Investor Day: May 23, 2022 Royal Sonesta Chicago Downtown
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Investor Day: May 23, 2022
Royal Sonesta Chicago
Downtown
Royal Sonesta San Juan
The information, data, opinions, estimates, forecasts or predictions
regarding Sonesta or its performance made in this presentation do
not represent information, data, opinions, estimates, forecasts or
predictions of SVC or its management. SVC does not by its reference
imply its endorsement of or concurrence with any information,
conclusions or predictions provided by Sonesta.
2
Company Overview John Murray
Chief Executive Officer
Brand, Commercial, & Vera Manoukian
Operations Chief Operating Officer
Operating Results Steve Miano
Chief Financial Officer
Franchise & Keith Pierce
Development Executive Vice President
Franchise & Development
Closing Remarks John Murray
Chief Executive Offer
3
COMPANY
OVERVIEW
Sonesta Resort Hilton Head Island
4
INTRODUCTION TO SONESTA
• 2012: SVC acquires two Sonesta Hotels, Portnoy family acquires Sonesta.
• 2012-2019: SVC grows Sonesta relationship from 2 hotels to 56 hotels under Royal Sonesta, Sonesta and
Sonesta ES Suites brands.
• February, 2020: SVC and Sonesta agree on restructuring. SVC takes 34% ownership in exchange for
Amended Management Agreement and sale of ES Suites.
• March, 2020: Pandemic hits and sale of ES Suites put on hold.
• Q4 2020-Q3 2021: SVC transfers 205 hotels to Sonesta brands including a new mid-priced extended stay
brand Sonesta Simply Suites and a new upscale focus-service brand Sonesta Select.
• March, 2021: Sonesta purchases RLHC, begins franchising four Sonesta brands in October, 2021.
• April 2022: Sonesta acquires four strategic hotels and introduces four separate brands in New York City.
Acquisition includes The James lifestyle brand.
5
OPERATING PERFORMANCE COMMENTARY
• Sonesta's 2021 hotel operating performance was held back by necessary foundational work on its teams, brands,
systems and processes, with a focus on long term value creation. For instance, we negotiated OTA savings that will
result in estimated savings of $10.7 million in 2022 benefitting hotel margins and SABRE cost savings of $2.5 million
benefit Sonesta.
• Our hotels are showing improved performance versus their 2019 performance and their chain scales and competitive
sets, partly as industry conditions improve but also reflecting the foundational work.
• Our Sonesta ES and Sonesta Simply Suites hotels are performing at or above their chain scale and specific competitive
sets.
• In addition, we believe most one-time foundational costs are behind us now and that by year end hotel level EBITDA
run rate will be approximately 20%. As business travel returns and our system improvements become fully
operational, these margins will move closer to 25%.
• We have several initiatives in process to shift business from OTA to group, business transient and contract and we see
these working. Q1 2022 business through the OTA segment is down 9% compared to 2021.
• Sonesta continues to be challenged with respect to the Sonesta Select brand; we have several initiatives in place to
improve operating revenues and margins which we will discuss but the return of business travel is critically important.
• We may not get all of our hotels back to 2019 RevPAR or EBITDA levels in 2022 or 2023 but we are confident that the
combined hotel operating results plus 34% of Sonesta's results, including from its 11 owned hotels and nearly 900
franchised hotels will more than offset any near-term shortfall.
6
INTRODUCTION TO SONESTA
SONESTA TODAY
1,400% 243 884 16
Room Managed Franchised Distinct
Growth Properties Properties Brands
SONESTA
ITERNATIONAL
100,000 7 3 10,000
Guest Countries Continents Associates
Rooms
7
As of May 17, 2022
BLENDING FIVE DISTINCT CULTURES INTO ONE SONESTA
Since the transition in 2021, we have strengthened and stabilized our team by focusing on and
creating opportunities for leaders that are entrepreneurial, accountable, and excited about the
change and future of Sonesta.
