What's Happening?
The 12th Revised Edition of the Uniform System of Accounts for the Lodging Industry (USALI) has introduced a new structure for Energy, Water, and Waste (EWW) reporting. This change aims to standardize how hotels account for energy costs and usage, which has historically varied widely across different properties and regions. The new framework provides a consistent financial and operational language for one of the hospitality industry's most significant expense categories. The Energy component of the EWW schedule is particularly emphasized, as energy is a major controllable operating expense in a hotel's profit and loss statement. The revised USALI formalizes the recording of energy expenses by aligning costs with actual consumption, thereby enhancing
benchmarking and justifying investments in efficiency initiatives.
Why It's Important?
The introduction of a standardized energy reporting framework is significant for the hospitality industry as it directly impacts financial reporting, valuation, and transparency for Environmental, Social, and Governance (ESG) disclosures. By providing a consistent method for accounting energy costs, the USALI 12 helps uncover inefficiencies and supports the justification for investments in renewable energy and efficiency initiatives. This standardization is crucial for hotel owners and investors as it strengthens financial reporting and improves transparency. Operationally, it highlights energy as a key performance indicator that connects financial discipline with environmental responsibility, potentially leading to more sustainable business practices.
What's Next?
Hotels will need to prepare their energy data to align with the new USALI 12 standards. This involves ensuring that financial and operational figures are consistent and accurately reflect actual consumption. Hotels will need to verify cost and usage alignment, report consumption accurately, and ensure that data is normalized to match accounting periods. Additionally, hotels must maintain thorough documentation to provide a clear audit trail. The adoption of standardized metrics like Energy per Occupied Room and Energy per Square Foot will enable hotels to benchmark their performance internally and externally, potentially leading to operational improvements and cost savings.
