Cover story: 2024 Person of the Year – Atypical Approach

For Sonesta International Hotels Corporation, 2024 has been a year of significant progress, ranging from robust distribution growth throughout its multi-brand portfolio to the debut of a unified loyalty program to encompass all its brands. The driving force behind the aforementioned areas of progress, as well as its overall atypical approach to franchising, has been John Murray, Sonesta’s president and CEO. 

Murray spent more than two decades with Services Properties Trust (SVC), previously Hospitality Properties Trust, including a stint as president and CEO of the lodging REIT before resigning in April 2022 to take the reins of Sonesta following the resignation of Carlos Flores. 

Murray—who remains on the board of trustees for SVC, which is a significant stakeholder in Sonesta—acknowledged that he felt he could have more of an impact on the share price of SVC when the “opportunity arose to move over to Sonesta” as CEO. 

“That was sort of the clincher for why I decided to make the move. … I thought if I could help make Sonesta more successful, I can make SVC shares more successful,” Murray noted. 

He summarized some of the more clearcut differences that came with the transition from SVC to Sonesta. 

“On the real estate side, the day-to-day was examining transactions and the analysis was very much about return on investment. It was very mathematical and not emotional. The hotel business, however, is a people business,” he said. 

While Sonesta has grown to become one of the larger franchise companies in the industry with nearly 1,100 hotels and 13 brands, the Newton, Massachusetts-based company—founded in 1937—has taken something of an atypical approach in a few key areas when compared to its franchise counterparts. For example, owning and managing roughly 200 of the assets in its portfolio, the company has adopted what it refers to as an “asset right” strategy as opposed to the more common asset-light approach.

“The big hotel franchisors don’t really have any skin in the game, and we do and our franchisees appreciate that,” said Murray. 

He further elaborated on that perspective. 

“Before we roll out brand standards or tell our business partners that they need to do something, we think about whether this is something we would do ourselves. Will it actually add value, or does it just justify a team of people in a marketing group? Our franchisees have appreciated it, and I think that’s resonated with them when they look at our competitors, which don’t really own properties,” Murray noted. 

Franchising Momentum

While franchise growth is clearly not the only means of expansion for Sonesta, it has significantly boosted distribution and momentum for the company since it began franchising in 2021. To that point, the company has built a substantial pipeline of product, which includes over 60 hotels.

Murray further noted that Sonesta Hotels plans to enter into long-term franchise agreements for 114 hotels that it currently manages after current owner SVC sells the properties, which is slated for 2025.

The CEO touted the company’s progress on the franchising front. 

“We’ve doubled the amount of new hotels we franchised in 2024 versus new franchises in 2023, so our growth is definitely on the upward track,” noted Murray, who added that the company is seeing “great interest from franchisees” in the mid-priced segments, in particular. 

Recently, one of the company’s newest brands, the MOD Collection by Sonesta, debuted its second property with the ACP Hotel Houston Westchase. The 120-room hotel marks the soft brand’s first location in the United States and second location in North America. The first property to debut under the MOD brand was Hotel 11, MOD Collection by Sonesta, located in Calgary, Alberta, Canada, which opened at the end of 2023.

The MOD Collection falls within the company’s Luxury & Lifestyle lineup, which also includes Royal Sonesta and its 19 properties, as well as The James Hotels and Classico, another soft brand.

Meanwhile, the company’s Premium lineup consists of Sonesta Hotels, Resorts & Cruises and its lineup of 56 hotels, while its Sonesta Select Hotels portfolio has some 43 properties. The Premium lineup also includes the Sonesta Essential Hotels brand, which the company launched in January 2023 and has already grown to over 20 properties. Longer-stay products round out the Premium portfolio with Sonesta ES Suites and Sonesta Simply Suites, which are comprised of 81 properties and 63 hotels, respectively.  

Finally, the company’s Value brands are made up of Red Lion Hotels, Inns & Suites by Sonesta; Signature Inn by Sonesta; Americas Best Value Inn by Sonesta, which includes some 466 properties; and Canadas Best Value Inn by Sonesta. 

Sonesta actually consolidated the aforementioned brand lineup following its 2021 acquisition of Red Lion Hotels Corp. As part of that process, Sonesta cut down its number of core brands from 19 to 13. That included combining Red Lion’s brands into one brand, Red Lion Hotels, Inns & Suites, as well as combining its cruise and resort operations into Sonesta Hotels, Resorts & Cruises.

