Shortly after the calendar turned to 2023, Sonesta International Hotels Corporation uncorked a new brand campaign that perfectly encapsulates the brand. Dubbed “Famous Yet Nameless,” it marks Sonesta’s first major effort to build up recognition on a name that has been around for years but is not necessarily as omnipresent as a Marriott or Hilton. The campaign features Judy Greer, who, like the Sonesta name, is someone you probably have seen on TV (“Arrested Development”, Xfinity commercials), but not likely know her name. For Sonesta, it’s the perfect comparison, but for every new hotel it opens, or brand it launches, the correlation becomes more tenuous.
The growth of Sonesta has been nothing short of meteoric, with a huge assist from its parent company, Service Properties Trust, a real estate investment trust, which over the last couple of years has been delivering hotels into the Sonesta portfolio that, prior, had brandished flags from lodging companies from Marriott International to InterContinental Hotels Group.
It all comes on the heels of Sonesta now offering full franchising services in the U.S., which puts it in direct competition with owners and developers of all the major hotel brands.
The latest dispatch from Sonesta is the launch of a new brand alongside the reintroduction of another.
A rendering of the Sonesta Essential exterior.
In one move, Sonesta announced the expansion of its global development strategy to include The James brand as part of the Sonesta Franchise portfolio in the U.S. and Latin America. Sonesta’s rights to The James brand came with the acquisition of the Denihan portfolio in New York last year.
Currently, The James Nomad, New York is the prototype for future properties under its license agreement. Sonesta will also reflag two Royal Sonesta properties it manages to The James brand — The Royal Sonesta Chicago River North and The Royal Sonesta Washington, D.C. Dupont Circle.
In another move, Sonesta announced the debut of Sonesta Essential, a new upper-midscale, select-service segment brand, now also available to franchise in the U.S.
The first two Sonesta Essential hotels will be Sonesta Essential Vacaville, Calif., set to open in late spring 2023, and Sonesta Essential Chattanooga, Tenn, which will be a conversion from a Sonesta Select in the fall of 2023.
And all this expansion comes after Sonesta’s first full year after its acquisition of RLH Corporation in March 2021.
It’s a lot of activity and it keeps Keith Pierce, EVP and president of franchise & development at Sonesta, on his toes and on his game. In 2022 alone, Sonesta opened 55 new franchises. And in a testament to Sonesta’s prowess, when Service Properties Trust, which trades under the name SVC, sold 68 hotels last year, the vast majority remained in the Sonesta brand family.
“We ended up having a remarkable, call it, first full year,” Pierce said, pointing to the sale and retention of the SVC portfolio, setting up franchising also in Latin America and building out its development, operations and marketing teams. (Development is led by veteran hotelier Brian Quinn.)
The Sonesta Select Atlanta Midtown Georgia Tech.
FILLING A NEED
For Sonesta, setting up new brands is a study in owner needs. “We learned through the course of 2022 that there was a fair amount of interest from existing owners and operators with other flags that wanted to come into the Sonesta family,” Pierce said. “And we didn’t have a brand for them.” Pierce alluded to Hilton’s Hampton brand and IHG’s Holiday Inn Express as examples. These brands often achieve market saturation and owners seek out alternative flag options for their assets, which is where brands like Sonesta Essential can fill that void.
In the case of Essential, the origin of the brand came about in large part because Sonesta needed a go-to brand underneath Sonesta Select, an upscale, focused-service brand launched in late 2020. “We were getting this high level of interest for what I’ll call ‘non-conforming’ properties that didn’t work to as a Select,” Pierce said. Sonesta Select hotels require a liquor license and food on-premise, unlike Essential. “So we didn’t do a lot of those deals because we didn’t want to change the Select standards. That’s what drove the creation of Essential.”
A premier studio city-view room at The Royal Sonesta Washington, D.C. Dupont Circle. The hotel is slated to rebrand as a James property.
Like the case of Essential, Sonesta needed a brand to complement its high-end Royal Sonesta brand. Specifically, something in the popular lifestyle segment. It has that now in The James. “It is a perfect fit for us,” Pierce said. “Because above Royal Sonesta, we really didn’t have a lifestyle brand.” The Denihan acquisition changed that and Sonesta will look for franchise opportunities.
Meanwhile, Sonesta is still trying to figure out the best way to integrate its acquisition of RLH Corporation. For example, prior ownership bifurcated Red Lion Suites and Red Lion Hotels. “There is an argument to be made that they should be consolidated back together as one,” Pierce said of the now 70 hotels.
“We are looking at what we call rationalizing the brand portfolio. And how do we represent it — not only to the development community but also to the consumer,” Pierce continued.
Consider, also, loyalty. RLH still has its Hello Rewards program, while Sonesta has Travel Pass, which is very much a traditional, currency-based program. “At some point in time, does it make sense to only have one loyalty program throughout the portfolio brands?” Pierce asked. “We are going through that evaluation process now.”