What was the amortization of key money and contract costs for Sonesta Simply Suites in 2024?
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 2024 was $1,514,000. This figure represents the expense recognized during the 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 expected life of the agreement.
For a prospective Sonesta Simply Suites franchisee, understanding this amortization expense is crucial for projecting the profitability of their franchise. Amortization is a non-cash expense, meaning it doesn't involve an actual outflow of cash, but it does reduce the reported net income. This can affect various financial metrics and potentially impact the franchisee's ability to secure financing or attract investors.
The FDD also provides figures for 2023 and 2022, allowing potential franchisees to see how this expense has trended over time. In 2023, the amortization of key money and contract costs was $396,000, and in 2022, it was $7,000. The significant increase in 2024 suggests there may have been substantial new contracts or key money arrangements entered into during that year.
It is important for prospective franchisees to discuss with Sonesta Simply Suites the specifics of what these key money and contract costs entail and how they are amortized. Understanding the nature of these costs and the amortization schedule will provide a clearer picture of the franchise's financial performance and future cash flows.