Svc Ihg Agreement

Svc Ihg Agreement

However, for SVC, it is important that we insert our agreements and try to protect our negotiated cash flows so that we can pay SVC`s operating costs and other obligations without interruption. NEWTON, Mass.-August 25, 2020-Service Properties Trust (Nasdaq: SVC), or SVC, announced today that it will transfer branding and management of 103 hotels from InterContinental Hotels Group plc (NYSE: IHG) or IHG to Sonesta International Corporation Hotels or Sonesta. As previously announced, SVC sent cancellations to IHG for non-payment of minimum returns and SVC rents for July and August 2020, for a total amount of US$26.4 million plus accrued interest, and IHG had until August 24, 2020 to avoid termination by payment to SVC. SVC did not receive any payments from IHG until August 24, 2020, and SVC does not expect any payment from IHG in the future and management contracts with IHG are terminated. The termination deadline is November 30, 2020, the same date on which SVC currently plans to transfer branding and management of these hotels to Sonesta. Sonesta currently manages 16 hotels for us, renamed by IHG in 2012, and total revenue and EBITDA in these 16 hotels improved by 14.4% and 10.3% respectively, after the change and after stabilization. In addition to the fact that Sonesta could have a positive impact on the performance of these hotels in the future, we own approximately 34% of Sonesta and will therefore indirectly participate in the future in all the benefits of these new Sonesta management agreements. We also believe that the 103 hotels operated by Sonesta offer us greater flexibility in the management of our business due to the current challenging market conditions. We assume, for example, that some converted hotels will use or be sold in the future for other uses. Without payment of cure by IHG, SVC currently plans to change the management and brand of these 103 IHG hotels to Sonesta International Hotels Corporation or Sonesta, mainly under the Royal Sonesta, Sonesta and Sonesta ES Suites brands. SVC owns approximately 34% of Sonesta and would contribute to the benefits of these new management agreements and to the performance of hotels as they increase in the post-pandemic recovery. SVC`s management agreements with IHG include 103 hotels (three InterContinental®, five Kimpton® Hotels and Restaurants, 11 Crowne Plaza®, three Holiday Inn®, 20 Staybridge Suites® and 61 Candlewood Suites®) in 30 states in the United States, the District of Columbia, Ontario, Canada Rico and Puerto Rico.

After the transfer to Sonesta, SVC expects these hotels to operate under the Royal Sonesta, Sonesta and Sonesta ES Suites brands. There are currently 80 Sonesta brand hotels in the world. LG`s $100 million bond held by SVC to guarantee minimum repayments under these agreements was fully utilized. SVC has the right to keep hotels marked and managed by IHG up to one year after termination, in order to facilitate an orderly transition. Service Properties Trust terminates its agreement with IHG and converts 103 hotels into Sonesta Pavilions after IHG has not paid minimum rents. «We are very proud of the confidence that SVC has shown through Sonesta`s responsibility to rename 103 additional hotels and take over,» said Carlos Flores, President and CEO of Sonesta International Hotels Corp. «This new agreement with SVC strengthens our continued development as a hotel operator and global brand and we look forward to introducing our existing loyal customers. , as well as news to all destinations in our greatly expanded portfolio. Through this operation, Sonesta now has more than 160 properties in the United States and nearly 200 properties worldwide, more than tripling its presence in major tourism and commercial regions. Among the newcomers to Sonesta are Washington, D.C.; San Diego; Seattle; Salt Lake City; Denver, Louisville, Ky. and San Juan, Puerto Rico, among others.

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