What was the amortization of key money and contract costs for Sonesta Simply Suites in 2022?
Sonesta_Simply_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
| (dollars in thousands) | ||||
|---|---|---|---|---|
| 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 |
Source: Item 23 — RECEIPTS (FDD pages 80–246)
What This Means (2025 FDD)
According to Sonesta Simply Suites' 2025 Franchise Disclosure Document, the amortization of key money and contract costs in 2022 was $7,000. This figure represents the expense recognized during that year related to the gradual write-off of the initial costs associated with key money and contracts. These costs are typically capitalized and then amortized over the life of the agreement.
For a prospective Sonesta Simply Suites franchisee, understanding amortization is crucial for financial planning. Amortization of key money and contract costs impacts the franchisee's profitability by reducing net income. While it's a non-cash expense, it affects the reported earnings and, consequently, the financial ratios used by lenders and investors.
The FDD provides a historical view of these expenses, allowing potential franchisees to assess how these costs have trended over recent years. Reviewing these figures in conjunction with other financial data in the FDD can offer insights into the overall financial health and stability of Sonesta Simply Suites. It's important to note that future amortization expenses may vary based on the terms of new agreements or changes in accounting practices.
Franchisees should consult with financial advisors to fully understand the implications of amortization on their investment and to develop accurate financial projections. This information, combined with other due diligence, will help in making an informed decision about investing in a Sonesta Simply Suites franchise.