What was the provision (recovery) of doubtful accounts for Sonesta Select Sonesta Essential in 2022?
Sonesta_Select_Sonesta_Essential Franchise · 2025 FDDAnswer from 2025 FDD Document
31, 2024 | 25,464,899 | $ 255 | $ 87,652 | $ (9,676) | $ 78,231 | |
RED LION HOTELS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
| (uoriai 5 ili tilousanus | December 31, | |||||
|---|---|---|---|---|---|---|
| 2024 | 2023 | (Restated) | 2022 | |||
| Cash flows from operating activities: | ||||||
| Net income (loss) | $ | (2,913) | $ | 1,477 | $ | (3,186) |
| Adjustments to reconcile net loss to cash provided by (used in) operating activities: | ||||||
| Depreciation and amortization | 489 | 1,691 | 3,506 | |||
| Amortization of key money and contract costs | 1,514 | 396 | 7 | |||
| Amortization of contract liabilities | 192 | 1,497 | 713 | |||
| Deferred income taxes | - | 1 | 1 | |||
| Provision (Recovery) of doubtful accounts | 1,112 | (1,819) | 654 | |||
| Other income (expense), net | - | - | 846 | |||
| Loss (gain) on sale of hotel | 153 | (160) | - | |||
| Change in current assets and liabilities | ||||||
| Accounts receivable, net | (3,111) | (942) | (50) | |||
| Prepaid expenses and other current assets | (706) | (414) | (541) | |||
| Other long term assets | (19,498) | (9,440) | (1,007) | |||
| Accounts payable | (434) | (436) | (682) | |||
| Loyalty program liability | 139 | - | - | |||
| Accrued compensation, accrued expenses, and other liabilities | 893 | (2,777) | 3,600 | |||
| Net cash provided by (used in) operating activities | (22,170) | (10,926) | 3,861 | |||
| Cash flows from investing activities: | ||||||
| Capital expenditures | (735) | (433) | (358) | |||
| Proceeds from sale of hotel | - | 550 | - | |||
| Merger purchase price adjustment | - | - | (264) | |||
| Disbursement of notes receivable | (12) | - | - | |||
| Collection of notes receivable | 14 | 39 | 54 | |||
| Cash transfers from |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 84)
What This Means (2025 FDD)
According to Sonesta Select Sonesta Essential's 2025 Franchise Disclosure Document, the provision for doubtful accounts in 2022 was $654,000. This figure represents an estimate of potential losses from uncollectible accounts receivable. It is an accounting measure used to reduce the value of accounts receivable to the amount expected to be collected.
For a prospective Sonesta Select Sonesta Essential franchisee, this number indicates the level of risk Sonesta Select Sonesta Essential faces regarding unpaid accounts. A higher provision suggests a greater likelihood of customers not paying their debts, which could impact the franchisee's revenue and profitability. Franchisees should consider this when evaluating the financial stability and risk associated with the franchise.
The provision for doubtful accounts can fluctuate from year to year based on various factors, including economic conditions and the creditworthiness of customers. In 2023, Sonesta Select Sonesta Essential actually had a recovery of doubtful accounts of $(1,819,000), while in 2024, the provision was $1,112,000. These variations highlight the dynamic nature of this accounting estimate and the importance of understanding the underlying factors driving these changes.
Understanding the provision for doubtful accounts helps potential franchisees assess the financial health and potential risks associated with investing in a Sonesta Select Sonesta Essential franchise. It's a key metric to consider alongside other financial data when making an informed investment decision.