Sonesta International Hotels, the eighth-largest hotel group in the U.S. by number of units, is orchestrating the sale of 114 properties in a pivot to a franchise model.

CEO John Murray doesn’t anticipate problems selling the hotels despite recent economic uncertainty for two reasons: Buyers’ inquiries have been plentiful and reservation demand is “still strong.”

Skift asked Murray if Sonesta had seen any weakness in demand, given that U.S. consumer confidence dropped sharply in February.

“Booking signals are mixed, but Sonesta hasn’t changed its internal outlook or plans despite uncertainty in the market,” Murray said. “Things are still strong.”

Sonesta continues to see strength in its East Coast gateway markets, such as New York City.

The booking pace in March “isn’t reversing.” Sonesta remains confident with strong and growing group bookings, a continued good pace in business transient bookings, and steady or growing leisure demand.

Sonesta is privately held and doesn’t report quarterly earnings. But Murray expected “improvement” in year-over-year metrics in the quarter. That’s despite the Easter holiday moving to the second quarter, which will make year-over-year comparisons more challenging.

“We are watching government travel spending closely, and thus far, government spending is down, especially in markets with lots of government and military travel spending,” Murray said.

Yet there are also upsides to watch for.

“A silver lining to tariff wars may be a return of strong leisure travel by Americans within the U.S. to avoid foreign markets with growing anti-American sentiment,” Murray said.

International inbound travel hasn’t had a tariff pullback yet, either.

“The limited international travel reductions in 2025 that we have seen seem to reflect the strong U.S. dollar more than politics or tariffs,” Murray said.

Pivot to Franchising

Murray is betting big on franchising (as opposed to ownership or management) to speed up Sonesta’s transformation from property owner to a domestic hotel group.

Murray discussed in an interview how Service Properties Trust (SVC), a 34% shareholder in Sonesta, plans to sell 114 hotels. SVC will cash out on the real estate, while Sonesta will gain recurring revenue from franchising fees.

Unlike previous divestments of underperforming properties, Murray noted that these hotels are “performing pretty well,” potentially attracting larger franchisees who operate properties under competing brands.

“When you announce for the third year in a row that you’re selling a portfolio of hotels, and nearly every one of your existing franchisees calls and says, ‘How can I get some of these?’ — that’s a good indication of how your brands are stacking up,” Murray said.

Sonesta currently has approximately 1,100 hotels, with about 900 franchised. Following the SVC sales, franchised properties will exceed 1,000 by June.

Sonesta’s 2025 Goals

The consolidation of brands, websites, and loyalty programs marked a significant milestone for Sonesta in 2024, helping the company operate as “one well-oiled machine,” the CEO said.

“The one consistent thing about Sonesta over the last few years has been change,” Murray said, describing the company’s evolution since merging with Red Lion Hotels in 2021.

Murray highlighted key initiatives for this year, including:

• the rollout of “Sonesta Connect,” a new customer relationship management platform

• spending $250 million on hotel renovations

• continue to invest in the company’s Travel Pass loyalty program, which relaunched last year on a new platform and currently has over 7 million members

Tech Catch-Up

“We were pretty far behind some of our competitors when we came into the second half of 2024 as maybe the only brand company that didn’t really have a CRM [customer relationship management] platform,” Murray acknowledged.

“We couldn’t easily market to guests,” he said. “Many [owners and franchisees] were using online booking engines, which cost us money when we should have been marketing directly.”

That problem will ease this year after the full rollout of customer relationship management software, which will unify guest data across properties.

Sonesta is also hiring staff to help inform operators about how best to use the company’s tools for rate-setting and distribution.

“We’re adding more revenue managers and more franchise services associates to help them understand how our systems work and learn all the different levers they can pull to generate business for their hotels,” Murray said.

Renovation Push

While building the franchise business, Sonesta isn’t neglecting its managed properties. The company plans to invest approximately $250 million in renovations this year in Boston, Nashville, Hilton Head, Charlotte, Miami, Washington D.C., and New Orleans.

This month, it announced a $42 million renovation of its Los Angeles Airport property, with new guest rooms, a modernized lobby, revamped event spaces, and four new restaurants.

According to Murray, all of these renovations are designed to “bring the quality level up across the portfolio.”

He said Sonesta benefits from “strong capital sources,” including SVC and RMR Group, a family-controlled entity that manages several REITs. Murray said these relationships provided financial stability as the company pursued renovations and overall growth.

Murray said little about the prospects for Knights Inn, a brand owned by Sonesta International. Sonesta hasn’t included Knights Inn in its loyalty program because its owners weren’t looking for the added expense of participating in a loyalty program when few people redeem stays at budget properties.

“We’re not currently marketing it for sale,” Murray said.

Modest Growth

Murray predicted Sonesta would add approximately 90 hotels organically (not through acquisition) this year — representing 4% to 5% net unit growth year-over-year.

After accounting for property sales, portfolio growth last year was closer to 1%.

“It was 2% [net unit growth year-over-year] including the asset sales and 1% not including,” Murray said.

“We’re still right-sizing our portfolio,” he said — meaning letting underperforming assets go.

Underdog Advantage?

Sonesta has adopted what Murray called a “fast, friendly, and flexible” approach to attract and retain franchisees in a market dominated by giants like Marriott and Hilton.

Murray claimed Sonesta’s lean organizational structure lets it move more quickly than larger organizations. The pace allows weekly — sometimes twice-weekly — meetings to review potential deals, a pace that larger competitors might struggle to match.

“We get back to our prospective franchisees very quickly when they have questions,” he explained. “We go through our process of underwriting transactions quickly.”

The “friendly” part? Murray pointed to Sonesta’s dual role as both franchisor and operator.

“Whatever brand standards we come up with, we have to invest in ourselves,” he noted, suggesting this creates a business-minded approach to brand requirements.

As for flexibility, Murray contrasted Sonesta’s approach with larger hotel groups, which might insist on immediate compliance with new brand standards or costly rules for a hotel’s decor and operations.

“We don’t necessarily say you need to convert your tubs to showers right now,” he said. “We can be flexible, depending on what your market is.”

Sonesta is backing this operator-friendly approach with investment in support staff.

The giant hotel groups often claim their scale advantages translate into volume discounts for hotel owners.

Murray said Sonesta is also lowering costs for its hotel owners as it grows.

“As we’ve negotiated better rates with the OTAs [referring to online travel agency commissions], we’ve lowered rates for our franchisees,” he said. “As we’ve improved our purchasing power for FFE [furniture and fixtures], we’ve lowered costs there and returned more rebates. As we’ve grown our marketing fund, we’ve adjusted some of the fees there.“

The ‘People’ Factor

Murray highlighted Sonesta’s corporate culture as another differentiator from competitors.

This people-first philosophy was tested during a recent tragedy in New Orleans next to one of Sonesta’s hotels in New Orleans. On New Year’s Day, someone drove a truck into a crowd of people on Bourbon Street, killing 14 and injuring 57, according to the FBI.

Afterward, the CEO visited the property to thank staff members who assisted evacuated guests at his hotel and a neighboring hotel whose staff also helped. Murray wanted to reflect the company’s “culture of caring.”

“Sometimes you throw out lines like ‘We’re people people,’ and it starts to sound cliché,” Murray said, noting that his team really does care.

“The important thing isn’t whether we’re the fourth-, eighth-, or tenth-largest [hotel group in the U.S.],” Murray said. “The important thing is that we have franchisees who want to grow their franchise relationships with us, vendors who want deeper relationships with us, guests who want to stay with us more often, and employees who want to work here.”

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