How to Properly Account for Utility Cost

Those of you who are users of our Profit Evaluation tool, or participate in Choice Hotels International’s Project GROW, know that we send out Monthly Tips on issues of compliance with the hotel industries accounting standards (The 11th Edition); the goal of the emails is to help you get your accounting lined up with industry standards. Without that attention to detail, the comparisons of expenses and knowledge you may gain from them, are seriously impacted.

“It’s the little details that are vital. Little things make big things happen.”

– John Wooden

 

One of the areas where comparisons can be of the most help to you is Utility Cost.

  1. Electricity
  2. Gas
  3. Oil
  4. Water/Sewer
  5. Steam
  6. Chilled Water
  7. Other Fuels (examples include propane, kerosene, diesel, geothermal, solar, wind)
  8. Contract Services (firms that are engaged in energy audits, water reclamation, or other services that reduce energy consumption)

Things that don’t belong under Utilities (and where they belong): Cable (Rooms Expense), internet (Information & Technology), Garbage (Maintenance), Pest Control (Maintenance).

Next Up – Accuracy Matters

Be sure to post each type of cost to the appropriate line, and keep current with your postings. Sometimes, accountants will post several types of cost to a single account, or miss a month and post two months at a time. This will cause issues for you in the event your Utility Cost is out of line with other operators. If your cost is high, the next thing to do is look at ach cost individually. If you are not tracking your expenses by type of utility, you find that you cannot determine which cost(s) are causing the issue. It should not be any harder to book the expenses individually than together. Similarly, season and volume of business are also contributors to Utility Cost variances. Posting monthly amounts will allow you to better see these fluctuations.

Help Is Out There

There are a number of FREE tips and resources for improving your utility costs, and you can learn about them from us, your Brand Representative, your local utility provider, or Google.

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