Accounting Guide for Hotel Owners, B&Bs, and Short-Term Rentals - SUMMARY OF CONTENT

Introduction

Running a hotel, guesthouse, or short-term rental business is not just about filling rooms or delighting guests but behind every successful property is a clear and disciplined approach to accounting. Without this, margins quickly erode, bills go unpaid, and expansion plans stall. This guide sets out the accounting foundations that every hotelier, innkeeper, or rental host should know. Whether you run a ten-room boutique, a countryside B&B, or a portfolio of Airbnb listings, the principles are the same: structure your accounts properly, track revenue and costs accurately, and stay ahead of compliance obligations.

1. Setting up the right Accounting Structure

• Chart of accounts tailored to hotels: rooms, F&B, bar, spa, ancillary services, commissions, taxes.

• How to treat deposits, prepayments, and cancellations so revenue is only recognized when earned.

• Why splitting revenue categories is essential for tracking profitability (room sales vs restaurant vs extras).

2. Choosing the Right Accounting System

• The right system depends on your size and complexity.

• Small hotels and B&Bs often manage with cloud systems (QuickBooks, Xero).

• Larger independents benefit from PMS-linked accounting modules.

• Avoid spreadsheets as a long-term solution.

• → For a detailed breakdown, see our dedicated blog: Choosing the Right Accounting System for Your Hotel.

3. Daily Accounting Basics

• Recording daily sales by revenue stream.

• Reconciling OTA and channel manager reports with bank deposits.

• Cash handling and credit card controls (still common pitfalls for independents).

• Handling chargebacks and refunds correctly.

4. Occupancy and Hotel-Specific Taxes

• Occupancy or tourist taxes are pass-through liabilities, not revenue.

• Correct treatment in your accounts prevents inflated sales figures.

• Importance of clear communication to guests and avoid disputes when charges appear at check-in.

5. Payroll and Staffing Costs

• Seasonal staff management, overtime, and service charges.

• Accounting for tips and gratuities.

• Allocating payroll costs to departments (front office, housekeeping, F&B).

• Payroll system integration with your accounting platform.

6. Short-Term Rentals (Airbnb, Vrbo, etc.)

• How to handle split revenue streams (platform vs. direct bookings).

• Accounting for cleaning fees, commissions, and service charges.

• Local sales and lodging taxes must be tracked and filed — requirements vary by jurisdiction.

• Separating personal vs. rental use of a property to keep accounts accurate.

7. Fixed Costs and Capital Expenses

• Managing utilities, insurance, licenses, and marketing as recurring costs.

• Recording major refurbishments or renovations as capital expenses rather than operating costs.

• Using depreciation to spread the cost of furniture, fixtures, and equipment.

8. Financing and Debt

• Many hotels and B&Bs rely on loans or mortgages.

• Accounting correctly for loan repayments vs. interest expense.

• Understanding debt service coverage and can the business meet its financing obligations?

• Importance of cash flow planning when loan repayments rise.

9. Inventory and Cost of Goods

• Food, beverage, and minibar stock control.

• Accounting for linens, guest amenities, and cleaning supplies.

• Spotting wastage, theft, or over-ordering that eats into margins.

10. Owner Withdrawals and Personal Expenses

• Common trap: mixing personal and business funds.

• Why a separate business bank account is essential.

• Accounting treatment for drawings vs. legitimate business expenses.

• Transparency protects you if audited or when seeking financing.

11. Financial Reporting

• Key hotel metrics: Occupancy rate, ADR (average daily rate), RevPAR.

• Cash flow forecasts to handle seasonality.

• Spotting breakage: unbilled extras, missed OTA invoices, incorrect charges.

• Monthly reconciliations as the minimum standard.

12. When to get Professional Help

• Difference between a bookkeeper and an accountant.

• Outsourcing vs. in-house accounting support.

• Knowing when complexity justifies professional help — tax compliance, financing, or expansion planning.

Conclusion

Accounting should sit at the heart of every hotel or rental business. Clear structures, accurate records, and disciplined reporting are what turn occupancy into profit. Whether you run a family B&B or a growing independent hotel, following these accounting principles will help you avoid costly mistakes and build a business that can withstand seasonality, market shocks, and growth demands.

Accounting Guide for Hotel Owners, B&Bs, and Short-Term Rentals

Introduction

Running a hotel, guesthouse, or short-term rental business is not just about filling rooms or delighting guests but behind every successful property is a clear and disciplined approach to accounting. Without this, margins quickly erode, bills go unpaid, and expansion plans stall. This guide sets out the accounting foundations that every hotelier, innkeeper, or rental host should know. Whether you run a ten-room boutique, a countryside B&B, or a portfolio of Airbnb listings, the principles are the same: structure your accounts properly, track revenue and costs accurately, and stay ahead of compliance obligations.

1. Setting up the right Accounting Structure

Every property should begin with a chart of accounts that reflects how hotels operate. At a minimum, this should include separate categories for rooms, food and beverage, bar, spa, commissions, and taxes.

Revenue recognition is a frequent problem. Guest deposits and prepayments should never be booked as income until the stay occurs. Likewise, cancellations and no-shows must be reversed appropriately to avoid overstating revenue.

A well-structured chart of accounts allows you to analyse profitability by department — understanding how much each area contributes. A small hotel’s restaurant or bar might seem busy but could be losing money once labour and cost of goods are factored in.

Please see our separate blog for Chart of Accounts for Hotels

2. Choosing the Right Accounting System

The best accounting system depends on the property’s size and complexity.

• Small hotels and B&Bs can often manage effectively with cloud systems such as QuickBooks or Xero.

• Independent hotels benefit from accounting modules linked to their Property Management System (PMS), allowing automatic posting of room revenue, taxes, and deposits.

