MCB Accounting Blog

The May 21, 2012 compliance deadline for pool and spa lifts is less than two weeks away and there is no indication from the Department of Justice (DOJ) that it will extend the deadline.  The American Hotel and Lodging Association (AH&LA) has filed a letter with DOJ urging an immediate response and noting that its members need clarity on what types of lifts are acceptable and time to comply.

On Thursday, May 10, 2012, the House of Representatives passed the Commerce, Justice, Science Appropriations Bill, which includes an AH&LA-supported amendment prohibiting DOJ from enforcing permanent pool lift restrictions for one year. The legislation needs to pass the Senate and be signed by the President.

Meanwhile, Senator Lindsay Graham (R-S.C.) recently introduced S. 2390, the Pool SAFE Act, which would allow portable lifts as an acceptable means of providing pool and spa entry, sharing of lifts between multiple pools at a facility and a one-year compliance deadline. The House companion bill, H.R. 4256, was introduced by Congressman Mick Mulvaney (R.-S.C.).

MCB has over 35 years of hospitality accounting experience providing audit, tax, accounting, due diligence and employee benefit plan audit services.  Contact an MCB Adviser today at info@mcb-cpa.com or call 703.218.3600 to discuss your hotel accounting and tax needs or to receive a proposal for your next financial statement audit.

The Obama administration has released the National Travel and Tourism Strategy from the Task Force on Travel and Competetiveness, marking the first time a President has made travel and tourism a national priority.  The Strategy expands the government's efforts to market the United States as a destination; sets a goal of increasing American jobs by attracting and welcoming 100 million international visitors annually by the end of 2021, more than a 50 percent increase over the number expected in 2012; and expanding the Visa Waiver Program, improving visa processing, expanding the trusted traveler program and improving screening processes at airports and using grants to improve transportation infrastructure.

Click here to view the complete National Travel and Tourism Strategy.

MCB has over 35 years of hospitality accounting experience providing audit, tax, accounting, due diligence and employee benefit plan audit services.  Contact an MCB Adviser today at info@mcb-cpa.com or call 703.218.3600 to discuss your hotel accounting and tax needs or to receive a proposal for your next financial statement audit.

Hoteliers are finding difficulty controlling rates because they face a different market mix than that of 2007, when profits were peaking, according to Greg Cross, Hyatt Hotels' senior vice president of revenue management, in a recent HotelNewsNow.com article.

Cross has been tasked with taking the hotel ownership, management and franchising company's revenue management strategies to the next level. He has said that revenue management is simply an evolution of  "what hoteliers called 'hotel management' 30 years ago--finding the balance of occupancy and rate."

Cross said technology can help revenue managers see opportunities further in advance and pull together myriad reports and data quicker than ever before.

Cross also addressed a number of hot-button issues affecting hotel revenue managers:

• Occupancy or Rate? Occupancy has returned, but pricing power has not returned to all markets. The market mix is different now than it was in 2007, when profits were at their peak. In addition, wholesale businesses continue to diminish pricing power.
• Shifting Channel Mix: Cross said Hyatt uses technology to better understand where demand is coming from at any particular time. This helps them place inventory. High-quality data makes forecasting easier and improves decision making.
• New OTA Sites: New online travel agencies do not yet play a role in Hyatt's distribution strategy. Some of the more recently introduced channels such as Groupon were tested, but they do not play much of a role either.
• Corporate Directives: Over the past few years, Hyatt has changed its corporate revenue management structure. While there used to be more directives from corporate, executives now understand that revenue management processes belong at the hotel level.

Click here to view the complete HotelNewsNow.com article.

MCB has over 35 years of Hotel Accounting experience. Contact an MCB Adviser today at info@mcb-cpa.com or call 703.218.3600 to discuss your hotel accounting and tax needs or to receive a proposal for your next financial statement audit. Join us at the 1st Annual BisNow Lodging Investment Summit May 9-10 in Washington, DC.

Believe it or not, the federal Department of Labor (DOL) does not require that an investigator announce the scheduling of a wage & hour investigation. An investigator has sufficient latitude to initiate unannounced wage & hour investigations to directly observe normal business operations and obtain information.