2020 2022
+714%
1,400 10,000
The Allegro Royal Sonesta Chicago 8
LABOR MANAGEMENT
Productivity | Wage Rates | Talent
Managing Our Biggest Expense
Item in a Tight Labor Market
• Market wage adjustments
• Job referral and hiring bonuses
• Program to recruit Sonesta "alumni"
• Sonesta nationwide Recruiting Blitz 2Q
2022
• Expedited job offers
• Daily Pay ("gig") program
• Sonesta's employee engagement scores
continue to improve and rank in the top
7% of all companies, it’s a great place to
work.
9
PLATFORM CREATED FOR LONG TERM VALUE
WHY SONESTA
EXPERIENCED AGILE, FAST-ACTING TEAM MAXIMUM FRANCHISEE
OWNER/OPERATOR Our Customer Advisory Board tells FLEXIBILITY
As an experienced owner operator, us that, unlike our competitors, we With a new group of brands to
Sonesta has “skin in the game” and is have the advantage of acting quickly franchise and an ownership stake, we
committed to long term value. and being agile in our actions and provide maximum flexibility and
thoughtful in our development. alignment to our franchisee partners.
EXPANSIVE MARKET SEGMENTATION EXPERIENCED
INNOVATIVE, FRESH THINKING RESPECTED LEADERSHIP
Our new leadership team has taken Our hotels span market segments from
upper upscale to economy, resort to Sonesta’s leadership is focused on long
a fresh, new, innovative approach to term value creation and has a track
flexible meeting space, hotels brand urban and suburban locations with
various lengths of stay, offering guests record of successful leadership of
standards, and loyalty flexible growth focused hospitality
program design. what they need and want for as long as
they want it. organizations.
OUR PEOPLE
Sonesta Posadas del Inca Sa cred Valley - Yucay 10TRANSFORMATIONAL LEADERSHIP
John Murray Vera Manoukian Keith Pierce Stephen Miano, CPA Brad Maxwell Shawn Cryan
President and CEO Chief Operating Officer EVP & President, Chief Financial Officer General Counsel SVP – Corporate Strategy
Franchise & Development
John Murray is the President Vera Manoukian has over With over 35 years of global Mr. Miano joined Sonesta as Brad Maxwell oversees Shawn Cryan has two
& CEO of Sonesta three decades of hotel hospitality industry CFO in 2016 and is a 30-year Sonesta’s day-to-day legal decades of commercial real-
International Hotels industry knowledge, skills, experience, Mr. Pierce joined veteran of the hospitality affairs and provides strategic estate management
Corporation. Murray is also an and experience. She joined Sonesta as EVP in 2021 industry, with a history of direction and advice to the experience and oversees
Executive Vice President of Sonesta as the Chief following the acquisition of managing finance company’s owners, directors, corporate strategy. He is
The RMR Group and is a Operating Officer in Red Lion Hotels. Prior to operations in the Americas, and executive leadership. In responsible for leading all
member of the RMR November 2020. Prior to joining Sonesta, he worked Middle East, Asia, and his role, Brad is responsible aspects of hotel acquisitions
Executive Operating Sonesta, she served as the for Passionality Group as Europe. He previously for managing the company’s and development for
Committee. In addition, he Global Head of the Hilton President and Managing worked in senior finance litigation, contracting, Sonesta. Prior to joining
serves as a Managing Trustee Brand at Hilton Partner where he led leadership roles franchising, and other legal Sonesta, he held various
of Service Properties Trust Worldwide Holdings, Inc. strategic investments. Prior at Rosewood, Four Seasons matters. Prior to joining senior-level roles at The RMR
(Nasdaq: SVC) and Industrial where she led the strategic to that, he worked in a and most recently Sonesta in 2015, he served as Group and its affiliate Travel
Logistics Properties Trust direction, vision, and growth variety of leadership roles at Commune Hotels + Resorts Assistant General Counsel Centers of America. He
(Nasdaq: ILPT). Murray for nearly 600 properties in Wyndham over 27 years, as their Chief Financial with Reit Management & began his career serving as
previously served as SVC’s 95 countries. Previously, she including EVP, Brand Officer, where he led Research LLC, now The RMR an Accountant and
President from 1996 to 2022 served as Senior Vice Operations overseeing more the company’s financial, Group. He began his legal Operations Analyst at
and its CEO from 2018 to 2022. President of Operations for than 6,000 franchised information technology, career in the Real Estate Windsor Capital Group, a
Starwood Hotels & Resorts properties in the Americas. legal and administration, Investments and hotel Owner/Operator.
