Why is a hotel P&L laid out the way it is?

USALI is the lodging industry’s own accounting standard, and its central idea is simple: a hotel’s profit comes from its departments, so the statement is built from departments. Read a USALI P&L from the top down and it is sorted by one thing, who could actually have changed each number. Everything else in this chapter follows from that.

Part 1 of this series made the case that a standard accounting package produces an accurate P&L but not a departmental one. This chapter is about what the alternative actually looks like, at the scale of an independent hotel rather than a 450-room group property.

What is USALI, and who decides what it says?

The Uniform System of Accounts for the Lodging Industry was written in 1926 by the Hotel Association of New York City. It turns one hundred this year.

It is published today by HFTP, the Hospitality Financial and Technology Professionals association, which bought the rights from that same New York association in 2018. Its content is set by a Global Finance Committee sponsored jointly by HFTP and the American Hotel & Lodging Association. The 12th revised edition was published in 2024, with adoption from 1 January 2026.

HFTP and AHLA describe it as “the worldwide, authoritative standard for lodging financial and operating reporting”, and nearly every hotel group in the world reports in it.

Two things follow from that ownership which matter later in this chapter. The standard is a private publication, not a regulation. And because it is a published book rather than a house convention, the reasoning behind every decision in it is written down and available to anyone.

How does a USALI P&L read?

From the top down, in order of control.

It opens with the operated departments. Rooms, food and beverage, leisure, each showing its own revenue and its own direct costs, and nothing else. What is left is departmental profit, and it is the fairest number in the building, because every line above it belongs to someone who was in the room.

Then come the costs no single department controls. Administration, sales and marketing, energy. These are reported in their own right rather than charged to a department that had no say in them. Take them off and you reach Gross Operating Profit.

GOP stops before rent, interest, depreciation and tax, and that boundary is the point of the whole layout. It is the last line a management team can fairly be held to.

Below it sits a different kind of cost entirely. Rent, insurance and property taxes bring you to EBITDA. Interest, depreciation and tax take you to the bottom. None of those come from how the hotel was run last month. They come from how it was bought, financed and owned.

Here is an illustrative month for a 70-room Irish hotel with a busy food operation, read the way the statement reads. The figures are invented for demonstration; the pattern is one we see repeatedly.

A general manager reading that page is accountable for the top block and for GOP. Nothing between EBITDA and the bottom line was theirs to move. Judge a head of department on the final figure and you are judging them on the mortgage.

Note also how far apart the two profit figures sit. €113,000 of Gross Operating Profit and €22,000 of profit before tax describe the same month, and an owner and a GM discussing “profit” without saying which one they mean will talk past each other every time.

That is not a subtle distinction in practice. It decides who gets asked what at the monthly meeting, and it decides whether a bonus scheme is measuring performance or measuring the capital structure. We wrote previously about what EBITDAR margin a hotel should achieve; every figure in that discussion assumes this layout underneath it.

Why don’t shared costs sit inside departments?

Because a department cannot be held to a cost it does not control, and because the moment shared costs are pushed into departments, the departmental profit figures stop meaning anything definite.

Take the marketing spend behind your restaurant, the energy the kitchen burns, and the repair bill on the walk-in fridge. Charge all three to food and beverage and the restaurant looks marginal. Treat them as house costs and it looks healthy. Same restaurant, same year, two defensible answers.

USALI settles it by putting administration, sales and marketing, and energy into their own schedules, outside the operated departments. Note that these schedules exist even though they earn nothing. That is the part most people do not expect, and it is the part an independent is most likely to skip.

Skipping them is what quietly breaks the standard. Leave those costs inside the departments and the figure you are calling GOP is not what USALI means by GOP. The definitions only hold if the structure does.

The 12th edition also renamed the old Utilities department to Energy, Water and Waste, roughly doubling the number of lines in it and adding consumption reporting. Waste moved across from Property Operations and Maintenance. It is a sustainability-driven change, and it means operational teams now have to capture figures, such as tonnes of landfill versus recycled waste, that most never collected before.

Why three statements instead of one?

Because three different people need three different pages, and USALI produces all three from the same ledger.

The departmental schedules come first. One per operated department, plus one for each of the non-revenue departments. This is where the detail lives: revenue broken down by segment, payroll, the direct costs a head of department actually signs off. Accountability starts at the front of the pack, which is why a head of department should be reading their own schedule rather than the whole statement.

The summary operating statement gathers those results onto a single page, applies the undistributed costs, and carries on down to GOP and then EBITDA. This is the operator’s page, and the one a GM should be reading.

The statement of income goes furthest down. It is deliberately flat, all revenue and all expenses with no intermediate profit lines, but it includes the interest, depreciation and amortisation that the operating statement stops short of. This is the owner’s and the investor’s page.

Same ledger, three times, each cut to what its reader can act on. In a lot of independent hotels one P&L goes to everybody, and that single page ends up doing three jobs at once.

How much of it does a 70-room hotel actually produce?

