----

**FORM      10-Q**

**SECURITIES      AND EXCHANGE COMMISSION**

| x      | QUARTERLY                REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE |   |
|--------|-------------------------------------------------------------------------|--------|
|   | SECURITIES                EXCHANGE ACT OF 1934                          |   |
|   | For                the Quarterly period ended June 30, 2007             |   |
|   |                                                                    |   |
|   | OR                                                                      |   |

| o      | TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE |   |
|--------|--------------------------------------------------------------------------|--------|
|   | SECURITIES                EXCHANGE ACT OF 1934                           |   |

| For                the transition period from |   | to |   |
|-----------------------------------------------|--------|----|--------|

**SONESTA      INTERNATIONAL HOTELS CORPORATION**

| NEW                YORK                                                       |   | 13-5648107                                          |
|-------------------------------------------------------------------------------|--------|-----------------------------------------------------|
| (State                or other jurisdiction or incorporation or organization) |   | (I.R.S.                Employer Identification No.) |

|  617-421-5400                                                        |
|---------------------------------------------------------------------------|
| (Registrant’s                telephone number, including area code) |
|                                                                      |
| (Former                name, former address and former fiscal year,       |
| if                changed since last report)                              |

| Yes                x | No                o |
|----------------------|---------------------|

  Accelerated Filer 
  Non-Accelerated      Filer 

| Yes                o | No                x |
|----------------------|---------------------|

----

**INDEX**

**SONESTA      INTERNATIONAL HOTELS CORPORATION**

| Part                I.  Financial Information | **Page**                                                                                                                                                   |
|---------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                    |                                                                                                                                                       |   |
| Item                1.                                  | Financial                Statements (unaudited)                                                                                                            |   |
|                                                    |                                                                                                                                                       |   |
|                                                    | Condensed                consolidated balance sheets — June 30, 2007 (unaudited) and December 31,                2006                                | 1 |
|                                                    |                                                                                                                                                       |   |
|                                                    | Condensed                consolidated statements of operations — Three and six-month periods ended                June 30, 2007 and 2006 (unaudited) | 3 |
|                                                    |                                                                                                                                                       |   |
|                                                    | Condensed                consolidated statements of cash flows — Six-month periods ended June 30,                2007 and 2006 (unaudited)           | 4 |
|                                                    |                                                                                                                                                       |   |
|                                                    | Notes                to condensed consolidated financial statements — June 30, 2007 and                2006                                          | 5 |
|                                                    |                                                                                                                                                       |   |
| Item                2.                                  | Management’s                Discussion and Analysis of Results of Operations and Financial Condition—                June 30, 2007             | 13 |
|                                                    |                                                                                                                                                       |   |
| Item  3.                                      | Quantitative                and Qualitative Disclosure of Market Risk                                                                                      | 18 |
|                                                    |                                                                                                                                                       |   |
| Item  4.                                      | Internal                Controls and Procedures                                                                                                            | 19 |
|                                                    |                                                                                                                                                       |   |
| Part                II.  Other Information    |                                                                                                                                                       |
|                                                    |                                                                                                                                                       |   |
| Item  4.                                      | Submission                of Matters to a vote of Security Holders                                                                                         | 20 |
|                                                    |                                                                                                                                                       |   |
|                                                    | Signature                page                                                                                                                              | 21 |
|                                                    |                                                                                                                                                       |   |
| Exhibits                31.1, 31.2, 31.3                | Certifications                by the Company’s Chief Executive Officers and Vice President and                Treasurer                              | 22 |
|                                                    |                                                                                                                                                       |   |
| Exhibit                32                               | 18                U.S.C. Section 1350 Certification by Company Officers                                                                                    | 25 |