Worldwide, Inc. and risk management Transactions Group at Ropes
disciplines. & Gray LLP in Boston.
Sonesta Suites Scottsdale Ga iney Ra nch 11INTRODUCTION TO SONESTA
H O T E L M A N A G E M E NT C O M P A N Y
H O T E L F R A N C HIS E C O M P A NY
Economy
12
Da ta Source: ST R US Census – Ma rch 2022 (includes 4 NYC a ssets a cquired i n April 2022)BRAND
WHO WE ARE
13
Royal Sonesta Portland DowntownTHECHANGING
THE CHANGING FACE
FACE OF OF A CHALLENGER
A CHALLENGER BRAND
BRAND
Spanning Market Segments
UPPER UPSCALE UPSCALE FOCUSED SERVICE EXTENDED STAY ECONOMY
8,818 ROOMS 12,438 ROOMS
5,616 ROOMS 13,616 ROOMS 450 ROOMS
8,040 ROOMS 29,176 ROOMS
158 ROOMS
337 ROOMS 5,724 ROOMS
143 ROOMS 1,015 ROOMS
2,767 ROOMS 1,011 ROOMS
1,198 ROOMS 12,365 ROOMS 14
Sonesta Resort Hilton Head Island 1 14BRAND POSITIONING: FIVE PHASES
1 2 3 4 5
Discovery, Training Internal and
Research & Brand Material External
Positioning
Target Guest Standards and Rollout:
Platform
Development Bringing the
brands to life
Research, background, Develop Brand Develop operational, Develop brand books, Communication Plan
history, competitor best positioning including AD&C, and Brand video and brand tool internal and external
practices the Promise, Pillars Defining standards kit and style guides stakeholders
Define Target Guest and Vision statements
Create guest personas
& identify behaviors
Current Phase
Sonesta Select Ma hwah 15TARGET GUESTS
THE THE
ON-THE-MOVER WRANGLER
(Business Transient) (Weekend)
Whether traveling with colleagues or on his own, his work takes Priority number one is the family, but she needs a place to put
him far and wide. He’s got business to take care of and wants a her feet up when the kids finally pass out.
homelike space that fits his lifestyle while he does.
USE CASE 1: USE CASE 2: USE CASE 1: USE CASE 2:
Visiting a client’s office and Working on a short film One of her kids has a The annual family reunion is
all that matters is staying project with colleagues and tournament and the out-of-town this year and
someplace comfortable and is happy to use the meeting spacious suites gives she’s responsible for finding
modern as he prepares for room that perfectly fits his everyone the room to a place that works for
the meeting. 30-person team. celebrate. everyone.
Sonesta Select Boston Stoughton 16A SPACE TO BE YOUR BEST
When our guests spend time with us, they'll see how the radiant energy of our crafted spaces and locally rooted
team members shine through to fit their lifestyles. From a great morning cappuccino, to a well-earned evening cocktail,
we have our guests covered so they can spread their wings to work, play, and live each day as their best selves.
Sonesta Select Newport Middletown Sonesta Select Chicago Elgin West Dundee Sonesta Select Laguna Hills
BRAND PROMISE BRAND VISION BRAND PILLARS
We will deliver amazing hospitality To create a lasting sense of UPLIFTING ADAPTABLE CONNECTED
making it easy to be your best community and belonging that
warm hearts and lifts spirits Warming hearts and Delivering spaces Embracing the
bringing guests back each time. lifting spirits that let you be your neighborhoods, we
best call home
Sonesta Select La s Vegas Summerlin 17STAY SIMPLY.
Extended Stay Hotels
With comfortable suites, kitchens equipped with everything to make a meal, dedicated workspace, and
apartment-like amenities, Sonesta Simply Suites offers guests everything they need and nothing they don’t.
No-fuss, no games, no costly unwanted extras. Sonesta Simply Suites is simplicity redefined.
