To whom are the construction and improvement costs paid for a Sonesta Select Sonesta Essential hotel?
Sonesta_Select_Sonesta_Essential Franchise · 2025 FDDAnswer from 2025 FDD Document
SELECT (Note 1) – 125 ROOMS**
| Type Of Expenditure | Amount Conversion | New Construction | Method of Payment | When Due | To Whom Payment Is To Be Made |
|---|---|---|---|---|---|
| Initial Fee (Note 2) | $65,000 | $65,000 | Lump sum | Upon your signing of the Franchise Agreement | Us |
| Onboarding | $5,000 | $5,000 | Lump sum | As arranged | Us |
| Administration Fee | |||||
| (Note 3) | |||||
| YOUR ESTIMATED INITIAL INVES |
Source: Item 7 — ESTIMATED INITIAL INVESTMENT SONESTA SELECT (Note 1) – 125 ROOMS (FDD pages 36–46)
What This Means (2025 FDD)
According to Sonesta Select Sonesta Essential's 2025 Franchise Disclosure Document, franchisees are responsible for construction and improvement costs, which are paid to suppliers. For a conversion, these costs are estimated to range from $517,500 to $2,277,000, while new construction costs range from $9,315,000 to $14,283,000. These costs can vary significantly based on factors such as site preparation, the size and configuration of the site, market conditions, and the cost of labor and materials. The estimate includes professional fees, such as those for a third-party architect.
These figures represent a substantial investment for franchisees. The wide range in estimates highlights the importance of conducting thorough due diligence and obtaining detailed quotes from contractors and suppliers. Franchisees should carefully evaluate their specific site conditions and project requirements to develop an accurate budget. For conversions, the lower end of the estimate assumes minimal construction costs due to the existing building's condition.
In addition to construction and improvement costs, franchisees should also budget for contingencies to cover unanticipated expenses. These costs are paid to contractors and suppliers. For conversions, the contingency costs range from $45,000 to $100,000, while for new construction, they range from $360,000 to $504,000. These contingency funds can help mitigate the risk of cost overruns and ensure that the project stays on track.
Overall, the construction and improvement phase represents a significant financial undertaking for Sonesta Select Sonesta Essential franchisees. By carefully planning and budgeting for these costs, franchisees can increase their chances of a successful hotel launch. It is important to note that these costs are paid to suppliers and contractors, not directly to Sonesta Select Sonesta Essential.