----

**Part      I  -  Item 1.  Financial      Information**

**SONESTA      INTERNATIONAL HOTELS CORPORATION**

**CONDENSED      CONSOLIDATED BALANCE SHEETS**

|                                                                                                       |   | (in                thousands) |    |
|------------------------------------------------------------------------------------------------------------|--------|-------------------------------|---------|
|                                                                                                       |   | June                30, 2007  |    |   | December                31, 2006 |   |
|                                                                                                       |   |                          |    |   |   |   |
| ASSETS                                                                                                     |   |                          |    |   |   |   |
| Current                assets:                                                                             |   |                          |    |   |   |   |
| Cash                and cash equivalents                                                                   |   | $                             | 25,602  |   |   | $ | 24,888 |   |
| Accounts                and notes receivable:                                                              |   |                          |    |   |   |   |   |   |
| Trade,                less allowance of $89 ($87 at December 31, 2006) fordoubtful                accounts |   |                          | 7,302   |   |   |   | 6,928 |   |
| Other,                including current portion of long-term receivables                andadvances        |   |                          | 1,170   |   |   |   | 1,551 |   |
| Total                accounts and notes receivable                                                         |   |                          | 8,472   |   |   |   | 8,479 |   |
| Inventories                                                                                                |   |                          | 575     |   |   |   | 532 |   |
| Current                deferred tax assets                                                                 |   |                          | 353     |   |   |   | 353 |   |
| Refundable                income taxes                                                                     |   |                          | 10      |   |   |   | 89 |   |
| Prepaid                expenses and other current assets                                                   |   |                          | 2,040   |   |   |   | 1,275 |   |
|                                                                                                       |   |                          |    |   |   |   |   |   |
| Total                current assets                                                                        |   |                          | 37,052  |   |   |   | 35,616 |   |
|                                                                                                       |   |                          |    |   |   |   |   |   |
| Long-term                receivables and advances                                                          |   |                          | 5,649   |   |   |   | 6,879 |   |
|                                                                                                       |   |                          |    |   |   |   |   |   |
| Deferred                tax assets                                                                         |   |                          | 7,588   |   |   |   | 7,873 |   |
|                                                                                                       |   |                          |    |   |   |   |   |   |
| Investment                in development partnership                                                       |   |                          | 34,541  |   |   |   | 35,291 |   |
|                                                                                                       |   |                          |    |   |   |   |   |   |
| Property                and equipment, at cost:                                                            |   |                          |    |   |   |   |   |   |
| Land                                                                                                       |   |                          | 2,102   |   |   |   | 2,102 |   |
| Buildings                                                                                                  |   |                          | 26,175  |   |   |   | 25,984 |   |
| Furniture                and equipment                                                                     |   |                          | 32,892  |   |   |   | 30,730 |   |
| Leasehold                improvements                                                                      |   |                          | 8,171   |   |   |   | 8,076 |   |
| Projects                in progress                                                                        |   |                          | 14      |   |   |   | 560 |   |
|                                                                                                       |   |                          | 69,354  |   |   |   | 67,452 |   |
|                                                                                                       |   |                          |    |   |   |   |   |   |
| Less:                accumulated depreciation and amortization                                             |   |                          | 31,684  |   |   |   | 29,052 |   |
| Net                property and equipment                                                                  |   |                          | 37,670  |   |   |   | 38,400 |   |
|                                                                                                       |   |                          |    |   |   |   |   |   |
| Other                long-term assets                                                                      |   |                          | 2,024   |   |   |   | 2,369 |   |
|                                                                                                       |   | $                             | 124,524 |   |   | $ | 126,428 |   |

*See      accompanying notes to condensed consolidated financial      statements.*