Sonesta Simply Suites Boston Braintree Sonesta Simply Suites Irvine East Foothill Sonesta Simply Suites Las Vegas Convention Center
BRAND PROMISE BRAND PILLARS TARGET GUEST(S)
COMMUNITY THE BUSY BODY
We'll go the extra mile to ensure that you Making real connections Primary Motivator: Dependable
never have to and effortlessly make travel
DEPENDABLE THE MINIMALIST
uncomplicated, letting you breathe easier Showing up when it counts Primary Motivator: Comfortable
COMFORTABLE
Setting the tone
18
Sonesta Simply Suites ClearwaterSURPRISINGLY DIFFERENT
Upscale Extended Stay Hotels Extended
Sonesta ES Suites is a surprisingly different take on the extended stay hotel. Here you’ll find bright and
comfortable places to work, play and relax. Our friendly team members take great pride in doing all they can to
make your stay extra special. Stay with us, and you will know what makes Sonesta ES Suites amazing!
Sonesta ES Suites New Orleans Sonesta ES Suites Princeton Sonesta ES Suites Oklahoma City
BRAND PROMISE TARGET GUEST(S)
THE ON-THE-MOVER
We promise a welcoming homelike Primary Motivator: Adaptable
stay, engaging experiences connected to our
local communities, and an environment where THE WRANGLER
guests can comfortably relax, work and play Primary Motivator: Uplifting
Sonesta ES Suites Andover Boston 19UNIQUE DESTINATIONS, UNRIVALED EXPERIENCE
Full Service Upscale Hotels & Resorts
At Sonesta Hotels & Resorts, we believe in personalized experiences tailored to each guest.
Discover the neighborhoods of our city destinations or indulge in complete relaxation at our resorts.
Sonesta Silicon Valley Sonesta Fort Lauderdale Beach Sonesta Philadelphia Rittenhouse Square
20
Sonesta Suites Scottsdale Ga iney Ra nchLIGHTHEARTED LOCALIZED UPSCALE TRAVEL
Distinctive Upscale Hotels & Resorts
A collective of unique, memorable hotels in some of the world’s most exciting travel destinations through warm,
unscripted service and elevated wit, the Royal Sonesta is redefining the experience of upscale travel
The Chase Park Plaza Royal Sonesta Hotel St. Louis The Alexis Royal Sonesta Hotel Seattle Royal Sonesta Harbor Court Baltimore
BRAND PROMISE BRAND PILLARS
Unscripted warmth
To surprise guests with a
lighthearted, localized upscale Big day know-how
travel experience
Localized individuality
“Ha”—inspiring charm
Royal Sonesta Sa n Juan 21COMMERCIAL
ENGINE
FUELING THE BUSINESS
22
Sonesta Select ScottsdaleCOMMERCIAL ORGANIZATION = REVENUE GENERATION
Field & Global Sales
Digital
Organization
Marketing
Distribution Field & Corporate
Sales
Revenue
Management
23
23COMMERCIAL ENGINE $$$
Drive to Sonesta Channels Global Sales &
Loyalty Program Partnerships
Website | Mobile | CRO Top Line Delivery
Finalizing the design New World Class Sales Global Partnerships
of a “Best in Class” Sonesta.com Website Organization engaged with established
loyalty program Design with 100+ Fortune brands
companies
Robust Customer New Sonesta Mobile Preferred Groups &
Acquisition, Engagem Application Power of Shared Services Meetings
ent and Retention plan o Group Direct Center Organizations – Helms
Enterprise Boost Digital o Field Marketing Briscoe, Conference
Compelling recognitio Marketing programs o Revenue Direct, ALHI
n plan to target Management
multiple customer Sonesta Brand Call Center Transient Corporate
segments contribution through Sales Programming Engagement &
cross selling brands and Delivery Partnerships –
Leverage MasterCard upsell programs o Ignite Sonesta BTN/GBTA/IPW
Co-Brand Program Referral
o Enhanced o Business Pass Engagement with
