What do Sonesta Select Sonesta Essential's other long-term assets primarily consist of?

According to Sonesta Select Sonesta Essential's 2025 Franchise Disclosure Document, the company's other long-term assets primarily consist of key money arrangements and contract assets. Key money is paid when entering into long-term franchise agreements. Sonesta Select Sonesta Essential recognizes this key money as other long-term assets on its consolidated balance sheets. The company then amortizes the amount paid as a reduction of revenue over the term of the franchise agreements.

The portion of these costs that will be amortized over the following 12 months are classified as prepaid expenses and other current assets on Sonesta Select Sonesta Essential's consolidated balance sheets. This means that the key money is initially recorded as a long-term asset, and as it is used up over time, it is moved to a short-term asset category.

For a prospective franchisee, this means that a portion of their initial investment in a Sonesta Select Sonesta Essential franchise may be recorded as a long-term asset by the company. This accounting treatment affects how Sonesta Select Sonesta Essential reports its financial performance and asset values over the life of the franchise agreement. It's important to note that this key money is amortized, meaning it is recognized as an expense over time, which reduces revenue during that period.