----

**SONESTA      INTERNATIONAL HOTELS CORPORATION**

**CONDENSED      CONSOLIDATED BALANCE SHEETS**

|                                                             |   | (in                thousands) |    |
|------------------------------------------------------------------|--------|-------------------------------|---------|
|                                                             |   | June                30, 2007  |    |   | December                31, 2006 |   |
|                                                             |   |                          |    |   |   |   |
|                                                             |   |                          |    |   |   |   |
| LIABILITIES                AND COMMON STOCKHOLDERS’ EQUITY |   |                          |    |   |   |   |
| Current                liabilities:                              |   |                          |    |   |   |   |
| Accounts                payable                                  |   | $                             | 2,808   |   |   | $ | 3,782 |   |
| Advance                deposits                                  |   |                          | 791     |   |   |   | 829 |   |
| Accrued                income taxes                              |   |                          | 106     |   |   |   | 449 |   |
| Accrued                liabilities:                              |   |                          |    |   |   |   |   |   |
| Salaries                and wages                                |   |                          | 1,375   |   |   |   | 1,053 |   |
| Rentals                                                          |   |                          | 2,559   |   |   |   | 3,127 |   |
| Interest                                                         |   |                          | 244     |   |   |   | 252 |   |
| Pension                and other employee benefits               |   |                          | 2,301   |   |   |   | 262 |   |
| Other                                                            |   |                          | 942     |   |   |   | 1,320 |   |
|                                                             |   |                          |    |   |   |   |   |   |
| Total                accrued liabilities                         |   |                          | 7,421   |   |   |   | 6,014 |   |
|                                                             |   |                          |    |   |   |   |   |   |
| Total                current liabilities                         |   |                          | 11,126  |   |   |   | 11,074 |   |
|                                                             |   |                          |    |   |   |   |   |   |
| Long-term                debt                                    |   |                          | 34,061  |   |   |   | 34,061 |   |
|                                                             |   |                          |    |   |   |   |   |   |
| Deferred                gain                                     |   |                          | 64,481  |   |   |   | 64,481 |   |
|                                                             |   |                          |    |   |   |   |   |   |
| Other                non-current liabilities                     |   |                          | 8,216   |   |   |   | 9,441 |   |
|                                                             |   |                          |    |   |   |   |   |   |
|                                                             |   |                          |    |   |   |   |   |   |
| Commitments                and contingencies                     |   |                          |    |   |   |   |   |   |
|                                                             |   |                          |    |   |   |   |   |   |
| Common                stockholders’ equity:                |   |                          |    |   |   |   |   |   |
| Common                stock:                                     |   |                          |    |   |   |   |   |   |
| Class                A, $ 0.80 par value:                        |   |                          |    |   |   |   |   |   |
| Authorized                – 10,000 shares                  |   |                          |    |   |   |   |   |   |
| Issued—6,102                shares at stated value         |   |                          | 4,882   |   |   |   | 4,882 |   |
| Retained                earnings                                 |   |                          | 14,042  |   |   |   | 14,773 |   |
| Treasury                shares—2,404, at cost              |   |                          | (12,053 | ) |   |   | (12,053 | ) |
| Accumulated                other comprehensive loss              |   |                          | (231    | ) |   |   | (231 | ) |
| Total                common stockholders’ equity           |   |                          | 6,640   |   |   |   | 7,371 |   |
|                                                             |   | $                             | 124,524 |   |   | $ | 126,428 |   |

*See      accompanying notes to condensed consolidated financial      statements.*