Efficiencies Program Leisure & Luxury
o Cross-selling across o Sonesta INSTABook Partnerships
brands
o RLH + SON Customer Advisory Renegotiated
Consolidation Committee agreements with OTAs
24
DATA ANALYTICS | TECHNOLOGY & SYSTEMS PLATFORMS | STRATEGIC TOOLS
The Allegro Royal Sonesta ChicagoLOYALTY PROGRAM
Finalizing the design
of a “Best in Class”
loyalty program
Robust Customer
Acquisition, Engagem
ent and
Retention plan
Design a recognition
plan to target multiple
customer segments
Leverage MasterCard
Co-Brand Program
LH + SON Consolidation
The Allegro Royal Sonesta Chicago 25COMMERCIAL
DRIVE ENGINE
TO SONESTA CHANNELS
New Sonesta.com Website
Design
New Sonesta Mobile
Application
Enterprise Boost Digital
Marketing programs
Sonesta Brand Call Center
o Enhanced Efficiencies
o Cross-selling across
brands
o Upselling
o RLH + SON Consolidation
Sonesta Na shville Airport 26COMMERCIAL
GLOBAL ENGINE
SALES & TOP-LINE DELIVERY
World Class Sales
Organization engaged with
100+ Fortune companies
Power of Shared Services
o Group Direct Center
o Field Marketing
o Revenue Management
Sales Programming Delivery
o Ignite Sonesta Referral
o Business Pass Program
o Sonesta INSTABook
Customer Advisory
Committee #SonestaMeetings
Sonesta Hotel Bogotá 27PARTNERSHIPS
Global Partnerships with
established brands
Preferred Groups &
Meetings Organizations –
Helms Briscoe,
Conference Direct, ALHI
Transient Corporate
Engagement &
Partnerships –
BTN/GBTA/IPW
Engagement with Leisure
& Luxury Partnerships
28
The Allegro Royal Sonesta ChicagoOPERATIONS
&
INNOVATION
29
The Yorkville Royal Sonesta Hotel TorontoA FIRST-CLASS CORPORATE AND REGIONAL OPERATIONS TEAM
THAT IS BUILT TO SUPPORT THE 1400% GROWTH AND FUTURE
KNOWLEDGE OF FULL
SERVICE, SELECT SERVICE,
AND EXTENDED STAY
HOTELS
BIG BRAND INNOVATION
EXPERIENCE FOCUSED
SONESTA
INTERNATIONAL
PERFORMANCE-DRIVEN
ABILITY TO DRIVE LEADERSHIP
TOP AND BOTTOM LINE
The Alexis Royal Sonesta Seattle 30REIMAGINING THE BUSINESS
Reimagining the Business
Product and Service Innovation is Driven Through a Lean Management
Methodology to be Flexible, Nimble, and Agile
SERVICES PRODUCTS
• F&B programming for bars, restaurants, and • Housekeeping, Guest Service and Guest
in-room dining that meets guest Messaging solutions to boost productivity
expectations with a low cost/labor model and guest satisfaction
• Virtual Dining Concepts (ghost kitchens) to
better utilize F&B space and generate
revenue • Enterprise-wide Capex and Preventative
Maintenance solutions to better manage
• Self Service/Automated Grab & Go Markets hotel assets
to drive profit
• The future of Meetings & Events. Introducing
• Housekeeping Reimagined – Cost effective The WorkSuite
solutions for the post-Covid travelers
• Room upgrade incentive programs to drive
top line revenue
31A MEETINGS DESTINATION
More than a meeting, it's an experience.
Introducing The WorkSuite.
DESIGN - New Multi-Zone Environments designed to reflect
the lifestyle and expectations of today's modern professionals;
creating flexible, agile rooms that can quickly be adapted to
varied meeting styles.
RESOURCES - From wireless accessories and digital
collaboration tools; essentials to take your ideas from the
ephemeral to the concrete.
TECHNOLOGY – Designing a seamless meetings experience
powered by a robust set of enterprise-grade technology
partnerships; intuitive, user-friendly on-site tech and hybrid
solutions.
FOOD & BEVERAGE - Simplified all inclusive F&B packages
for simple meetings. Elevated, well-balanced offerings curated
for special events, paired with a renewed focus on wellness.
