For Sonesta Select Sonesta Essential, how are property and equipment valued on the financial statements?

According to Sonesta Select Sonesta Essential's 2025 Franchise Disclosure Document, property and equipment are recorded at cost, less any accumulated depreciation. The cost of improvements that extend the life of the property and equipment is capitalized, meaning it's added to the asset's book value. Routine repairs and maintenance are expensed as they are incurred. This is a standard accounting practice.

For a prospective Sonesta Select Sonesta Essential franchisee, this means that when reviewing the company's balance sheets, the value of items like furniture, fixtures, and building improvements are shown at their original cost, but reduced by the amount of depreciation taken over time. Depreciation reflects the wear and tear or obsolescence of these assets.

Capitalizing improvements can make the company's assets appear more valuable on paper, while expensing repairs ensures that day-to-day maintenance doesn't distort the long-term asset values. Understanding these accounting policies is crucial for franchisees to accurately interpret Sonesta Select Sonesta Essential's financial health and make informed investment decisions.