----

**SONESTA      INTERNATIONAL HOTELS CORPORATION**

**CONDENSED      CONSOLIDATED STATEMENTS OF      OPERATIONS  (unaudited)**

|                                                                                |   |                                                    |   |   |                                                  |   |
|-------------------------------------------------------------------------------------|--------|---------------------------------------------------------|--------|--------|-------------------------------------------------------|--------|
|                                                                                |   |                                                    |   |   |                                                  |   |
|                                                                                |   | Three                Months EndedJune                30 |   |   | Six                Months EndedJune                30 |   |
|                                                                                |   |                                                    |   |   |                                                  |   |   |   |   |   |   |   |
|                                                                                |   | 2007                                                    |   |   | 2006                                                  |   |   | 2007 |   |   | 2006 |   |
| Revenues:                                                                           |   |                                                    |   |   |                                                  |   |   |   |   |   |   |   |
|      Rooms                                                 |   | $                                                       | 10,663 |   |                                                  | $      | 13,024 |   |   | $ | 19,148 |   |   | $ | 27,895 |   |
|      Food                and beverage                      |   |                                                    | 4,687  |   |                                                  |   | 6,481 |   |   |   | 8,609 |   |   |   | 11,909 |   |
|      Management,                license and service fees   |   |                                                    | 1,385  |   |                                                  |   | 1,060 |   |   |   | 3,153 |   |   |   | 2,457 |   |
|      Parking,                telephone and other           |   |                                                    | 1,383  |   |                                                  |   | 2,274 |   |   |   | 2,591 |   |   |   | 4,516 |   |
|                                                                                |   |                                                    | 18,118 |   |                                                  |   | 22,839 |   |   |   | 33,501 |   |   |   | 46,777 |   |
| Other                revenues from managed and                affiliated properties |   |                                                    | 4,678  |   |                                                  |   | 4,055 |   |   |   | 9,578 |   |   |   | 8,367 |   |
| Total                revenues                                                       |   |                                                    | 22,796 |   |                                                  |   | 26,894 |   |   |   | 43,079 |   |   |   | 55,144 |   |
|                                                                                |   |                                                    |   |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |
| Costs                and expenses:                                                  |   |                                                    |   |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |
|      Costs                and operating expenses           |   |                                                    | 7,722  |   |                                                  |   | 11,011 |   |   |   | 14,682 |   |   |   | 21,445 |   |
|      Advertising                and promotion              |   |                                                    | 1,423  |   |                                                  |   | 1,779 |   |   |   | 2,682 |   |   |   | 3,674 |   |
|      Administrative                and general             |   |                                                    | 3,284  |   |                                                  |   | 3,992 |   |   |   | 6,490 |   |   |   | 7,683 |   |
|      Human                resources                        |   |                                                    | 275    |   |                                                  |   | 539 |   |   |   | 560 |   |   |   | 938 |   |
|      Maintenance                                           |   |                                                    | 927    |   |                                                  |   | 1,216 |   |   |   | 1,783 |   |   |   | 2,610 |   |
|      Rentals                                               |   |                                                    | 1,065  |   |                                                  |   | 683 |   |   |   | 2,840 |   |   |   | 3,033 |   |
|      Property                taxes                         |   |                                                    | 412    |   |                                                  |   | 647 |   |   |   | 820 |   |   |   | 1,322 |   |
|      Depreciation                and amortization          |   |                                                    | 1,374  |   |                                                  |   | 2,857 |   |   |   | 2,745 |   |   |   | 5,366 |   |
