Exclusive: 1 of the fastest-growing hotel companies launches 2 new brands

One of the largest and fastest-growing U.S. hotel companies has debuted two new hotel brands targeting travelers who favor independent hotels.

On Monday, Boston-based Sonesta International Hotels Corp. launched Classico and Mod, two soft brands operating in the upper-upscale and upscale space, respectively.

Each Classico hotel, which will park within Sonesta's luxury and lifestyle division, will feature local dining options as well as a high level of service and design. Mod hotels, which will be a part of Sonesta's upscale hotel division, will feature "eclectic design" as well as food and beverage programs curated uniquely to each property.

The first Classico — the Z Ocean Hotel in Miami Beach, Florida — as well as the first Mod — Hotel 11 in Calgary, Alberta — are already open.

Sonesta's new soft brands enter a field already crowded with competitors like Marriott's Autograph Collection, Hilton's Curio Collection and Hyatt's Unbound Collection. Why throw a hat into the ring?

Customers and hotel owners want it, Sonesta's leadership team says.

"Consumers want more of an experiential experience. They want something unique. They want something rooted in the local community. They want something with a nod towards design," Brian Quinn, Sonesta's chief development officer, told TPG in an exclusive interview ahead of the launch. "They're sensitive around the food and beverage offering. They're sensitive to how the product comes to market and how it serves all of its constituencies right."

Sonesta's latest brands

The push to add soft brands is how hotel companies keep beefing up their options for potential guests without going through all the hassle of convincing owners to spend money building out a property in accordance with the standards and requirements that go with a "hard brand" like a Westin or a Hyatt Regency.

Instead, soft brands have more flexibility when it comes to design and amenities as long as they maintain certain customer satisfaction levels. But they also enable independent hotel owners to tap into the reservations and loyalty system of a bigger brand.

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"We realized in these urban and destination markets, specifically with Classico, that in the upper-upscale luxury space there continue to be great independent hotels in North America and around the world, for that matter, that would like to affiliate with the brands and leverage the scale and the commercial engines [of a bigger company]," Quinn said. "But [they also] want to keep the unique personality that they cultivated around the hotel - its history and its offering within the community."

Future Classico hotel expansion will likely focus on larger cities and lifestyle destinations. Mod hotels have the ability to work in smaller markets.

"Mod has the potential for a much bigger footprint, but also the markets have to have some sensitivity to the lifestyle piece," Quinn added.

Sonesta's rapid ascent

The new brands add to Sonesta's ongoing seismic growth trajectory. Only a few years ago, the hotel company had fewer than 100 hotels. Today, after acquiring Red Lion Hotels parent company RLH Corp. in 2021 and going on to launch a variety of new brands, the company has more than 1,200 hotels.

Prior to Monday's announcement, several of Sonesta's brand additions focused on more affordable segments of the hotel ecosystem, like Sonesta Essential and Sonesta Select — more limited-service offerings than its namesake Sonesta Hotels and Resorts brand or its high-end Royal Sonesta brand.

But there has been a push to get more into the lifestyle hotel sector, which includes hotels catering more to customers craving experiences and restaurants that are destinations unto themselves. The James is a Sonesta brand that competes with Hyatt's Thompson Hotels.

"Classico's upper-upscale identity is a unique alternative to The Royal and The James brands," Elizabeth Harlow, Sonesta's chief brand officer, said in a statement. "Mod's modern upscale brand allows owners and developers to maintain the qualities that make their hotels unique."

Classico operating in the "upper-upscale" space means it will compete with the likes of Marriott's Autograph Collection and Hilton's Curio Collection. Mod's "upscale" category includes competitors like Hilton's Tapestry Collection.

Sonesta expanding into the soft-brand space is also the latest positioning of the company against the largest hotel companies in the world. Just as Marriott and Hilton are filling out blank spaces in their brand offerings with recent expansions into more affordable segments of the market, Sonesta's further push into high-end hotels enables it to have a more robust lineup of offerings for all price points.

It also comes after a recent overhaul of Sonesta's Travel Pass loyalty program. Combine all these moves, and you have one increasingly formidable hotel player in the game of travel giants.

"We do see these two products playing a critical role as we grow the upper-upscale space and the luxury space for us," Quinn said. "We absolutely recognize it as a strategic component to the American strategy and the future strategy around the world."

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