When does the Royalty Fee obligation begin for a Sonesta Select Sonesta Essential hotel?
Sonesta_Select_Sonesta_Essential Franchise · 2025 FDDAnswer from 2025 FDD Document
- C. Royalty Fee. Beginning on the earlier of (a) the Opening Date, or (b) the date you begin operating your Hotel under the Marks, you will pay to us via ACH in U.S. dollars on or before the twentieth (20th) day of each month, including the final month of the Term, a monthly royalty fee in the amount of 5% of Gross Rooms Revenue, as defined below, accruing during the preceding calendar month (the "Royalty").
You will pay us the Royalty in the manner provided below (or as the Brand Manual otherwise prescribes).
- D. Definition of "Gross Rooms Revenue." As used in this Agreement, the term "Gross Rooms Revenue" means all revenue attributable to or payable for rental of Guest Rooms at your Hotel, whether from cash, check, credit and debit card, barter exchange, trade credit, or other credit transactions, whether or not collected, including guaranteed no-show revenue, revenue calculated on reservations cancelled outside of your Hotel's cancellation policy or outside of the reservation channel in which it was made, any proceeds actually received from any business interruption or similar insurance applicable to the loss of revenue due to the non-availability of Guest Rooms, and any miscellaneous fees charged to all guests regardless of the accounting treatment of such fees, net of chargebacks from credit card issuers.
Excluded from Gross Rooms Revenue are separate charges to guests for food and beverage (including room service); vending machine receipts; actual telephone charges for calls made from a guest room; key forfeitures and entertainment (including Internet fees and commissions); allowances for any Guest Room rebates and overcharges; gratuities to employees or service charges levied in lieu of such gratuities, which are payable to employees; and applicable federal, state and local sales, occupancy and use taxes collected from guests.
Source: Item 22 — CONTRACTS (FDD page 84)
What This Means (2025 FDD)
According to Sonesta Select Sonesta Essential's 2025 Franchise Disclosure Document, the Royalty Fee obligation begins on the earlier of two dates: either the hotel's Opening Date, or the date the franchisee begins operating the hotel under the Sonesta Select Sonesta Essential Marks.
The Royalty Fee is 5% of Gross Rooms Revenue, which includes all revenue attributable to the rental of guest rooms, whether paid in cash, credit, or other forms of credit transactions. This also includes guaranteed no-show revenue and revenue from reservations cancelled outside the hotel's cancellation policy. Gross Rooms Revenue is calculated before deductions for credit card chargebacks.
However, Gross Rooms Revenue excludes separate charges for food and beverage, vending machine receipts, telephone charges, key forfeitures, entertainment (including Internet fees and commissions), allowances for Guest Room rebates and overcharges, gratuities, and applicable taxes collected from guests. The Royalty Fee is paid monthly via ACH in U.S. dollars on or before the 20th day of each month, including the final month of the franchise term.