As described in Part 3, hotel/motel property types range from simple, rooms-only motels to full service properties with rooms and a wide variety of facilities such as restaurants, lounges, fitness centres, pools, spas, business centres, and shops.  Analyzing the income and expense from each department to compare property to property on a consistent basis using a standard format is critical to the valuation process. Many income and expense statements will, for example, report single line items such as telephone and other income as a combined amount or report franchise fees as part of administrative and general expenses. The standard format recommended by the American Hotel and Motel Association can be found in the 2008 edition of Uniform System of Accounts for the Lodging Industry. ¹ However, as not all operators follow this format, the assessor may be able, as a preliminary step, to review and record the income and expense statements in the standard format, using the following broad categories:

Revenue

• Rooms
• Food and Beverage
• Telephone
• Other Operating Departments
• Miscellaneous Income
• Rental Income
• Total Revenue $$$

Departmental Expenses

• Rooms
• Food and Beverage
• Telephone
• Other Operating Departments
• Miscellaneous
• Total Departmental Expense
• Gross Operating Income $$$

Undistributed Operating Expenses

• Administration and General
• Marketing
• Property Operations and Maintenance
• Energy
• Management Fee
• Franchise Fee
• Other
• Total Undistributed Operating Expenses
• Income Before Fixed Expenses $$$

Fixed Expenses

• Insurance
• Property Taxes
• Reserve for Replacement
• Total  Fixed Expenses
• Net Operating Income $$$

The above illustration is commonly referred to as a Summary Income Statement. It provides the income and expenses by department in summary form and is suitable for the all of the hotel/motel types covered in this Guide except for gallonage/tavern hotels which are covered separately. Also it is understood that under current jurisprudence in Alberta, video lottery terminals (VLT’s) and their incomes are not assessable.

¹ Uniform System of Accounts for the Lodging Industry, 10th Revised Edition (New York:  Educational Institute of the American Hotel & Motel Association, 2006)