Let's talk about Hotel Industry Accounting Compliant vs Comparable
We don't need all those accounts in the 11th Edition
This is the sentiment of most midscale and economy owners I have met over the past 10 years. There are two specific problems with these statements: 1. No one uses all the accounts in the 11th Edition. And 2. Any time an owner needs to show their financials to an outside interest or compare their earnings to an outside interest, this statement will mean trouble.
Comparable with as few as 44 Accounts
That number is right (yes we proof read this). You will be able to compare to Hotel Industry Accounting standard reports with as few as 44 accounts. Now this does not include balance sheet or below the profit line. But will allow you to compare revenue and expenses to most industry P&L comparisons.
Now I'm sure that some people are currently thinking no way, but in the words of Wayne and Garth "Yes Way". In the end most comparison tools you see are done at a summary level, and as such, if you accurately break your expenses down into the proper departments (5 to 8 for most economy and midscale hotels), and properly categorize expense into Revenue, Statistics, Payroll, Taxes and Benefits, and Other Expense under those departments, then use the recommended report format, you are comparable. Understand we are not saying do this, we would recommend that you use more like 80 to 90 accounts, and we'll be glad to explain why. BUT, at the end of the day it's your business, and if you feel that you are better served by having fewer accounts, we think what's important is that you be able to compare your self to others, and that lender, brands, business interruption insurers and other industry professionals be able to compare you.
How you keep score matter
Comparability can greatly impact improve your likelihood of:
Better lender terms
Getting Fee relief
Better reception and understanding from outside investors
Benefiting from industry comparison tools like Smith Travel Host, CBRE, Hot Stats, CHOPS, HOPE, and others.
Better operational analysis
Easier participation in programs like PPP and Restaurant Revitalization Grants
Comparable is not compliant
This is perhaps the tricky part. You will be comparable but not truly compliant. We do believe that in the vast number of cases a midscale or economy hotel can be compliant with less than 100 accounts. But n only the most extreme instances will compliancy be needed. The difference is in a more finite tracking of expensive. For instance you will be comparable with an account for "Rooms Payroll" or "Front of House Rooms" and "back of "House Rooms". To be compliant you would need one account per position, ie. Front Desk Clerk, Night Auditor, Houseperson, Room Attendant, Laundry, Breakfast Attendant, Etc.
As an owner you will definitely benefit from this detail, especially when trying to determine where you might be over spending, but it isn't needed to be comparable.
How do you even get started on something like this?
Well perhaps we can help you with that. We have gone through the 11th Edition and based on our background of 30+ years experience and more conversations with Midscale and Economy owners than we could count, were happy to offer you 2 FREE WAYS TO START (Free provided you give us your name and email to be honest).
We have developed 4 base charts of accounts - All based on the 11th edition, slimmed down based on a series of questions that we'll go over with you (like do you have a restaurant, do yo offer free breakfast, are you in a union area, etc.), nothing hard to answer or personal about your money. Then we'll send you the right chart for you to start with, and be glad to answer any questions and work with you to customize further.
Send us your chart - We have reviewed 10,000+ chart of accounts. If you prefer we'll start with what you're doing and recommend things you need add, delete, or change to be comparable.
Following industry standards in how you track and report revenue and expense says a lot about how you run your business
Be seen as the professional Hotel Owner you are!
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