Carlos Flores is president and CEO of Sonesta International Hotels Corporation, which, after acquiring RLH Corporation earlier this year, is now one of the largest hotel companies globally with approximately 1,200 locations, more than 100,000 guestrooms, and a diversified portfolio of 15 brands across multiple market segments. Flores discussed with LODGING why Sonesta chose this time to act on its long-held interest in Red Lion, the role of culture in the company’s growth, and other aspects of Sonesta’s recent expansion, including the launch of two new hotel brands: Sonesta Simply Suites and Sonesta Select.
How did you get your start in hospitality and end up where you are now?
I actually began my career in hospitality right out of college, working at the Phoenix Hotel for Chip Conley, who founded Joie de Vivre Hospitality and was among those who first popularized the whole boutique hotel movement. But after a few years, like many at that time, I jumped on the technology bandwagon. That eventually brought me first into real estate, then full circle into real estate technology with the acquisition of Sonesta in 2012.
What has it been like being part of an organization that has grown and changed so much, especially over the past year amid the pandemic?
It’s been unbelievably rewarding to manage the growth of our portfolio since 2012, but, what I think has been most rewarding recently has been seeing how our team has responded to the opportunities to make the kind of thoughtful investments that have paid off in dividends.
Their response, I believe, is part of our overall growth mentality, but perhaps more significant is the underlying culture that enabled the team to rise to the challenge, growing the portfolio more than 350 percent over the course of just a few months, vaulting the company to being the eighth-largest hotel company in the United States.
What was it about that growth mindset and focus that enabled your team to navigate opportunities during an especially challenging period?
There’s no doubt about it—the pandemic was a really heartbreaking event, but the fact of the matter is that there was a lot of focus and clarity associated with the challenges it presented. Rather than getting caught up in the usual day-to-day distractions, circumstances forced us to be focused and objective-driven. Yet, we had been preparing for growth for a long time—in fact, managing hyper-growth had become a core competency of ours. When we bought Sonesta in 2012, there were three hotels domestically; by 2020, that number was just shy of 60, and now we’re at 1,200 hotels, with nearly 10,000 team members, 5,000 of whom came aboard just in the past few months.
An important part of this growth strategy was making strategic investments—making sure we had the right plumbing and scaffolding in place as we were building up. And a big part of that was, again, having a culture based on a passion for growth. Our project management office that was making those wise investments allowed us to stay focused and get the job done.
How did the RLH acquisition fit into Sonesta’s vision for the future?
I’d say the Red Lion acquisition had been in the works for years, but it didn’t make sense for us to move forward until they went “asset-light,” as we like to say in the industry. The concept of U.S. franchising has long been a “when”—not “if”—question for us in our quest to get that hyper-growth on the franchise side. So, between our familiarity with Red Lion over the years, what the team had done, and the fact that the board was actively looking for opportunities ultimately made for a perfect marriage.
What was behind the development of the Sonesta Select and Sonesta Simply Suites brands?
Thinking ahead to what to do next, we decided to go vertical. We had purchased our first extended-stay brand in 2012; it became Sonesta ES Suites—premier extended-stay accommodations. By creating Sonesta Simply Suites, a more focused offering of extended stay, we were able to pull our capabilities into a different segment of the extended-stay market. Then, having put into place the infrastructure and capabilities we cultivated to be great managers, owners, and custodians of extended stay positioned us very nicely to go into select service, something that had always been on our roadmap. They aren’t exactly the same—some tweaks, twists, and augmentations were needed—but there’s a lot of similarity from an organizational perspective. With that in mind, we created the upscale, focused-service brand Sonesta Select.
Just how does one mold a culture that supports its goals?
Whether they acknowledge it or not, every organization has a culture. Some go to great lengths to define it with things like a mission statement, vision, etc., but it comes down to delineating how people should support one another and their common goals as organizational team members.
I can’t take credit for Sonesta’s culture; it was going strong long before I arrived on the scene. In some ways, it’s aspirational: We want to be the best hotel company in the world. Then, too, there is its “Culture of Caring,” which is shorthand for how people should interact with one another, do the right thing, always remembering that there is a cost associated with sharp elbows.
So, to support a culture, there are regular conversations to keep people on the same page. In fact, we just had our all-hands corporate meeting yesterday, where we acknowledged the fact that we’ve gone through rapid change—where everyone has been wonderfully busy— but that we should be aware of the risk it carries of compromising any of those core tenets that we’ve articulated for our culture, and that we need to bring ourselves back into alignment through communication.
Really, though, you can have videos and training and endless dialog, but at the end of the day, it’s all about setting the intention, communicating that intention, and making sure that we’re staying vigilant in what that intent is.
Is there anything in particular keeping you up at night?
Given that hospitality is most of all a people business with relationships at its core, our biggest challenge now is managing change as it relates to our relationships internally and externally. We need to be rock stars at managing relationships with our three primary stakeholder groups: our guests, our employees, and our owners.
There’s a lot more work to be done there, and we’re going to have to increase our capabilities, aided by our relationship with our primary capital partner and now minority owner, Service Properties Trust.
Looking ahead, what else can we expect of Sonesta?
Now that the pandemic seems to be winding down in the United States, and business is returning to hotels, you can expect us to be delivering on all of those relationships with our key stakeholder groups. I couldn’t be prouder of the work our team executed on opportunities over the past year, and believe the future has never been brighter for Sonesta.
