Hotel uniform accounting in the special administrative regions of China : current and future issues

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Hotel uniform accounting in the special administrative regions of China : current and future issues


Author: Ni, Shanshan
Title: Hotel uniform accounting in the special administrative regions of China : current and future issues
Degree: M.Phil.
Year: 2011
Subject: Hospitality industry -- China -- Hong Kong -- Accounting.
Hospitality industry -- China -- Macau (Special Administrative Region) -- Accounting.
Hong Kong Polytechnic University -- Dissertations
Department: School of Hotel and Tourism Management
Pages: ix, 241 p. : ill. ; 30 cm.
InnoPac Record:
Abstract: At present, the Uniform System of Accounts for the Lodging Industry (USALI) sets the accounting standards for the hotel industry by providing detailed guidance for categorizing, organizing, and presenting financial information with the intent of establishing uniformity. In order to keep pace with the dynamic hotel business environment and its corresponding needs for modifying the reporting format, the USALI is regularly updated every five to ten years. The changes are based on contemporary information obtained from the US lodging industry. However, the applicability of USALI outside the US, such as in the Asian regions investigated in this study (Hong Kong and Macau), is limited. The aims of this research are to determine the extent of implementation and applicability of the 10th edition of USALI to the lodging industry in Hong Kong and Macau, investigate current and potential ambiguous items and problem areas, and propose enhancement options to substantiate the hotel performance reporting content in the local context. To achieve these objectives, a qualitative research approach supplemented by a minor quantitative method was employed in this exploratory study. The data collection process was carried out in two stages. In the first stage, seventeen in-depth interviews and two focus group discussions were held with the operational management personnel (department heads) of hotels in Hong Kong and Macau. Based on the proposed modifications on the existing schedules of USALI and suggested new reporting features collected from the first-stage discussions, a semi-structured questionnaire, together with an interview topic guide, was developed for further investigation of these topics. In the second stage, one focus group interview was conducted with ten committee members of the Hotel Controllers and Accountants Association of Hong Kong in attendance. In addition, nineteen in-depth interviews were conducted with local hotel financial controllers and accounting managers.
The study found that all the non-casino hotels in Hong Kong and Macau adopted the USALI system as a basic framework. However, minor changes were implemented to suit local conditions and the special requirements of the particular chain. Modifications in terms of new additions and some deletion of certain revenue/expense line items in two major revenue-generating departments (i.e., Rooms and Food & Beverage Departments) were proposed. However, the accounting system adopted by casino hotels in Macau is significantly different from non-casino hotels. Casino hotels apply casino accounting practices and are not aware of the USALI. Based on the comments of the interviewees, a Profit and Loss report framework for integrated casino resorts was proposed. This study also identified common areas of concern when USALI was applied in non-casino hotels. Ambiguities were found in applications to items of operating equipment, frequent-guest program, and service charges. The guidelines on accounting treatment for operating equipment were vague. The deletion of cost allocation guidance in the 10th USALI was found to be inappropriate, and some new revenue/cost drivers were not fully reported. Finally, enhancement options were recommended to remedy the identified deficiencies. Sub-accounts, sub-schedules, and notes sections were suggested to enrich the in-depth details of departmental schedules and strengthen understanding of management of operation performance. The HCAA of Hong Kong strongly supported the idea of setting up an e-addendum to reflect Asian business features through an expense dictionary and updated accounting treatments. This study probes into an area that has thus far received minimal academic attention. It undertakes a serious secondary data review by comparing the major changes in the 8th, 9th, and 10th editions of USALI. Thus, this study represents the first attempt to map the extent of implementation and identify the issues related to applicability of the latest version of the USALI. It contributes significantly towards fine-tuning hotel operational performance reporting in Hong Kong and Macau by proposing enhancement options to remedy the areas of concern identified by local hotel professionals. The findings contribute to the body of knowledge not only on hotel performance reporting format in Special Administrative Regions (SARs) of China, but also on some overlooked accounting treatment for service charges, frequent-guest programs, operating equipment and casino operations. The results may also be considered as contribution to enrich the content of professional and tertiary education in the hospitality field.

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