The following are some strategies to prevent such an investigation:

1. Avoid unfair compensation practices.  Compensate employees consistently. If pay practices are consistent, complaints are less likely to arise, and you will be in a better position if DOL does launch a wage & hour investigation.
2. Understand the regulations. Understand the Fair Labor Standards Act (FLSA). It is the law, and failing to follow it could subject you to litigation or a DOL audit.
3. Train managers thoroughly. Managers should understand the FLSA and follow it.
4. Analyze both state and federal law.  Determine whether your state's wage & hour laws conflict with the federal law, then follow the law that is the most beneficial to the employee.
5. Pay past overtime due. If it is determined that an employee is wrongly classified as exempt, you should determine how many overtime hours the employee has worked in the past two years , then pay him or her the overtime due.  You should have the employee sign a release freeing you from further liability.
6. Follow child labor laws.  You must determine a minor's age and set his or her job duties and work schedules accordingly.  You must also file the minor's age certificate and keep it as long as the minor is employed.
7. Pay interns, unless they meet a strict test. Internship in the for-profit, private sector will most often be viewed as employment by the DOL, unless a strict test is met. Interns who qualify as employees rather than trainees must be paid at least the minimum wage and overtime for hours worked over 40 in a workweek.
8. Respond to internal complaints quickly.  If an employee files a wage & hour complaint internally, you should take it seriously.  You may be able to prevent an investigation by addressing an employee's initial internal complaint.
9. Seek compliance assistance from DOL.  Compliance tools and information are available on DOL's website.
10. Conduct a self-audit. Hire an attorney to audit your company or do it yourself before DOL initiates an investigation.  An audit can help ensure compliance. Review job descriptions to make sure they are accurate and reflect the jobs performed and the skills needed. Review actual job duties to ensure that they still fall within the administrative, executive, professional, computer, or outside sales exemptions. Make sure overtime for nonexempt employees has been properly calculated. Make sure the required posters have been hung in the appropriate places.

In addition, be sure that records are complete, accurate and unambiguous.  Pay records for every employee for each pay period should be maintained for three years.

If violations are found, you may owe back pay, face penalties and be instructed by DOL to make changes in your employment practices.

Click here to view the complete HRnewsWatch.com article.

MCB has over 35 years of hospitality accounting experience providing audit, tax, accounting, due diligence and employee benefit plan audit services.  Contact an MCB Adviser today at info@mcb-cpa.com or call 703.218.3600 to discuss your hotel accounting and tax needs or to receive a proposal for your next financial statement audit.

MCB is a proud Sponsor of The 1st Annual Bisnow Lodging Investment Summit, May 9-10, 2012, at the Ritz-Carlton, Tysons Corner: 

Washington, DC is fast becoming the hotel investment capital of the world, boasting headquarters of Marriott, Hilton, Choice, LaSalle, DiamondRock, Pebblebrook, Crestline, RLJ, Savills US and many others. 

Join us in our nation's capital to hear from these industry giants as well as top political and economic insiders as they reflect on the challenges of 2011 and project changes to come in 2012. 

MCB has over 35 years of experience serving Real Estate Developers and Hoteliers with accounting, tax, audit, due diligence and consulting services. Contact Jim Keating at 703.218.3600 to start building a relationship with a CPA firm who strives to earn your RESPECT and CONFIDENCE as a TRUSTED business adviser.

If you ask restaurant owners their thoughts on participating in group-buying deals like those offered by LivingSocial or Groupon, you will get a variety of responses and hear some strong opinions.  Some will say that the deal helped significantly grow their business while others will tell you they will never participate again.

One Delaware restaurant reported that a Groupon deal increased its new customers by 65 percent. It was able to extend its reach and its brand by being able to tap into new audiences that it otherwise would not have reached.  A San Diego chef reported a negative experience. He felt that group deals were time consuming to track and that patrons tipped on the discounted amount, reducing server morale.

So, the question remains, Are group buying deals right for your restaurant?  The answer:  It depends.  The main difference between restaurants that see positive results and those that don't is carefully structuring a deal that will bring in new, regular customers without overwhelming your restaurant--or your bottom line.

There are three questions to ask before signing up for a group-buying deal:

• Can you bring in new customers?  Given that most restaurants break even or take a loss on the actual proceeds from voucher purchases, the main reason to participate is to attract new customers who will become repeat customers.  If you think that the group-buying deal will primarily be purchased by your regular customers, then you may want to use other marketing strategies.
• Is there a specific location, product or service you want to promote? One strategy that can bring positive results is to use the deal to promote a specific location, type of meal or time of day for which you would like to increase business.
• Can your restaurant handle the increased business? If the deal brings in many new customers but you are not able to provide quality food and good service, then there is little chance of converting them into regular customers.  Make sure you have adequate staff and food supply to meet the demands of the deal.  Consider structuring the deal to bring people into the restaurant during less busy times.
  

Click here to view the complete OPEN Forum article.

Contact an MCB Tax Adviser at 703.218.3600 and start building a relationship with a CPA firm who strives to earn your RESPECT and CONFIDENCE as a TRUSTED business adviser.