|                                                                                |   |                                                    | 16,482 |   |                                                  |   | 22,724 |   |   |   | 32,602 |   |   |   | 46,071 |   |
| Other                expenses from managed and                affiliated properties |   |                                                    | 4,678  |   |                                                  |   | 4,055 |   |   |   | 9,578 |   |   |   | 8,367 |   |
| Total                costs and expenses                                             |   |                                                    | 21,160 |   |                                                  |   | 26,779 |   |   |   | 42,180 |   |   |   | 54,438 |   |
|                                                                                |   |                                                    |   |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |
| Operating                income                                                     |   |                                                    | 1,636  |   |                                                  |   | 115 |   |   |   | 899 |   |   |   | 706 |   |
|                                                                                |   |                                                    |   |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |
| Other                income (deductions):                                           |   |                                                    |   |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |
|      Interest                expense                       |   |                                                    | (751   | )      |                                                  |   | (751 | ) |   |   | (1,494 | ) |   |   | (1,494 | ) |
|      Interest                income                        |   |                                                    | 387    |   |                                                  |   | 342 |   |   |   | 784 |   |   |   | 716 |   |
|      Foreign                exchange gain                  |   |                                                    | 1      |   |                                                  |   | 26 |   |   |   | 3 |   |   |   | 32 |   |
|      Gain                on sales of assets                |   |                                                    | 16     |   |                                                  |   | -- |   |   |   | 16 |   |   |   | 4 |   |
|                                                                                |   |                                                    | (347   | )      |                                                  |   | (383 | ) |   |   | (691 | ) |   |   | (742 | ) |
|                                                                                |   |                                                    |   |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |
| Income                (loss) before income tax provision (benefit)                  |   |                                                    | 1,289  |   |                                                  |   | (268 | ) |   |   | 208 |   |   |   | (36 | ) |
| Income                tax provision (benefit)                                       |   |                                                    | 527    |   |                                                  |   | (35 | ) |   |   | 267 |   |   |   | 187 |   |
| Net                income (loss)                                                    |   |                                                    | 762    |   |                                                  |   | (233 | ) |   |   | (59 | ) |   |   | (223 | ) |
|                                                                                |   |                                                    |   |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |
| Retained                earnings at beginning of period                             |   |                                                    | 13,650 |   |                                                  |   | 19,046 |   |   |   | 14,773 |   |   |   | 19,036 |   |
| Cumulative                effect of change in accounting principle (see note 11)    |   |                                                    | --     |   |                                                  |   | -- |   |   |   | (302 | ) |   |   | -- |   |
| Cash                dividends                                                       |   |                                                    | (370   | )      |                                                  |   | (370 | ) |   |   | (370 | ) |   |   | (370 | ) |
| Retained                earnings at end of period                                   |   | $                                                       | 14,042 |   |                                                  | $      | 18,443 |   |   | $ | 14,042 |   |   | $ | 18,443 |   |
|                                                                                |   |                                                    |   |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |
| Net                income (loss) per share                                          |   | $                                                       | 0.21   |   |                                                  | $      | (0.06 | ) |   | $ | (0.01 | ) |   | $ | (0.06 | ) |
| Weighted                average number of shares outstanding                        |   |                                                    | 3,698  |   |                                                  |   | 3,698 |   |   |   | 3,698 |   |   |   | 3,698 |   |

