Accounting for the Furniture, Fittings & Equipment Reserve in Hotels

Abstract

The somewhat idiosyncratic accounting procedure of maintaining reserves to fund furniture, fittings and equipment (FFE (ii) determining FFE (iii) determining the amount assigned to FFE (iv) determining the sufficiency of FFE and (v) appraising the degree of ease with which hotel operators can draw on FF&E reserve funds. These objectives have been pursued through the analysis of qualitative field data as well as survey data collected in Australia and New Zealand. The study’s more significant findings include the determination that, consistent with the wishes of operators, maintaining cash funded FF&E reserves is the most popular approach (particularly in small hotels). It has also been found that FF&E reserves are 40 per cent underfunded. This deficiency beckons a question over whether hotel FF&E reserve accounting serves any meaningful role.