Over what period does Sonesta Simply Suites amortize key money paid?

According to the 2025 Sonesta Simply Suites FDD, any consideration paid to incentivize hotel owners to enter into franchise contracts is capitalized. This means the cost is recorded as an asset on the balance sheet rather than an immediate expense. Sonesta Simply Suites then reduces revenues as the capitalized amount is amortized over the length of the contract. This accounting treatment spreads the cost over the period the franchise agreement is in effect.

Application fees paid at the start of a franchise contract are also capitalized by Sonesta Simply Suites. These fees are then amortized to revenues over the length of the contract, similar to the treatment of key money. Additionally, the commissions or direct costs of acquiring the contract or modification are recorded as contract acquisition costs.

These contract acquisition costs are amortized on a straight-line basis. This means an equal amount is recognized as an expense each period. The amortization reduces franchise fees and system, reservation, and marketing fees in the consolidated statements of comprehensive income (loss) over the length of the contract. Therefore, the amortization period is tied directly to the term of the franchise agreement.