Service Properties Trust Completes Transfer of 99 Hotels to Sonesta
Three Additional Hotels Will Convert in Mid-December
SVC entered short term agreements with Sonesta to manage the 99 hotels that expire on
“We are excited to complete this milestone in transitioning 99 hotels to Sonesta and the launching of the Sonesta Simply Suites brand. We believe that as a 34% owner of Sonesta, SVC will benefit from Sonesta’s growth as well as share in more of the upside from the recovery of these hotels. The rebranding of these hotels with Sonesta will also create greater flexibility for us in managing through these challenging market conditions, give us improved decision-making control over dispositions or alternative uses, and potentially have a positive impact on this portfolio’s performance in the future. For example, while all of our hotels have been significantly negatively affected by the COVID-19 pandemic, year to date and for the third quarter of 2020, comparable hotel RevPAR performance at existing Sonesta managed hotels has been among the best performing of SVC’s hotel portfolios.”
Warning Concerning Forward-Looking Statements
This press release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Also, whenever SVC uses words such as “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, “will”, “may” and negatives or derivatives of these or similar expressions, SVC is making forward-looking statements. These forward-looking statements are based upon SVC’s present intent, beliefs or expectations, but forward-looking statements are not guaranteed to occur and may not occur. Actual results may differ materially from those contained in or implied by SVC’s forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond SVC’s control. For example:
- Sonesta is a small privately held company with less resources and scale compared to IHG. If Sonesta were to fail to provide quality services and amenities or to maintain a quality brand, our income from these properties may be adversely affected. There can be no assurance that Sonesta can operate the hotels rebranded from IHG as effectively or for returns at levels that could otherwise be achieved by IHG. Further, if we were required to replace Sonesta, we could experience significant disruptions in operations at the applicable properties, which could reduce our income and cash flows from, and the value of, those properties. We have no guarantee or security deposit under our Sonesta agreements. Accordingly, we may receive amounts from Sonesta that are less than the contractual minimum returns stated in our agreements with Sonesta or we may be requested to fund losses for our Sonesta hotels. Further, we own a 34% interest in Sonesta. If Sonesta experiences losses, or requires additional capital, Sonesta may request we fund our share through the contribution of additional capital.
Mr. Murraystates SVC believes that as a 34% owner of Sonesta, it will benefit from Sonesta’s growth as well as share in more of the upside from the recovery of these hotels. However, Sonesta may not operate these hotels profitably, Sonesta may not grow and SVC may not receive the benefit it would expect to receive. Further, it is not known how long the COVID-19 pandemic will last or how severe it will be, including its continued impact on the hotel industry. Moreover, it is not known how long it will take the economy to recover following the pandemic or what adverse changes on the hotel industry may be realized, such as if business and leisure travel are significantly reduced on a long-term or permanent basis. These and other factors may adversely affect the performance of these hotels, regardless of which operator is managing them.
- This press release states that three additional hotels will be converted to Sonesta brands and management in mid-December. These conversions are subject to various conditions that may not occur and these conversions may be delayed.
- This press release states performance at existing Sonesta managed hotels has been among the best performing of SVC’s hotel portfolios year to date and for the third quarter 2020. There is no assurance these trends will continue or Sonesta’s performance will not decline in the future.
- This press release also states that some of these hotels may be disposed of or have alternative uses. However, these outcomes may not occur.
The information contained in SVC’s filings with the
You should not place undue reliance upon forward-looking statements.
Except as required by law, SVC does not intend to update or change any forward-looking statements as a result of new information, future events or otherwise.
No shareholder, Trustee or officer is personally liable for any act or obligation of the Trust.
Kristin Brown, Director, Investor Relations