*See      accompanying notes to condensed consolidated financial      statements.*

----

**SONESTA      INTERNATIONAL HOTELS CORPORATION**

**CONDENSED      CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)**

|                                                                                                                                                  |   | (in                thousands)           |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|--------|
|                                                                                                                                                  |   | Six                Months Ended June 30 |   |
|                                                                                                                                                  |   | 2007                                    |   |   | 2006 |   |
| Cash                provided (used) by operating activities                                                                                           |   |                                    |   |   |   |   |
| Net                loss                                                                                                                               |   | $                                       | (59    | ) |   | $ | (223 | ) |
| Adjustments                to reconcile net loss to net cash provided                                                                                 |   |                                    |   |   |   |   |   |   |
|     by                operating activities                                                                                        |   |                                    |   |   |   |   |   |   |
|           Depreciation                and amortization of property and equipment                    |   |                                    | 2,745  |   |   |   | 5,366 |   |
|           Other                amortization                                                         |   |                                    | 21     |   |   |   | 21 |   |
|           Deferred                federal and state income tax provision                            |   |                                    | 441    |   |   |   | 63 |   |
|           Gain                on sales of assets                                                    |   |                                    | (16    | ) |   |   | (4 | ) |
| Changes                in assets and liabilities                                                                                                      |   |                                    |   |   |   |   |   |   |
|           Restricted                cash                                                            |   |                                    | --     |   |   |   | 267 |   |
|           Accounts                and notes receivable                                              |   |                                    | 19     |   |   |   | 647 |   |
|           Inventories                                                                               |   |                                    | (43    | ) |   |   | 274 |   |
|           Prepaid                expenses and other                                                 |   |                                    | (382   | ) |   |   | 23 |   |
|           Accounts                payable                                                           |   |                                    | (974   | ) |   |   | (1,511 | ) |
|           Advance                deposits                                                           |   |                                    | (38    | ) |   |   | (693 | ) |
|           Accrued                income taxes                                                       |   |                                    | (357   | ) |   |   | (975 | ) |
|           Accrued                liabilities                                                        |   |                                    | (566   | ) |   |   | (695 | ) |
|                Cash                provided by operating activities        |   |                                    | 791    |   |   |   | 2,560 |   |
|                                                                                                                                                  |   |                                    |   |   |   |   |   |   |
|                                                                                                                                                  |   |                                    |   |   |   |   |   |   |
| Cash                provided (used) by investing activities                                                                                           |   |                                    |   |   |   |   |   |   |
|      Proceeds                from sales of assets                                                                            |   |                                    | 16     |   |   |   | 17 |   |
|      Payments                received from development partnership                                                           |   |                                    | 625    |   |   |   | -- |   |
|      Expenditures                for property and equipment                                                                  |   |                                    | (1,901 | ) |   |   | (4,084 | ) |
|      Payments                received on long-term receivables and advances                                                  |   |                                    | 1,553  |   |   |   | 3,605 |   |
|      New                loans and advances                                                                                   |   |                                    | --     |   |   |   | (1,370 | ) |
|                Cash                provided (used) by investing activities |   |                                    | 293    |   |   |   | (1,832 | ) |
|                                                                                                                                                  |   |                                    |   |   |   |   |   |   |
| Cash                used by financing activities                                                                                                      |   |                                    |   |   |   |   |   |   |
|      Cash                dividends paid                                                                                      |   |                                    | (370   | ) |   |   | (370 | ) |
|  Cash                used by financing activities                                                                                                |   |                                    | (370   | ) |   |   | (370 | ) |
|                                                                                                                                                  |   |                                    |   |   |   |   |   |   |
| Net                increase in cash                                                                                                                   |   |                                    | 714    |   |   |   | 358 |   |
| Cash                and cash equivalents at beginning of period                                                                                       |   |                                    | 24,888 |   |   |   | 24,941 |   |
| Cash                and cash equivalents at end of period                                                                                             |   | $                                       | 25,602 |   |   | $ | 25,299 |   |

*See      accompanying notes to condensed consolidated financial      statements.*

----

**SONESTA      INTERNATIONAL HOTELS CORPORATION**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

| **1.** | **Basis                of Presentation** |
|--------|------------------------------------------|

| **2.** | **Long-Term                Receivables and                Advances** |
|--------|----------------------------------------------------------------------|

|                                                                       |   | (in                thousands) |   |
|----------------------------------------------------------------------------|--------|-------------------------------|--------|
|                                                                       |   | June                30,2007   |   |   | December                31,2006 |   |
| Sharm                El Sheikh, Egypt (a)                                  |   | $                             | --     |   |   | $ | 126 |   |
| Sonesta                Hotel & Suites Coconut Grove (b)                |   |                          | 3,623  |   |   |   | 4,346 |   |
| Trump International Sonesta Beach                Resort (c) |   |                          | 1,135  |   |   |   | 1,135 |   |
| Chateau                Sonesta Hotel New Orleans (d)                       |   |                          | 1,445  |   |   |   | 1,895 |   |
| Other                                                                      |   |                          | 308    |   |   |   | 565 |   |
| Total                long-term                receivables                  |   |                          | 6,511  |   |   |   | 8,067 |   |
| Less:  current                portion                            |   |                          | 862    |   |   |   | 1,188 |   |
| Net                long-term                receivables                    |   | $                             | 5,649  |   |   | $ | 6,879 |   |

