What are some of the significant estimates used in Sonesta Select Sonesta Essential's consolidated financial statements?

According to Sonesta Select Sonesta Essential's 2025 Franchise Disclosure Document, the preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts. Actual results could differ from these estimates.

Significant estimates included in Sonesta Select Sonesta Essential's consolidated financial statements are the allowance for credit losses. This refers to the amount of money that the company estimates it may not be able to collect from its customers. Franchisees should be aware that this estimate can impact the overall financial health of the company.

Other significant estimates include the useful lives of long-lived assets, valuation of intangible assets and goodwill, and impairment of long-lived assets. These estimates relate to how the company values its assets over time. For example, the 'useful lives of long-lived assets' refers to how long the company expects its assets, like buildings and equipment, to remain in service. 'Valuation of intangible assets and goodwill' involves estimating the value of things like brand recognition and customer relationships. 'Impairment of long-lived assets' refers to assessing whether the value of an asset has declined. These estimates can significantly impact the financial statements and should be carefully considered by potential franchisees.