Factors from financing to franchisee and consumer appeal spur rollout of upper upscale Classico, A Sonesta Collection, and upscale MOD, A Sonesta Collection.
NEWTON, Massachusetts – Sonesta International Hotels Corp. made its third major move in the luxury and lifestyle sectors in less than a year with its launch of a pair of soft brands earlier this month. Upper upscale Classico, A Sonesta Collection, and upscale MOD, A Sonesta Collection, give the world’s eighth-largest hotel company flexible platforms for targeting the expanding market of high-end owners who want the benefits of brand affiliation without giving up their hotel’s own “brand” as well as travelers seeking unique stays, said President and CEO John Murray, breaking this news in an exclusive video interview with Hotel Investment Today June 5, 2023.
“Over the years, we’ve been approached by owners of historic properties, hotels under 100 rooms, hotels with signature features and hotels that want to retain their own iconic names to find a way for them to leverage Sonesta’s strengths,” Murray said. “These are attractive, well-maintained properties that achieve good rates and occupancies. They have unique characters and local authenticity. But a 40-room hotel or one with distinctive amenities such as full kitchens is not a fit for a hard luxury/lifestyle brand such as The Royal Sonesta or The James. Classico and MOD were designed to address the needs of these owners and the guests who seek out their individualistic, immersive experiences they provide.”
Classico, which made its debut May 1, 2023, with the 40-room Z Ocean Hotel in Miami’s South Beach neighborhood, focuses on “a distinct identity…with signature local cuisine, traditional high-touch service and refined interiors, blending local authenticity with global appeal,” according to a company statement. Calgary’s Hotel 11 became the first MOD property, showcasing the brand’s emphasis on catering to guests’ lifestyle and travel priorities with its Rocky Mountain views and opportunities for outdoor adventure. Hallmarks include eclectic interior design and amenities such as curated food and beverage offers.
Both of these franchised brands will be marketed by Sonesta’s new luxury and lifestyle lodging development team. They join the company’s core brands in these sectors: The Royal Sonesta; Sonesta Hotels & Resorts, which are owned, managed and franchised, and The James, relaunched as a franchised lifestyle in January 2023.
Though Classico and Mod complement rather than compete with Sonesta’s existing lifestyle and luxury brands, they’ll face tough competition in the already crowded upper upscale and soft brands sectors. Hotel Investment Today talked with Sonesta’s Chief Development Officer Brian Quinn about the impetus for the new launches, the franchising decision and what will make owners look.
Hotel Investment Today (HIT): Sonesta has leveraged the power of hard branding not only to grow its namesake brands but also to build out a successful franchising platform around Red Lion. What convinced you that the company needed complementary soft brands?
Brian Quinn (BQ): At Sonesta, we have a disciplined approach to offering diverse franchise opportunities to the development community. We always consider two audiences: Consumers and developers. Both of them were telling us we needed soft brands with that opportunity for a unique stay really resonating with the world post-COVID. More recently, the capital markets have also started to recognize the opportunity that soft brands represent (with their unique personality still connected to a brand family and strong commercial engines) and we’re finding they’re willing to lend in that space.
HIT: How will you ensure that guests get a seamless experience across the hard and soft luxury/lifestyle brands and how will Sonesta optimize cross-marketing opportunities to increase business to these hard and soft brands without cannibalizing either one?
BQ: We took a very thoughtful approach with Classico and MOD. Classico is about a refined guest experience with a sense of sophistication and charm with a unique location/destination and a distinct experience within that community. MOD is warm and playful, a bit more relaxed and a place to earn and burn Sonesta Travel Pass points. It reinforces what that guest is looking for in an upscale brand. Our first order of business as we grow is to keep these two soft brands in their respective spaces. Consistency is important, but with a different focus at each brand—beyond the table stakes of cleanliness, a good bed and stable WiFi. The soft brands give personality and a focus on a specific set of services that appeal to a particular guest’s needs. We think the new brands are complementary and we know guests are moving horizontally across each of these price points. By growing thoughtfully, similar to what we did with The James and Sonesta Essential brand launches, we’re ensuring we have an offering in each segment.
HIT: Will these brands be sold exclusively as franchises and are existing franchisees prime targets or do you expect to attract a new pool of owners?
BQ: Yes. We’re going to offer these in the franchise space to both our existing franchisees and new owners. Both have the first hotels open to help show how they’ll fit into the portfolio. Soft brands let us talk to some new communities including premier management companies looking for new brands for their clients. We also have the potential for residential components, flexibility of box size, etc. So, we’re realizing a real opportunity to look at new relationships.
HIT: What market factors have made the upscale and upper upscale sectors so attractive to Sonesta right now?
BQ: There is more demand for brands in these sectors. There is a real cultural and behavioral shift in this space, so much so that we recently introduced the lifestyle/luxury lodging development team specifically to represent it. With the return of international travel and domestic high-end demand, developers and consumers alike are looking for this opportunity to continue to grow. I’m not an economist, but there has been a clear change in consumers’ wants and needs. If unemployment stays low, we already know the demand for the travel and aspiration to travel remain high and that guests are seeking that experiential element… they want to be surprised and delighted, with a new flexibility that reflects their lifestyle. We see this as a balancing point in our family of brands.
...the capital markets have also started to recognize the opportunity that soft brands represent... and we’re finding they’re willing to lend in that space.
Brian Quinn
HIT There’s a lot of noise in the soft brand market. What differentiates these brands from their competitors in terms of owner service and support, flow-through to owners and brand growth?
BQ: What’s unique about the offering of soft brands with owners is that they invest their money and their partners’ money, looking for something flexible to accommodate their needs, too. Sonesta takes a great deal of pride in being fast, friendly and flexible with our owners since we’re owners, too. With plenty of market availability we’re quick to respond with answers around approvals. The lifestyle brands offer a fun and friendly place to owners to play in and our teams are really iterating with the owner about the right fit for their asset in our portfolio. Don’t get me wrong, consistency is still important, but the maximum flexibility is for the owner to give the consumer what they know they want—be that robust food or beverage, spa or wellness, high design, or something else that is going to be something the consumer is willing to pay more for. The new soft brands give us room to help define that. This is something key stakeholders in this space are looking for and Sonesta is listening to them.