Real estate investment trust Service Properties Trust has terminated the management agreements for 122 hotels with Marriott International, the company announced. The REIT had sent Marriott a notice of payment shortfall in September, and the hotel company had until Oct. 5 to pay the $11 million shortfall to avoid termination.
Service Properties Trust “did not receive any payment from” Marriott, according to the company, and “based on discussion with [Marriott]” it “does not expect [Marriott] to pay the cumulative shortfall for the balance of 2020.”
The agreements cover two Marriott properties, as well as two Springhill Suites, 12 TownePlace Suites, 35 Residence Inn and 71 Courtyard properties across 31 states.
The effective date of the termination is Jan. 31, 2021, with Service Properties Trust currently planning to transfer the branding and management of 98 of these hotels to Sonesta International Hotels Corp.
Service Properties Trust has agreed to sell the remaining 24 properties, but did not immediately specify the buyer.
Sonesta also received 103 hotel management agreements when Service Properties Trust ended its agreement with InterContinental Hotels Group in August for the properties. With the addition of the former IHG and now Marriott hotels, Sonesta announced that it would increase from three to five brands: Royal Sonesta, Sonesta Hotels & Resorts, Sonesta ES Suites, and the two newest brands Sonesta Select and Sonesta Simply Suites. Service Properties Trust owns about 34 percent of Sonesta, it said.
Marriott Served Notice of Payment Shortfall on 122 Hotels