| (a) | This                loan, in the original amount of $1,000,000, was made in 1996 and                1997 to                the owner of the Sonesta Beach Resort, Sharm El Sheikh.  The                loan was fully repaid in June 2007. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | This                loan was made to the owner of the Sonesta Hotel & Suites Coconut                Grove, Miami, which opened in April 2002, to fund construction and                furniture, fixtures and equipment costs.  The interest rate is                equal to the prime rate (8.25% at June 30, 2007), plus ¾%.  The                loan is secured by a mortgage on the hotel property, and is being                repaid                out of hotel profits that are available for distribution to the owner,                and, to the extent the hotel’s earnings are insufficient to pay the owner                certain minimum annual returns and minimum annual target returns                due under                the management agreement, out of shortfalls funded by the                Company. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**SONESTA      INTERNATIONAL HOTELS CORPORATION**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

| (c) | This                amount represents advances made to the owner of Trump International                Sonesta Beach Resort Sunny Isles for the Company’s share of the losses of                the resort from the opening on April 1, 2003 through October 31,                2004                ($1,391,000).  This amount was due pursuant to the terms of the                management agreement under which the Company operates the                hotel.  The advance was reduced by $256,000 received from the                hotel in 2006.  No interest is charged on this advance, which                will be repaid out of future available profits generated by the hotel,                after the payment of a minimum annual return to the hotel’s                owner. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d) | Following                Hurricane Katrina, which struck New Orleans in late August 2005,                the                Company advanced $1,895,000 to Chateau Sonesta Hotel New Orleans,                which it                operates under a long-term management agreement.  These advances                were used to cover operating expenses, and to pay for repairs necessary                to                reopen the hotel on December 1, 2005.  During the second quarter                of 2007, $450,000 was repaid from operating cash flow of the                hotel.  The Company expects to recover the remainder of these                advances, and certain deferred fees, together with interest, out                of                available cash flow from the hotel, or out of separate funds from                the                hotel’s owner.  The interest rate on these advances ranges from                prime (8.25% at June 30, 2007) plus one (1) to three (3) percentage                points. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **3.** | **Investment                in Development                Partnership** |
|--------|-------------------------------------------------------------------------|

|                                        |   |                            |    |
|---------------------------------------------|--------|---------------------------------|---------|
|                                        |   | at                June 30, 2007 |    |
|                                        |   |                            |    |
| Total                assets, primarily land |   | $                               | 146,297 |   |
| Less                debt                    |   |                            | (53,205 | ) |
| Partnership                equity           |   | $                               | 93,092  |   |

| **4.** | **Borrowing                Arrangements** |
|--------|-------------------------------------------|

*Credit      Line*

----

**SONESTA      INTERNATIONAL HOTELS CORPORATION**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

*Long-Term      Debt*

| **5.** | **Hotel                Costs and Operating                Expenses** |
|--------|----------------------------------------------------------------------|

|                                     |   | (in                thousands)                  |   |
|------------------------------------------|--------|------------------------------------------------|--------|
|                                     |   | Three                Months Ended June 30 |   |   | Six                Months EndedJune                30 |   |
|                                     |   | 2007                                           |   |   | 2006 |   |   | 2007 |   |   | 2006 |   |
| Direct                departmental costs |   |                                           |   |   |   |   |   |   |   |   |   |   |
| Rooms                                    |   | $                                              | 2,797  |   |   | $ | 3,510 |   |   | $ | 5,122 |   |   | $ | 6,710 |   |
| Food                and beverage         |   |                                           | 3,534  |   |   |   | 5,289 |   |   |   | 6,787 |   |   |   | 10,045 |   |
| Heat,                light and power     |   |                                           | 715    |   |   |   | 1,004 |   |   |   | 1,429 |   |   |   | 2,250 |   |
| Other                                    |   |                                           | 676    |   |   |   | 1,208 |   |   |   | 1,344 |   |   |   | 2,440 |   |
|                                     |   | $                                              | 7,722  |   |   | $ | 11,011 |   |   | $ | 14,682 |   |   | $ | 21,445 |   |

