Type of Submission

Refereed Article


This study examines the practice of accounting for preopening costs in U.S.-based hotels. The study surveyed 225 CFOs, controllers, and senior-level executives of lodging companies during the 2012–2013 period to examine current accounting practices for preopening costs in their firms. The research questions measured the amounts spent on preopening costs, key expenditures included as preopening costs; when/where these preopening costs were expensed, and the incentive operating fee arrangement. Results revealed that many lodging firms did not account properly for their preopening costs in accordance with U.S. Generally Accepted Accounting Principles (GAAPs). As such, the current practice of accounting of preopening costs in lodging firms is better understood and the need for further guidance on treatment of preopening expenses in the next (11th) edition of Uniform System of Accounts for the Lodging Industry (USALI) is explored.