What does the business interruption insurance for a Sonesta Select Sonesta Essential hotel cover?

According to Sonesta Select Sonesta Essential's 2025 Franchise Disclosure Document, franchisees are required to maintain business interruption insurance. This insurance must cover at least 12 months of lost profits and necessary continuing expenses. The purpose of this coverage is to protect the franchisee from financial losses resulting from interruptions caused by a covered event.

In practical terms, this means that if a Sonesta Select Sonesta Essential hotel experiences an event covered by the insurance policy, such as a fire or natural disaster, the insurance should cover the profits the hotel would have made during the interruption, as well as the expenses that continue even while the hotel is not fully operational. This could include things like rent, utilities, and salaries for essential staff.

The requirement to maintain business interruption insurance is a common practice in franchising, particularly in the hospitality industry, as it helps to mitigate the financial risks associated with unexpected events that can disrupt operations. Franchisees should carefully review the terms of their insurance policies to understand what events are covered and what limitations may apply. It is also important to ensure that the coverage amount is sufficient to adequately protect the business in the event of a prolonged interruption.