Your guide to Profit and Loss (P&L) Terminology
Understanding profit and loss terminology is key to successfully analyzing your P&L statements and getting a handle on your property’s performance. Equally important is the use of standardized terminology, which ensures consistency across the global hotel industry and enables apples-to-apples comparisons when you measure financial performance against the competition.
In order to achieve that consistency, STR adheres to the Uniform System of Accounts for the Lodging Industry’s (USALI) 11th Edition guidelines, across our P&L program. And to ensure you have an understanding of those terms, we’ve made our P&L glossary available for you; click the image below to view.
This contains a list of key P&L terms, which shows how we define full vs limited service hotels, how food and beverage revenues are categorized, what is included in miscellaneous income, and more.
How we understand P&L data
STR uses three different ratios to analyze hotel profit and loss data:
Ratio-to-Sales (RTS): Calculated by dividing by total revenue, with the exception of departmental expenses, which are based on the departmental revenue of the respective department.
Per-Available-Room (PAR): Calculated by dividing by the number of keys in the hotel.
Per-Occupied-Room night (POR): Calculated by dividing by the room nights occupied during the financial year.
These ratios enable us to compare performance across different hotels, when looking at an aggregated hotel data. For example, a Ratio-to-Sales comparison is useful when benchmarking your hotel’s performance against competitors. Looking at data on a PAR basis helps to make comparisons despite differences in room count, while POR is particularly useful for looking at variable expenses—as these are directly impacted by number of guests at the hotel.
Profitability Key Performance Indicators
Learn about some of the most important P&L KPIs through the below links:
To learn the additional benefits of profit and loss reporting and how you can participate, view our P&L program details.