What is the estimated range for insurance costs for a converted Sonesta Select Sonesta Essential hotel?
Sonesta_Select_Sonesta_Essential Franchise · 2025 FDDAnswer from 2025 FDD Document
or the location, and may exceed the estimates indicated.
- Note 23 You must procure and maintain, at your expense, insurance of the types and in the minimum amounts we specify, whether in the Brand Manual or otherwise in writing. This insurance must be with insurers having minimum ratings we specify, name as additional insureds the parties we specify, and carry the endorsements and notice requirements we specify, whether in the Brand Manual or otherwise in writing. Insurance premiums vary widely by reason of location,
size of hotel, number of employees, insurance carrier, your creditworthiness, market conditions, and type of coverage purchased and are difficult to estimate. The low end of the estimate for a conversion assumes you already have most of the specified minimum insurance. For Sonesta Select-branded hotels located in Florida, we estimate the high end of the estimate to be $71,900 for conversions and $236,700 for new constructions. For Sonesta Essential-branded hotels located in Florida, we estimate the high end of the estimate to be $34,750 for conversions and $136,450 for new c
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, insurance premiums can vary significantly based on several factors, including location, hotel size, number of employees, insurance carrier, creditworthiness, market conditions, and the type of coverage purchased. Therefore, providing a precise cost estimate is difficult. However, the FDD does provide some estimates for hotels located in Florida.
For a converted Sonesta Select-branded hotel in Florida, the high-end insurance estimate is $71,900, while for a new construction, it's $236,700. For a converted Sonesta Essential-branded hotel in Florida, the high-end estimate is $34,750, compared to $136,450 for new construction. These higher costs in Florida are attributed to local market conditions and expenses.
The FDD notes that the low-end estimate for a conversion assumes that the franchisee already has most of the minimum required insurance in place. This suggests that the actual initial cost for insurance could be lower if the franchisee has existing coverage that meets Sonesta Select Sonesta Essential's requirements. Prospective franchisees should carefully review the insurance requirements outlined in the Brand Manual or other written documentation to understand the specific types and minimum amounts of coverage needed.