Far less than the book’s size suggests.

Most of the standard’s bulk is optionality. It has to serve a 450-room convention hotel with three restaurants, a spa and a conference floor, so it carries structure for all of it. You produce a departmental schedule when you operate the department. A 70-room hotel with bedrooms, a restaurant and bar and a small leisure club is running three operated departments, not thirty. Its bulk is coverage, not workload.

The 12th edition also marks what is mandatory and what is optional the whole way through, which is the single most practical thing about it for a lean finance team. The new breakdown of rooms revenue by booking channel, for instance, is optional, and it covers rooms revenue only. The full-time-equivalent schedule, previously informal, is now mandatory. Knowing which is which is how you scope this to your hotel instead of to the index.

It is fair to say the standard has a reputation for heaviness, and the research supports the underlying concern. A 2025 systematic review in the International Journal of Hospitality Management found that while chain-affiliated hotels benefit from full adoption, smaller independents struggle with the system’s complexity and resource demands, and that no simplified version for smaller hotels exists. A separate small-hotels uniform system did exist historically and was merged into USALI in 1996.

That gap is precisely why this series exists. The barrier is real, but it is a resourcing and translation problem, not a reason the structure cannot work at 70 rooms.

Who actually requires any of this?

Nobody. There is no regulator, no audit, no filing, no deadline and no certificate at the end of it. USALI is not GAAP and it is not IFRS; your statutory accounts and your tax return will never mention it.

Where the standard is required at all, it is required by contract. A management agreement that pays an operator a percentage of a defined profit line needs both parties calculating that line the same way, so the agreement names the standard. Franchise agreements and some loan covenants do the same. That is how a format written by hotel operators in 1926 ended up running nearly every hotel group in the world without anyone ever being obliged by law to follow it, and it is why Belmond’s VP of Accounting, speaking at a HOSPA webinar in February 2025, described management agreements as the reason the standard exists at all.

An independent with no operator and no brand above it has none of that pressure. Nobody is coming to check.

So why would an independent adopt it?

Because the thinking is already done, and it is written down.

A hundred years and twelve editions of argument, by people who measure hotels for a living, have settled where each cost belongs, what counts as revenue, and how a department is defined. Adopting the structure means the answer to “why do we do it this way?” stops being “because that is how we have always done it here”. It is in a book, and the book explains itself.

That has a practical consequence most owners underrate. Your next financial controller inherits the reasoning rather than the file. A GM who queries an allocation gets an explanation rather than a defence. The method outlives the person who designed it, which is not true of any house convention, however good, and hotel finance teams turn over.

The discipline this requires is real, and it applies at every scale. When Belmond implemented the 12th edition, the group found its own definition of a full-time equivalent, which excluded public holidays and annual leave from working days, did not match the new standard definition. Their formula was perfectly defensible. It was also theirs alone, so the standard’s definition won and their FTE figures changed. If an LVMH-owned group with a central finance function has to give up a house measure to stay uniform, the gap being closed here is clearly not one of capability.

Comparability follows from all of this rather than causing it. Once your figures are built the way everyone else built theirs, they can be set beside another hotel’s line by line, which is where this series is eventually heading. It is a genuine benefit, and it is a consequence, not the reason.

One data point on why the industry watches GOP so closely: HVS, the hotel valuation firm, puts the correlation between GOP per available room and hotel value at between 85% and 90%, against roughly 70% to 75% for RevPAR. A full house and a profitable one are not the same achievement.

If reporting your hotel the way the industry reports itself sounds worth having, that is the conversation we are here for. Talk to us about making your hotel’s reporting benchmark-ready.

Aligned, not compliant

One honest note to finish on. Conformity with USALI is all or nothing: the 12th edition states that the format and terminology must be followed for a hotel to be in conformity, with no cherry-picking. In practice that means a hotel running the structure without every schedule is aligned to the standard rather than compliant with it.

For an independent, aligned is the target worth having. It is also the accurate word to use with a lender or a buyer, and using the accurate word is worth more than the stronger one.

USALI (the Uniform System of Accounts for the Lodging Industry) is published by HFTP. SSOT Analytics is independent of HFTP. This series explains the concepts in our own words; for the authoritative text, buy the 12th edition at usali.hftp.org, or in the UK and Ireland via hospa.org. There is no substitute for reading the book.

Where this series goes next

Part 3 covers the chart of accounts: how to move an existing one into the USALI shape without rebuilding it.

Three questions to sit with until then:

• If the person who designed your reporting left tomorrow, would the reasoning leave with them?
• Is everyone in your building being held to a line they could actually have moved?
• Do the costs that no department controls sit outside your departmental results, or inside them?

If the honest answer to the first is “yes, it would”, the structure is worth building whether or not anyone outside your hotel ever asks to see it. Talk to us about making your hotel’s reporting benchmark-ready, or follow the series and build it yourself.

Colin Donovan is an accountant and the founder of SSOT Analytics, which builds USALI-aligned financial reporting for independent hotels.