What is the maximum the Brand Promotion Fee can be increased to for a Sonesta Select Sonesta Essential franchise?
Sonesta_Select_Sonesta_Essential Franchise · 2025 FDDAnswer from 2025 FDD Document
Note 3 – Your Hotel must participate in the loyalty program (as it may be modified) for as long as we choose to offer a loyalty program. See Item 11 for additional details related to our current loyalty program. The loyalty program contribution is currently 3% of Qualified Revenue. "Qualified Revenue" includes (a) Qualifying Rates (defined below), and (b) at our discretion, any other items charged to the loyalty program member not defined in item (a). "Qualifying Rates" include: (1) non-discounted rates; (2) standard corporate rates; (3) leisure rates; (4) government rates; (5) corporate and negotiated rates; (6) conference and meeting rates; and (7) individual Hotel contract rates. We may increase your loyalty program contribution up to 4.5% of your Hotel's Qualified Revenue.
Source: Item 6 — OTHER FEES (FDD pages 24–36)
What This Means (2025 FDD)
According to Sonesta Select Sonesta Essential's 2025 Franchise Disclosure Document, the loyalty program contribution is currently 3% of Qualified Revenue. However, Sonesta Select Sonesta Essential has the right to increase this loyalty program contribution up to a maximum of 4.5% of the Hotel's Qualified Revenue. Qualified Revenue includes Qualifying Rates and, at Sonesta Select Sonesta Essential's discretion, any other items charged to the loyalty program member not defined in item (a). Qualifying Rates include non-discounted rates, standard corporate rates, leisure rates, government rates, corporate and negotiated rates, conference and meeting rates, and individual Hotel contract rates.
This means that a franchisee could see an increase in the amount they pay towards the loyalty program over time. The increase from 3% to 4.5% represents a 50% increase in the contribution, which could significantly impact a franchisee's expenses and profitability. Franchisees should factor this potential increase into their financial projections and business plans.
It is important for prospective franchisees to understand what constitutes "Qualified Revenue" and how changes to this definition could further impact the amount they contribute to the loyalty program. They should also inquire about the historical frequency and magnitude of such increases to better assess the potential financial impact on their business.