As Properties Multiply, Sonesta Aims to Grow Corp. Travel Business

Sonesta International Hotels Corp. has had a transformative year, but not necessarily in the same way as other hotel companies have during the Covid-19 pandemic. The company grew from 58 properties at the start of 2020 to more than 400 today, with conversions from InterContinental Hotels Group and Marriott International when each defaulted on hotels owned by Service Properties Trust, which in turn owns about a 34 percent stake in Sonesta. Sonesta also is in the process of acquiring Red Lion Hotels’ parent company. BTN senior lodging editor Donna M. Airoldi in January spoke with Sonesta VP of global and hotel sales Blair McSheffrey, who has been with Sonesta for three years, about the company’s changes, particularly as they relate to corporate travel. An edited transcript follows.

BTN: What was your mix of leisure and corporate business and meetings for the 58 properties in the system at the start of 2020?

Blair McSheffrey: The rough breakdown was meetings were about one-third of business, then another third was corporate, then the balance leisure depending on the property. I think we will continue to see leisure grow immediately out of the gate. That will be the first segment to ramp [up]. Everyone says that, and we believe that as well. One approach is to mature our offering and our delivery with business travel. We plan on increasing our business travel, and that also is a function of distribution. If you have an airline that flies only three routes, it’s hard to really effectively service the business travelers. And it’s the same with hotels. You have to have distribution, and now we have pretty significant distribution. 

BTN: With the recent announcement of the Red Lion Hotels purchase combined with the conversions from IHG and Marriott, Sonesta will have about 1,200 hotels with more than 100,000 rooms across 13 brands. How do you see that changing Sonesta’s position in the market?

McSheffrey: We are in the midst of converting the Marriott hotels. We haven’t converted them all. All of the IHG hotels have been converted. We will be at 284 hotels pre-Red Lion, by early March. Those are all in the management and owned environment, and that is [our] core business. The addition of Red Lion is a foray into a different environment for us, which is franchising. Because of the nature of that business, they’ll operate somewhat autonomously, but under the Sonesta umbrella. [And] we’ll look at where there are those immediate opportunities where they share some common clientele. … What also is interesting is Red Lion gives us a diverse portfolio. Typically [our hotels], and a lot of our competitive group as well, tend to glom together in the same grouping from midscale to upper upscale. There is some luxury, but with Red Lion, this gives us distribution in the economy segment, which is a valuable business segment as well. 

BTN: Especially as proven through its performance this past year.

McSheffrey: The economy segment has been relatively resilient. Our largest distribution is extended stay, which has been very resilient for us. 

BTN: Now that you have that expanded distribution, what are your plans for capturing a larger share of the corporate travel market?

McSheffrey: We launched two new brands that are really focused on different ends of the business segment, but that are really our core business. Sonesta Simply Suites is our core extended-stay product. That is an all-suite product focused exclusively on that long-term business. And then Sonesta Select is a core business hotel. It’s going to be a great business product. Business travelers’ needs are pretty straightforward: “I want to check-in quickly, I want a comfortable bed.” We will check all those boxes. But how do we add a little more heart and soul to it? We are bringing that to life a little bit differently and focusing on a lot of personalization in the product as compared to what [those properties] were before, which were Courtyards, and trying to develop a business product that adds a little more of a personal touch. [They are in] business locations, and Courtyard did well with that, but I think we can add a little more juice to it and make it a more interesting and engaging stay. Less vanilla.

BTN: How will you reach more into the business travel audience?

McSheffrey: Business travel is very important to us, and one of the investments we made was to make sure our business travel teams across our properties were intact. We had them work with clients. As you know, a lot of hotel companies kind of opted out of the [request-for-proposals] season this year, and we didn’t. We doubled down and really engaged with our business travel buyers because we wanted to make sure that, No. 1, we were well-represented and to stress the importance of business travel to us. I wouldn’t say we weren’t 100 percent staffed, but we paid attention to it. I think this will do us well, because as we come out of this, I think we are well-positioned, and a lot of other companies will be like, “OK, now we are interested in your business travel.” And that might be a little bit too late by the time it ramps. 

BTN: What was the recent RFP season like for Sonesta? Did you receive more because of your additional hotels?

McSheffrey: I would say that yes, we did get significantly more because of the new distribution. The other piece is that corporate travel buyers did want to discuss the rate and the opportunity. They were much more engaged. … There were a few that said to roll over the rates. But there were many that negotiated as they would normally negotiate it. Many corporate travel departments are procurement-led. And in a procurement world, it’s hard to justify not going through a regular procurement process. So we facilitated that procurement process thoughtfully.

BTN: How has the addition of the new properties changed the makeup of your sales team?

McSheffrey: We’ve added more. We are adding significantly more business travel representation, because the make-up of these hotels is so business-traveler-intensive. Then groups and meetings are still lagging, but we’ll continue to add, especially when dealing with more resort destinations, and focusing on additional segments we hadn’t focused on before. The first answer is more business traveler representation, and a stronger focus on our No. 1. brand, which is extended stay. So a stronger focus on those extended-stay segments and suppliers, and then a little into enhancing our partnerships with both consortias and mega agencies.

BTN: What type of active business travel have you continued to see at Sonesta properties? 

McSheffrey: We really see essential business travel as what is traveling right now. What we’ve noticed about business travel is the length of stay is much longer, primarily due to quarantine restrictions and travel restrictions in the states. If I’m going to California, it’s very unlikely I’ll make a one- or two-night stay. I’ll have to stay through my quarantine. You’ll make it worth your while. We also are seeing business travelers migrating to our core extended-stay properties because of some of the difficulties in dining out. The classic business traveler would go into a city, have dinner, etc., But now that’s not the case. That option to be able to have your own kitchen is of value even to what we would have considered more hardcore road warriors. In our full-service properties, we are seeing travel, but it’s mimicking, not to the same extent as our extended stay, obviously, but we are seeing longer length of stays than we have classically. In our full-service [hotels], I’d say most of that traveler [segment] has not yet started to book, but I wouldn’t say that accounts are dormant. Because when they have to travel, they do travel. 

BTN: What will be the biggest challenges facing Sonesta? 

McSheffrey: The biggest challenge is for us to grow and maintain what is Sonesta. Having worked at a large company before, I mean, we still have to keep what we do well and as you grow, you change, and you change things for scale. That’s OK, but it gets diluted. That is the piece that will always be hard for us because we have to change with the amount of hotels obviously, but we have to make sure that what is important for us is important for us, and that we maintain that. 

BTN: What are the biggest opportunities for Sonesta in 2021?

McSheffrey: The opportunity for us, the good opportunity, is we are growing up very fast. We have an opportunity now to present Sonesta in a different light to many clients, because a client can be attached to a particular Sonesta. But the problem always was there was not enough of them. If you have a favorite restaurant, and there’s only one of them and it’s in Milwaukee, then it’s good only when I go to Milwaukee. Now we’ll have that distribution. How do we leverage that love for Sonesta into all of these brands and maintain a level of effectiveness with the business traveler? That is going to be consistency, but not consistency to a level of [where] each one [of them] is the same. That is always going to be a problem. But I think it’s a good opportunity for us, and we can do things a little bit differently because we are thinking about that now. We are thinking about how we can be different from the Goliaths that are still out there—who have done a good job. They didn’t grow to that size for doing a bad job. But like anything else, they are big now, and they are probably far from the customer, and we can still be close to the customer.