USALI vs FRS 102: Understanding Hotel Accounting Under UK GAAP

Why this matters for UK hotels

Hotel accounting in the UK operates under two overlapping frameworks: FRS 102, which forms the basis of UK GAAP, and USALI, the Uniform System of Accounts for the Lodging Industry. Many hotels, particularly branded or managed properties, prepare their statutory accounts under FRS 102 but produce management accounts under USALI.

The distinction is critical. FRS 102 ensures compliance and audit credibility, while USALI ensures comparability and performance transparency. Understanding how these two systems interact helps hotel owners, operators, and accountants prepare consistent and meaningful financial statements.

At Antravia UK, we work with hotels, management companies, and auditors to bridge these frameworks, translating statutory FRS 102 reporting into operational USALI statements that owners and lenders can actually use.

What is FRS 102?

FRS 102 is the main UK accounting standard issued by the Financial Reporting Council (FRC). It applies to most medium-sized and private limited companies in the UK. It is based on IFRS for SMEs but adapted to the UK’s legal and reporting environment.

FRS 102 covers recognition, measurement, and disclosure across all major financial statement areas:

• Section 23: Revenue (to be aligned more closely with IFRS 15 from 2026)

• Section 20: Leases

• Section 13: Inventories

• Section 18: Intangible Assets

• Section 30: Foreign Currency Translation

• Section 35: Transition to FRS 102

The upcoming 2025–2026 FRS 102 revision will move towards a performance-obligation model for revenue recognition and introduce additional clarity on leases and disclosure, further narrowing the gap with IFRS.

What is USALI?

The Uniform System of Accounts for the Lodging Industry (USALI) was first developed in New York in 1926 and remains the global reporting model for hotels. It is maintained by HFTP’s Global Finance Committee and widely used across the UK, Europe, the Middle East, and Asia.

USALI is not a legal framework. It is a standardised internal reporting structure that allows hotels to present departmental results, Rooms, Food & Beverage, Spa, Golf, and Conference, in a consistent way. This consistency enables direct comparison across properties, brands, and management agreements.

The upcoming 12th Revised Edition, effective 1 January 2026, introduces new reporting areas for sustainability costs, loyalty programmes, and owner expenses, reflecting how the industry is evolving.

Key differences between FRS 102 and USALI

Under FRS 102, the purpose of reporting is to ensure compliance with UK company law and to provide a true and fair view of the entity’s financial position. USALI, in contrast, is designed for internal management use — offering comparability, transparency, and performance measurement across departments.

FRS 102 focuses on entity-level financial statements, producing a Profit and Loss Account, Balance Sheet, and Cash Flow Statement. USALI focuses on departmental reporting, including detailed operating statements for Rooms, F&B, Spa, and Undistributed Operating Expenses such as Sales & Marketing or Property Operations.

For revenue recognition, FRS 102 Section 23 follows the accruals principle, recognising income when the entity has transferred the risks and rewards of ownership. The revised FRS 102 will adopt a model similar to IFRS 15, based on performance obligations and control. USALI, while not prescribing recognition timing, allocates revenue across departments so that profitability can be compared on a like-for-like basis.

In lease accounting, FRS 102 differentiates between finance and operating leases. Finance leases recognise both an asset and liability; operating leases charge rent on a straight-line basis to the Profit and Loss Account. USALI shows rent as a non-operating expense in Schedule 11, keeping departmental Gross Operating Profit (GOP) unaffected by ownership structure.

For management and franchise fees, FRS 102 allows flexibility, these can be classified as administrative or distribution costs depending on policy. USALI mandates a separate Schedule 10 for Management and Franchise Fees, ensuring that management contracts can be compared consistently across brands and operators.

Owner’s expenses under FRS 102 are often hidden within general administrative costs. USALI requires them to be explicitly presented within the non-operating section, increasing transparency for owners and lenders.

When it comes to replacement reserves, FRS 102 treats these as appropriations of profit rather than expenses, typically disclosed in the cash flow statement. USALI deducts them below EBITDA, showing “EBITDA less replacement reserve,” which aligns with loan covenant and brand reporting conventions.

Segment reporting under FRS 102 is optional and rarely used by private companies. Publicly listed groups follow IFRS 8 instead. USALI, however, requires departmental schedules as standard, regardless of listing status or size, providing far greater operational insight.

In key performance indicators, FRS 102 does not define hospitality metrics such as ADR, RevPAR, or GOPPAR. USALI defines these metrics and embeds them in its structure, allowing comparison across regions, brands, and contract types.

Finally, for currency translation, FRS 102 Section 30 follows the same principle as IAS 21, requiring translation at closing and average rates with exchange differences in other comprehensive income. USALI reports results in the hotel’s functional currency, preserving operational visibility before consolidation adjustments are made.

Why hotels need both frameworks

Hotels in the UK cannot operate effectively with just one of these frameworks. FRS 102 ensures audit compliance, tax reporting, and legal conformity. USALI provides management teams, owners, and lenders with operational insights into the drivers of profit and loss.

Most successful hotel groups in the UK maintain both:

• FRS 102 for statutory reporting.

• USALI for management reporting, benchmarking, and owner communication.

Controllers typically prepare a USALI-to-FRS 102 reconciliation, mapping departmental results into statutory accounts. This allows the hotel’s internal management team to focus on operational performance while the external accountants handle compliance.

Antravia UK conclusion

FRS 102 delivers compliance and credibility, whilst USALI delivers comparability and insight. For UK hotels, the strongest financial systems combine both, so producing audited accounts under FRS 102 while maintaining internal management statements under USALI.

At Antravia UK, we help hotels bridge these frameworks. Our team translates statutory accounts into operational reports, ensuring consistency across departments, owners, and brands. We also guide hotels in preparing for the 2026 FRS 102 revision and the USALI 12th Edition, aligning both frameworks for future transparency and sustainability reporting.

For support or implementation guidance, contact us

Also available - USALI vs US GAAP: A Guide for Hotels and Accountants
and - USALI vs IFRS: Bridging Operational and Financial Reporting in Global Hotels | Antravia

References

• Financial Reporting Council (FRC): https://www.frc.org.uk/accountants/accounting-and-reporting-policy/uk-gaap/frs-102-the-financial-reporting-standard-applicable-in-the-uk-and-republic-of-ireland

• HFTP Global Finance Committee: https://www.hftp.org/globalfinancecommittee/

• HFTP USALI 12th Revised Edition Summary: https://www.hftp.org/downloads/documents/usali/usali12_presentation.pdf

• ICAEW Hospitality & Tourism Guidance: https://www.icaew.com/technical/tourism-hospitality

• ACCA Technical Factsheet 190: FRS 102 and UK Hotel Accounting

• HotStats Industry Resource: https://www.hotstats.com/hotel-industry-resources/uniform-system-of-accounts-for-the-lodging-industry