Hotel fundamentals are improving slightly in the United States, but industry analysts say the real growth in the industry is happening in international markets, especially in developing economies.  Large hotel corporations, including Hilton and Hyatt, are entering markets like China and India to build new properties. The Brazilian market is also expected to grow significantly in the coming decade, with the hosting of the FIFA Soccer World Cup and the Summer Olympics in 2014 and 2016, respectively.

Jones Lange LaSalle Hotels is forecasting that international hotel transaction volume will hold steady in 2012.  Their experts are expecting 2012 worldwide transaction levels to at leach match 2011 levels.  That represents a 13 percent increase over 2010 volume.

The construction of new hotels in the U.S. market has historically grown at an average of approximately 2 percent per year, but the recent growth rate has been less than 1 percent. This low growth rate is expected to continue as demand does not warrant significant growth.

Major markets such as New York, Chicago and Boston are likely to see more demand than the secondary markets.  In addition, the U.S. industry is starting to see smaller boutique properties being developed to meet the preferences of a new generation of travelers.

Click here to view the complete REIT.com article.

MCB has over 35 years of real estate and hotel accounting experience providing audit, tax and financial statement services.  Contact an Adviser today at info@mcb-cpa.com or call 703.218.3600 to discuss your hotel accounting and tax needs or to receive a proposal for your next financial statement audit.

The best thing to come out of the recent recession was a reminder that cash is king, according to outgoing Marriott International CEO Bill Marriott during Monday's opening general session at the American Lodging Investment Summit.

"Corporate America has more cash on hand than ever before," Marriott said. "That's probably the brightest thing on the landscape."

Sam Zell of Equity Group Investments agreed that cash is the biggest advantage a company can have.

"Liquidity equals value," he said. "At no time in my career has it ever been more clearly brought home to me than in the 2008-2009 period. If you had liquidity, you had value....Everything comes down to liquidity, everything comes down to exit strategies, everything comes down to knowing when you get in how you are going to get out."

Real estate, in general, is not yet out of the woods when it comes to having a difficult financial environment, Zell said.

"There has been a very limited solution to the overleveraged real estate industry," he said. "Pretend and extend was a really great thing in 2008-2009, but reality is going to have to take its place. An enormous amount has to be done in 2012 and 2013 to recapitalize overleveraged assets all over this country."

To hear more from Marriott and Zell at ALIS, click here to access the complete HotelNewsNow.com article.

MCB has over 35 years of real estate and hotel accounting experience providing audit, tax and financial statement services.  Contact an Adviser today at info@mcb-cpa.com or call 703.218.3600 to discuss your hotel accounting and tax needs or to receive a proposal for your next financial statement audit.

Without the proper price optimization strategy, hotel revenue managers will continue to struggle to increase rates, experts said during a recent Hospitality Sales and Marketing Association International University webinar. They reported that the upper end of the market is selling seven of ten rooms every night, indicating that there is pricing power in those segments. The lower end still has room to grow, however.

The problem is that pricing as a discipline is not understood, and hoteliers are getting worse at pricing instead of better.  Current reactionary pricing strategies result in losses for competing hotels, when holding rates would result in profit. If two competing hotels hold rates, both will profit. If one hotel decreases rates, its competitor will suffer if it continues to hold rates. Inevitably, the competitor that held rates will lower them, resulting in a significant loss in profits for both hotels.

Online travel agencies (OTAs) were identified as merchandising pros, and the experts presented key points revenue managers should consider before giving inventory to OTAs:

• Revenue managers should not plan to use opaque pricing channels as a way to sell inventory. They are a tool to be used to get rid of inventory two or three days before, but not for inventory seven or more days out.
• Membership-selling channels such as TravelZoo and flash sales are targeted to more price-sensitive consumers. They dilute profit, because revenue is shared with the third party.
• Sites such as Jetsetter and Tablet are good channels for capturing extra business and stimulating demand because they target travelers who weren't necessarily planning on traveling.
• Sites such as Expedia and Travelocity are good channels for gaining exposure.
• Daily deal services such as Groupon are marketed to the price-sensitive consumer and should probably only be used to fill need periods.
• Organic search results are becoming less prominent than paid search results. Companies increasingly will have to pay for placement.
• Mobile apps such as Hotel Tonight display suppliers' information in a particular market for "tonight only" deals. It is important to be prepared for the customer who has already made the booking and goes to check-in asking for the "tonight only" rate.
  

Click here to view the complete HotelNewsNow.com article.

MCB has over 35 years of hotel accounting experience providing audit, tax and financial statement services.  Contact an Adviser today at info@mcb-cpa.com or call 703.218.3600 to discuss your hotel accounting and tax needs or to receive a proposal for your next financial statement audit.