THE EXPERIENCE - Wellness-inspired tangible and visual
elements that tickle the brain and spark conversation; from
puzzles and brainteasers to Power Up experiences.
EASE OF BOOKING - Seamless, real-time booking solutions
and tools to simplify the meeting planning process.
32OPERATING
RESULTS
Royal Sonesta Portland Downtown
Royal Sonesta Portland Downtown
Sonesta Select Camarillo
Sonesta Select Camarillo 33OPERATING RESULTS 2021 Sonesta Hotel Performance Recap
$975M $47.6M
+5%
Gross EBITDA EBITDA Margin
Revenues
+157 bps +23% +27%
Margin U.S. RevPAR Growth in Loyalty
Program Members
Improvement vs. 2020 vs. 2020
vs. 2020
34SONESTA’S MONTHLY REVPAR TRENDS: 2021/2022 VS 2019
Sonesta has steadily decreased the RevPAR gap between from 2019 to 17% in 2022
Monthly RevPAR
$120 $114
$108 $109
$106 $104
$103 $103 $101
$100 $94
$91
17%
$82 Q2 Q3
$80 Q1 $85 46% 35% $73
34%(1) Q4
$75 $74 30%
$70
$60 $66 $64 $65
$61 $61
$58 $58
$40 $48 $49
$42
$31 $32
$20
$0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2019 2021 2022
(1) Q1 was impacted by uncertainty with OMICRON variant.
Jan = 41%, Feb = 35%, Mar = 31%. 35OPERATING RESULTS Sonesta Hotel Market Segmentation Comparison
2021 2022-04 YTD
5% 6%
9%
31% 13% 27%
33%
30%
22% 24%
Transient Corporate OTA Group Contract Transient Corporate OTA Group Contract
Decrease of OTA mix by shifting to Transient and Group
segments.
36
36SONESTA SUMMARY FINANCIAL DATA
OPERATING RESULTS 2021 KEY HIGHLIGHTS
Amounts in Millions USD
• Sonesta will benefit from 11 owned hotels
$122 $13.0 EBITDA contribution.
FEE EBITDA • Managed hotel revenue and franchisee
REVENUE growth over next two years will drive strong
margin flow-though.
• 20% Adjusted EBITDA margin goal for 2022.
• Improved operational efficiency and growth
absorption will lower operating expenses.
$19.7 13% • 30% Adjusted EBITDA margin goal by end of
ADJUSTED EBITDA 2023.
EBITDA MARGIN
37LODGING
DEVELOPMENT
-- Franchising
-- Acquisition
-- 3rd Party
Management
-- International Growth
38
Royal Sonesta
Royal Sonesta Houston
Portland Galleria
DowntownFRANCHISING: BUILDING A NEW PLATFORM
ACCELERATE
FRANCHISE GROWTH
RED LION HOTEL SONESTA + RLH • Dedicated Sonesta Development
ACQUISITION INTEGRATION Team In-place
• Completed Public to Private • Integrated and Consolidated Legal, • SVC Asset Sale –
Transaction on 3/17/21 Finance, IT & Human Resources Functions 48 Properties Sold Encumbered
with Long Term Sonesta
Franchise Agreements
• LATAM Franchise Development
Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022
TRANSITION LEADERSHIP & SONESTA BRANDS
STABILIZE BUSINESS FRANCHISE READINESS
• New Franchise Senior Leadership Team in • Formally Launched Sonesta Franchising in
Place North America – 10/2021
• Stabilized and Strengthened Franchising • Sonesta Brand Franchise Support in Place
Platform – Property Retention
39OUR FRANCHISE GUIDING PRINCIPLES
INCREASE REVENUE REDUCE COST SUPPORT SERVICES GROWTH
Increase property level revenue Leverage our scale with Work closely with existing Aggressively grow each of our
performance through improved supplier relationships to owners to support, service, twelve hotel brands through
brand contribution and reduce property level and retain them as part of a restructured and revitalized
property direct revenue operating expenses our brand family Franchise Development
organization
40
40FRANCHISE PLATFORM DRIVING PERFORMANCE
RELATIONSHIPS ARE TRAINING REVENUE MULTI-CHANNEL
OUR GROWTH PROGRAMS GLOBAL SALES MANAGEMENT E-COMMERCE BRAND MARKETING
STRATEGY.
