Executives at Sonesta International Hotels Corp. said the company’s portfolio is much more robust and full with the launch of its 17th brand, Sonesta Essential, but there’s still room to grow and transform.
Billed as an upper-midscale, select-service brand, Sonesta Essential is the result of owner and franchisee feedback from the launch of another brand, the upscale Sonesta Select, Chief Development Officer Brian Quinn said.
“Initially when we launched Sonesta Select for franchising, we got a lot of what would’ve traditionally been limited-service or upper-midscale assets that had interest in stretching for the Sonesta name to move upmarket a bit but were sensitive to the food-and-beverage dynamic that came along with Sonesta Select,” he said.
“We just ran into those conversations over and over again, so we were like, ‘You know what? There’s an opportunity here, and the market is telling us we need something that sits in this space.'”
A news release announcing the Sonesta Essential brand describes it as “a comfortable, clean place to stay, with a warm and friendly guest experience and foundational brand standards, including 24-hour reception, a fitness center, complimentary hot breakfast, a premium all-day coffee experience, high-speed complimentary Wi-Fi and elevated bedding with a unique sleep program.”
The first two Sonesta Essential hotels — a franchised property in Vacaville, California; and a brand-managed hotel in Chattanooga, Tennessee — are slated to open this year.
Sonesta’s broad growth over the past three years was sparked by the conversion of several properties owned by Service Properties Trust — which jointly owns the Sonesta brands along with parent-company The RMR Group — and then accelerated by the late-2020 acquisition of RLH Corp. and its family of brands.
Sonesta is now the eighth largest hotel branding company in the U.S., based on data from CoStar’s hospitality analytics firm STR.
Quinn said the relationships with Service Properties and The RMR Group will continue to be a strength for Sonesta.
“There’s just all kinds of talent around finance and real estate and different expertise in different verticals,” he said. “That is an incredible fuel for Sonesta.”
Quinn said the addition of Sonesta Essential fills the company’s biggest remaining white space in terms of brand segmentation, but future acquisitions and brand launches to bolster organic growth are not off the table.
“I think we’re going to continue to always have both muscles at the ready,” he said.
At the same time, Quinn said he takes pride in the fact that Sonesta’s portfolio doesn’t have unnecessary and obvious overlap between its brands that leads to owners competing within the same brand family.
“What was exciting about Sonesta’s acquisition of [RLH Corp.] was that when you stacked up the brands, there was not a lot of crossover,” he said. “And when you talk about all the consolidation in our industry, you can’t always say that.”
He added that in an era where brands rarely own hotels, Sonesta’s close relationship with it’s biggest ownership group helps the company remain particularly owner-centric and focused on keeping costs down.
Sonesta International has announced the launch of the company’s 17th brand, the upper-midscale Sonesta Essential. Above is a rendering of a Sonesta Essential exterior. (Sonesta International)
“A lot of competitors have gone asset-light, so they’ve become a bit disassociated with the plight of the owners,” he said. “But anytime we come up with something, we have to take this essential value proposition and sell it to our capital partner.”
Sonesta Essential is designed to be owner-friendly, offering “easier new-builds and conversations with modest brand standards, limited food-and-beverage requirements and simplified conversion processes,” according to the news release.
Quinn said the target size for properties will be between 80 and 120 rooms, but those aren’t hard limits on either side.
He said if all goes to plan, Sonesta Essential should turn into one of the portfolio’s primary growth drivers.
“We know that consumers like this space and it traditionally has been one of the most successful segments when you think about the competitors in the space,” he said. “It’s about delivering simplicity for both new-build and conversion targets with limited [food and beverage] that both the development community likes and the guests like, but with the Sonesta overlay. We want to punch above our weight as it relates to potential performance.”
He said the company is poised for a new wave of franchising growth with Sonesta Select and Sonesta Essential now in place.
“I think it’s going to be a dogfight between Sonesta Select and Essential on who grows the quickest,” Quinn said. “That’ll be fun to watch.”
Sonesta also recently announced plans to offer The James as a lifestyle option for franchisees, spinning off the existing James property in New York and rebranding two Royal Sonesta properties — The Royal Sonesta Chicago River North and The Royal Sonesta Washington DC Dupont Circle.
