Case Study

Geographic Expansion through Franchising

Background

As a collection of hotels, Sonesta was primarily focused on the US market. At the time I joined the company in 1982, they had five hotels and wanted to expand into emerging markets in Latin America. Working with ownership, we created an opportunity for franchise growth and found a long-term partner with mutual ambitions and similar product standard in the emerging markets of Peru, Chile, Colombia, Ecuador, Panama and Curacao. During my tenure as EVP of Operations, the Sonesta Collection grew adding 18 properties in Latin America Countries. Other market expansion took place in the Middle East and the Caribbean.

Strategy

The Sonesta Collection was known as a quality hotel company with a good reputation but minimal distribution. Market expansion was key to driving success for the next generation. With little capital resources we looked at our options and focused on foreign markets as a way to increase brand recognition and positioning. Through a solid partnerships with a Latin American company we leverage our name and created a viable and scalable franchise model.

Results

Primary: We created awareness & brand recognition in an emerging foreign market.
Secondary: We leveraged our managerial expertise and created a scalable business model we could duplicate by transferring tangible and intangible attributes with minimal capital investment.
Tertiary: Sonesta garnered International brand recognition. This benefited operations in and out of the United States.
Expansion elevated Sonesta’s visibility and stock value.
Visibility brought ancillary deals to the table in both the US and Foreign markets.
Sonesta was positioned as a player among the big brands.