What was the provision (recovery) of doubtful accounts 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's 2025 Franchise Disclosure Document, the provision for doubtful accounts in 2024 was $1,112,000. This figure is part of the cash flow from operating activities, which shows the adjustments made to net income to determine the actual cash generated or used by the company's core business operations.
The provision for doubtful accounts represents an estimate of the amount of accounts receivable that may not be collected. A higher provision suggests that Sonesta Simply Suites anticipates a greater risk of customers not paying their dues. This can be influenced by economic conditions, the creditworthiness of customers, or changes in the company's credit policies.
For a prospective franchisee, this information is useful in understanding the financial health and operational efficiency of Sonesta Simply Suites. It provides insight into how the company manages its receivables and the potential risk associated with uncollectible accounts. Reviewing trends in this provision over several years, as presented in the table, can offer a more comprehensive view of the company's financial stability and risk management practices.