What was the net cash provided by (used in) operating activities 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 | |
| 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 (to) parent for centralized cash management | - | 38,264 | (3,245) | |
| Net cash provided by (used in) investing activities | ( 733) | 38,420 | (3,813) | |
| Cash flows from financing activities: | ||||
| Cash transfers from (to) parent for centralized cash management | ( 1,534) | 8,768 | - | |
| Net cash provided by (used in) financing activities | ( 1,534) | 8,768 | - | |
| Change in cash and cash equivalents: | ||||
| Net increase (decrease) in cash and cash equivalents | (24,437) | 36,262 | 48 | |
| Cash and cash equivalents at beginning of period | 37,753 | 1,491 | 1,443 | |
| Cash and cash equivalents at end of period | $ 13,316 | $ 37,753 | $ 1,491 | |
| 2024 | 2023 | 2022 | ||
| Supplemental cash flow information: | ||||
| Cash paid for income taxes | $ 102 | $ - | $ 1 38 |
Source: Item 23 — RECEIPTS (FDD pages 80–246)
What This Means (2025 FDD)
According to Sonesta Simply Suites' 2025 Franchise Disclosure Document, the net cash used in operating activities for 2024 was $(22,170) thousand. This indicates that the company spent $22,170,000 more than it generated from its core business operations during that year. This figure is derived by adjusting net income (or loss) to account for non-cash transactions and changes in working capital accounts.
For a prospective franchisee, this is a critical metric to consider. A negative cash flow from operations could signal potential challenges in the brand's financial sustainability or operational efficiency. It's important to investigate the reasons behind this negative figure. Was it due to increased investments in growth, one-time expenses, or underlying issues with profitability? Understanding the drivers behind the cash flow is essential for assessing the risk and potential return of investing in a Sonesta Simply Suites franchise.
It is also useful to compare this figure to previous years. In 2023, the net cash used in operating activities was $(10,926) thousand, while in 2022, the net cash provided by operating activities was $3,861 thousand. The trend indicates a significant downturn in cash flow generation. A prospective franchisee should inquire about the strategies Sonesta Simply Suites plans to implement to improve its operating cash flow and ensure long-term financial health. This due diligence will help in making an informed decision about investing in the franchise.