• Our team is uniquely
collaborative, flexible and
supportive.
• We approach franchising with a
solid understanding of what
challenges hotel owners and
operators face, as we are owners
and operators ourselves.
• We provide personalized support
to our owners, with focused brand
standards and flexible programs to PROPERTY CHANNEL LOYALTY MULTI-LINGUAL LOCAL
help you maximize operating SALES DISTRIBUTION CALL CENTERS MARKETING
performance.
41
41INDUSTRY EVENTS , TRADE PRESS AND ADVERTISING
Leading Trade Magazine Cover Stories Trade Magazine Ads
42
© 2022 Sonesta RL Hotels FranchisingSVC ASSET SALES
SALE HIGHLIGHTS:
• 68 Properties Listed with Brokers
• 70% Retained Long-Term (10-20 Yr.) Franchise Agreements
• 20 New Ownership Groups
• 20 Future Franchise Deals Committed
• 5.0% Royalty Fee (Stabilized)
• 3.5% Marketing Fee
• $3.7+m Initial Franchise Fees Collected
43POSITIVE NET FRANCHISE ROOM GROWTH
15000 +10% 90,000
85,707
RLH Acquired – 3/21 80,000
10000
Sonesta FDD Registered – 9/21 2,920
5000 67,638 58,756 70,000
6,292
57,120
2,235 60,000
1,461 2,195 1,390
0
53,454
(5,861) (5,300) 50,000
Key Count
Net Change
-5000
(11,979)
40,000
-10000 (20,304)
30,000
-15000
20,000
-20000 10,000
-25000 -
2018 2019 2020 2021 2022F
Adds (Sonesta) Adds (SVC Sales) Adds (RLH) Terms (RLH) RLH
44SONESTA ROOM AND PROPERTY PIPELINE CONTINUES TO GROW
Sonesta Room Pipeline Sonesta Property Pipeline
12,000 60
10,000 50 55
10,192
8,000 40
6,000 30 34
30
4,000 20
4,477
2,000 10
2,390
- 0
Pipeline (FDD/PIP) Franchise Agreement Open Pipeline (FDD/PIP) Franchise Agreement Open
Executed/Term Sheet Executed/Term Sheet
Notes:
1. Pipeline (FDD/PIP) – Franchise Disclosure Document and Product Improvement Plan has been requested & provided.
2. Year-to-date data as of 5/20/2022. 45RLH ROOM AND PROPERTY PIPELINE CONTINUES TO GROW
RLH Room Pipeline RLH Property Pipeline
3,500 60
3,000
3,125 50
52
2,500
40
2,000 2,263
30
1,500 30
20
1,000
500 10
527 9
- 0
Pipeline (FDD/PIP) Franchise Agreement Open Pipeline (FDD/PIP) Franchise Agreement Open
Executed/Term Sheet Executed/Term Sheet
Notes:
1. Pipeline (FDD/PIP) – Franchise Disclosure Document and Product Improvement Plan has been requested & provided.
2. Year-to-date data as of 5/20/2022. 46EXPANDING
INTO KEY
MARKETS
47
The Yorkville Royal Sonesta Hotel Toronto48 48
49 49
TARGETED STRATEGIC GROWTH MARKETS
Los Angeles Miami
50CAPITALIZE ON EXISTING PRESENCE IN THE CARIBBEAN & LATAM
• Accelerate Sonesta
growth with existing
Master Franchisee (GHL)
• Hire in-region Lodging
Developer to identify and
sell direct Franchise
Agreements as well as
Master Territory
Development deals in...