• Spreadsheets may work initially but are not sustainable once transactions increase or multiple channels are in use.

For detailed system guidance, see our related post: Choosing the Right Accounting System for Your Hotel.

3. Daily Accounting Basics

Daily revenue control is essential in hospitality. Each day’s sales should be recorded by category, such as rooms, F&B, minibar, or spa, and reconciled to bank deposits.

Channel manager or OTA reports must be matched to actual payments received, as timing differences and missing payouts are common. Cash handling, credit card reconciliation, and refund processing should be reviewed daily. Even in small properties, these are frequent sources of error and fraud.

Chargebacks, especially from OTAs and credit cards, need careful treatment. Keep full documentation of guest authorisation, cancellation policies, and correspondence.

4. Occupancy and Hotel-Specific Taxes

Occupancy, bed, or tourist taxes are liabilities, not income. These must be recorded as taxes payable rather than revenue to avoid inflated sales figures.

Clarity is also essential for guests. Unexpected taxes at check-in or check-out often cause disputes and negative reviews. Ensure all taxes are disclosed upfront on booking confirmations and clearly separated on invoices.

5. Payroll and Staffing Costs

Payroll is typically the largest cost after cost of goods. Seasonal staffing, overtime, and service charge distribution need structured accounting.

Tips and gratuities should be tracked separately and handled in line with labour regulations. Payroll should ideally be split by department — front office, housekeeping, kitchen, and F&B — to show which areas drive costs.

Integrating payroll data with your accounting software reduces manual entry errors and improves monthly forecasting.

6. Short-Term Rentals (Airbnb, Vrbo, etc.)

For hosts managing multiple properties or listings across platforms, split revenue tracking is vital. Commissions deducted by Airbnb, Vrbo, or Booking.com must be recorded as expenses, not netted off revenue.

Cleaning fees, service charges, and platform commissions each have separate accounting treatment.

Local lodging and sales taxes also apply in most regions, even when platforms collect them automatically. Keep detailed records to reconcile what the platform has remitted versus what is still your responsibility.

Finally, if a property is used partly for personal stays, only the rental-use portion of costs (utilities, insurance, maintenance) should be claimed as business expenses.

7. Fixed Costs and Capital Expenses

Fixed costs include utilities, insurance, internet, and licences. These are your recurring overheads and should be budgeted monthly.

Capital expenses, such as major renovations, furniture replacement, or new air conditioning — are not operating costs. They should be capitalised and depreciated over their useful life.

Depreciation smooths the expense over several years and provides a more accurate picture of long-term profitability.

8. Financing and Debt

Loans, mortgages, and credit lines are common in hospitality. Distinguish clearly between loan principal and interest expense. Only the interest portion affects profit and loss.

Calculate your Debt Service Coverage Ratio (DSCR) regularly to ensure your earnings can cover loan repayments. A DSCR below 1.25 can signal liquidity risk.

Cash flow planning becomes especially important when interest rates rise or repayment holidays end.

9. Inventory and Cost of Goods

Food, beverage, minibar, and housekeeping supplies should be managed through inventory control. Regular counts reduce waste, theft, and over-ordering.

Track Cost of Goods Sold (COGS) as a percentage of F&B revenue — a well-run operation typically keeps this below 30–35%.

For small properties, even items such as linens, amenities, and cleaning products can significantly affect margins if poorly managed.

10. Owner Withdrawals and Personal Expenses

A common weakness in small hospitality businesses is mixing personal and business funds. Always maintain a separate business bank account.

Personal withdrawals should be recorded as drawings, not expenses. Using business accounts for groceries or personal travel is risky and complicates tax reporting.

Clean separation protects you during audits and builds credibility when applying for loans or investors.

11. Financial Reporting

Sound accounting enables meaningful reporting. Key performance indicators (KPIs) include:

• Occupancy Rate: Rooms sold ÷ rooms available.

• Average Daily Rate (ADR): Total room revenue ÷ rooms sold.

• RevPAR: Occupancy rate × ADR, the core measure of room performance.

Monthly reporting should also include a cash flow forecast and a reconciliation of all balance sheet accounts.

Look for breakage/leakage - revenue lost due to missed extras, incorrect OTA invoices, or unbilled services. These small errors add up quickly.

12. When to get Professional Help

Know the difference between a bookkeeper and an accountant. A bookkeeper records daily transactions; an accountant interprets them, ensuring compliance and guiding financial decisions.

As your business grows, outsourcing payroll, VAT, or tax filings can save time and avoid penalties. Larger independents may also benefit from part-time CFO support to oversee forecasting and financing.

The right advice at the right time can save thousands in tax, interest, or compliance costs.

See also our blog - Accountant vs Bookkeeper: What do Travel Businesses really need?

Conclusion

Accounting should sit at the heart of every hotel or rental business. Clear structures, accurate records, and disciplined reporting are what turn occupancy into profit. Whether you run a family B&B or a growing independent hotel, following these accounting principles will help you avoid costly mistakes and build a business that can withstand seasonality, market shocks, and growth demands.

References

• U.S. Small Business Administration. (2025). Manage your finances. https://www.sba.gov/business-guide/manage-your-business/manage-your-finances

• Investopedia. (2025). Revenue Recognition Principle. https://www.investopedia.com/terms/r/revenue-recognition-principle.asp

• American Hotel & Lodging Association. (2024). Hotel Accounting Best Practices. https://www.ahla.com/

• AccountingTools. (2025). Depreciation Methods and Hotel Accounting Basics. https://www.accountingtools.com/

• U.S. Internal Revenue Service (IRS). (2024). Publication 527: Residential Rental Property. https://www.irs.gov/publications/p527