Murray explained some of the benefits of its somewhat unique approach to brand extension. 

 “We’ve got a hotel brand that fits in each of the segments, but basically just one in each of the segments. There’s a number of franchise companies that have three, four, five, or more brands within any given segment, and I think that it’s confusing to guests and to owners,” he said. 

Murray continued, “I think a lot of the franchisees feel ‘disenfranchised’ by the fact that they jump through all the hoops to qualify for a certain flag, and then that company comes up with a new brand and builds something else next door.”

Relaunching TravelPass

Another key initiative during 2024 has been the relaunch of Sonesta TravelPass—which now includes nearly seven million members—as a unified loyalty program, which incorporates the former Red Lion Hello Rewards program, as well as a centralized booking site.

“We entered this year with two loyalty programs and two websites. It’s been monumental for us getting all of the hotels, including the Red Lion-branded properties, onto a common site and single Sonesta TravelPass Loyalty program. That was a big change, but it was well received by those guests, and it transitioned seamlessly,” he said. 

The company also implemented a new proprietary CRM platform called Sonesta Connect during the past year, which figures to further boost loyalty, according to Murray. 

He further touted the value of the program, as well as having access to additional guest information. 

“That’s been rolled out to all of our managed hotels, and it’s enabling us to do a much better job converting our guests who were not TravelPass members to the program and helping us with more targeted marketing,” he said.

Murray added, “You can bring the experiences to them that they’re most likely to be interested in, and that engenders more loyalty. The better your loyalty program, the more people who are booking direct and not through the OTAs, and so it’s just much more profitable to have that rewards program. So, we’ve seen loyalty grow significantly, and our pace of sign-ups is strong.” 

A Startup at Heart

Finally, when it comes to the culture of the company, Murray described a continued focus on “mission, vision, and values.” He also underscored the importance of a culture of caring, an attribute that’s been “refined over time” within Sonesta, according to Murray. 

“There’s also the culture of getting people to buy in to understand we’re an 85-year-old ‘startup.’ While the brand Sonesta has been around for ages, in its current incarnation with so many brands it really is a startup. We’re now putting some of the systems in place to support a company of this size,” he concluded. 

Embrace Daily Challenges 

Murray on the appeal of the hospitality business

As president/CEO of a mega-brand company, Sonesta’s John Murray is faced with plenty of challenges on a daily basis, but as he points out, that’s not unlike the business of running hotels. And for Murray, who characterizes himself as a “people person,” he wouldn’t have it any other way. 

Murray weighed in on what he likes most about the hospitality business.

“You know this may sound weird, but it’s the change or variety. Every day the challenge is a little bit different. You don’t know until you wake up what it’s going to be—whether you’re going to be dealing with the impact of a natural disaster like a hurricane or wild fires or if you’re going to be dealing with unusual City Council regulations in Los Angeles or New York,” he said.

Murray cited additional examples of hotel challenges such as personnel issues, technology, guest satisfaction, and renovations, to name a few. “You kind of have to be ready for everything and see what happens because the best-laid plans are usually over by 9 a.m.,” he added. 

Meanwhile, the CEO was asked about his overall outlook on the lodging industry, particularly in the wake of lots of political uncertainty and economic headwinds. 

“There are two groups of people, but I think they all have the same mindset at the end of the day, which is that travel is almost like a birthright or a necessity to maintain your sanity. So, there are those people who may have lesser means or more debt and they may tend to—in challenging times—dial down to lower brands and or do long weekends several different times instead of one- or two-week-long vacations. And then there are the people who are more wealthy and they’re going to travel regardless,” he said. 

Murray concluded, “All in all, travel is going to continue to be a mainstay; this industry isn’t going away. I think that there are ways we can make it a little bit more efficient with technology and artificial intelligence, but that personal interaction is always going to be important. The hotels where there’s camaraderie among the staff and where they work together and deliver for the guests are going to be very successful. Because it really is all about caring for your customer, and so I think that how you bring that to life varies by type of hotel, but at the end of the day that’s really what it’s all about, your guests.” 

SOURCE: Lodging Magazine