• Caribbean
• Central America
• Brazil
51BACK OF THE
HOUSE
Royal Sonesta Portland Downtown
Royal Sonesta Portland Downtown
Sonesta Select Camarillo
Sonesta Denver Downtown 52REPORTING AND ANALYTICS
Timely &
Best in Class
Accurate
Systems
Reporting
Repeatable Better
Secure Business
Processes Decisions
53INFORMATION SYSTEM RISK MITIGATION
Our security posture is positioned for scale
High percentage (10%) of non-telco technology cost is security related
Over 85% of our software applications are in the cloud under robust security protocols overseen by 100s of senior security staff
Top-tier security infrastructure from Crowdstrike, Zscaler, Proofpoint, Palo Alto Networks, IBM, Okta and Reliaquest
Our Security Scorecard Is Annual Threats Blocked from Web We Monitor and Triage Billions of Events
Stronger than Peers(1)
36 Billion Events Monitored
B 83 18.4 Billion 680 Alerts Raised
Web transactions filtered
534.4 Million 396 Tickets Escalated as Real
Threats
Policy violations prevented
D 69
Other major 51 High Risk Threats
American F 58 914,436
Hospitality Security threats blocked
Companies 0 Breaches
F 59
(1) From www.securityscorecard.io March 2022.
54SHARED SERVICES CENTER
SALES &
MARKETING SCALABILITY PROCESS
CONSISTENCY
REVENUE FINANCE AND
MANAGEMENT ACCOUNTING
WHAT CUSTOMER
WHY OPERATIONAL
FOCUSED EFFICIENCY
EQUITABLE SPECIALIZATION
COST MODEL / SME
HUMAN BUSINESS
RESOURCES SUPPORT
55SHARED SERVICES VALUE CREATION TIMELINE
Day 0 +6 Months +12 Months +18 Months +24 Months
Beyond 2023
2021 2022 Q1 2022 Q3 2023 Q1 2023 Q3
Transition Re-Design & Technology Automation and
SSC Launch Optimization
Processes Standardization Enhancement Outsourcing
Refine scope of
services delivered. Leverage technology
to improve efficiency
Standardize and align Gain efficiency and
Enhance employee and timely
Focus is on employee processes across all effectiveness through Drive organizational
training and information delivery.
hiring and initial brands to improve selected process value through high
development for
training. internal controls and automation and efficiency.
improved consistency Increase areas of
service consistency. outsourcing.
of performance. specialization for
improved efficiency.
56SVC
C L/ ORSMI N
RG
R eR
l aEtM
i oA
nRsh
KiSp s
Royal Sonesta Washington DC Dupont Circle 57A BRAND NEW COMPANY, THE EIGHTH LARGEST
• Converted 205 hotels to Sonesta brands, relaunched five Sonesta brands, brand standards, website and
mobile App.
• Acquired Red Lion Hotels adding approximately 900 hotels, 8 brands, platform for franchising Sonesta
brands in record time.
• Acquired four hotels in New York, adding almost 1,000 rooms with four Sonesta brands in Manhattan. Also
acquired The James lifestyle brand.
• Franchise pipeline aided by SVC sales; growth through acquisition and third party management on a
strategic basis in key markets - all add long term value.
• Preparing to re-imagine the Travel Pass program this summer, reward membership has grown 27%
in 2021 and we expect 50% growth in 2022.
• Sonesta is a whole new company, growing quickly and creating value for its shareholders.
58SONESTA FINAL TAKE-AWAYS
• Sonesta's hotels continue to improve, aided by steady extended stay performance and leisure-oriented hotels.
2022 RevPAR at leisure hotels exceeds 2019 levels.
• Business travel is showing signs of recovery. Group travel is picking up, especially small group and hybrid
meetings. We have seen a mix change reducing OTA.
• Sonesta continues to increase awareness and close the gap between its hotels and their comp sets and chain
scales. Its extended stay brands are at or above performance levels of their segments and comp sets. Renovations
over coming few years will aid in this improvement.
• Sonesta will continue to grow via franchising both Sonesta and RLH brands, including adding The James.
• We expect to see hotel RevPAR back at 2019 levels and EBITDA margin run rates at 20% by the end of
2022. Improving performance at Sonesta managed hotels and growth in its managed portfolio and higher margin
franchising, all lead to a more valuable Sonesta, of which SVC owns 34%.
59THANK YOU
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