----

**SONESTA      INTERNATIONAL HOTELS CORPORATION**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

| **6.** | **Federal,                Foreign and State Income                Tax** |
|--------|-------------------------------------------------------------------------|

|                                                 |   | (in                thousands)           |   |
|------------------------------------------------------|--------|-----------------------------------------|--------|
|                                                 |   | Six                Months Ended June 30 |   |
|                                                 |   | 2007                                    |   |   | 2006 |   |
|                                                 |   |                                    |   |   |   |   |
| Current                federal income tax benefit    |   | $                                       | (366   | ) |   | $ | (119 | ) |
| Current                foreign income tax provision  |   |                                    | 150    |   |   |   | 193 |   |
| Current                state income tax provision    |   |                                    | 42     |   |   |   | 50 |   |
| Deferred                state income tax provision   |   |                                    | 15     |   |   |   | 4 |   |
| Deferred                federal income tax provision |   |                                    | 426    |   |   |   | 59 |   |
| Income                tax provision                  |   | $                                       | 267    |   |   | $ | 187 |   |

| **7.** | **Segment                Information** |
|--------|----------------------------------------|

|                                                                                                    |   | (in                thousands)                          |   |
|---------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------|--------|
|                                                                                                    |   | Owned                &Leased                Hotels |   |   | ManagementActivities |   |   | Consolidated |   |
|                                                                                                    |   |                                                   |   |   |   |   |   |   |   |
| Revenues                                                                                                |   | $                                                      | 16,725 |   |   | $ | 1,393 |   |   | $ | 18,118 |   |
| Other                revenues from managed and                                                          |   |                                                   |   |   |   |   |   |   |   |   |   |   |
| affiliated                properties                                                                    |   |                                                   | --     |   |   |   | 4,678 |   |   |   | 4,678 |   |
| Total                revenues                                                                           |   |                                                   | 16,725 |   |   |   | 6,071 |   |   |   | 22,796 |   |
| Operating                income (loss) before depreciation and amortization                expense |   |                                                   | 3,770  |   |   |   | (760 | ) |   |   | 3,010 |   |
| Depreciation                and amortization                                                            |   |                                                   | (1,249 | ) |   |   | (125 | ) |   |   | (1,374 | ) |
| Interest                income (expense), net                                                           |   |                                                   | (750   | ) |   |   | 386 |   |   |   | (364 | ) |
| Other                income                                                                             |   |                                                   | --     |   |   |   | 17 |   |   |   | 17 |   |
| Segment                pre-tax income (loss)                                                            |   |                                                   | 1,771  |   |   |   | (482 | ) |   |   | 1,289 |   |
|                                                                                                    |   |                                                   |   |   |   |   |   |   |   |   |   |   |
| Segment                assets                                                                           |   |                                                   | 77,084 |   |   |   | 47,440 |   |   |   | 124,524 |   |
| Segment                capital additions                                                                |   |                                                   | 588    |   |   |   | 18 |   |   |   | 606 |   |

----

**SONESTA      INTERNATIONAL HOTELS CORPORATION**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

|                                                                                |   | (in                thousands)                          |   |
|-------------------------------------------------------------------------------------|--------|--------------------------------------------------------|--------|
|                                                                                |   | Owned                &Leased                Hotels |   |   | ManagementActivities |   |   | Consolidated |   |
|                                                                                |   |                                                   |   |   |   |   |   |   |   |
| Revenues                                                                            |   | $                                                      | 30,323 |   |   | $ | 3,178 |   |   | $ | 33,501 |   |
| Other                revenues from managed and                                      |   |                                                   |   |   |   |   |   |   |   |   |   |   |
| affiliated                properties                                                |   |                                                   | --     |   |   |   | 9,578 |   |   |   | 9,578 |   |
| Total                revenues                                                       |   |                                                   | 30,323 |   |   |   | 12,756 |   |   |   | 43,079 |   |
| Operating                income (loss) before depreciation and amortization expense |   |                                                   | 4,668  |   |   |   | (1,024 | ) |   |   | 3,644 |   |
| Depreciation                and amortization                                        |   |                                                   | (2,497 | ) |   |   | (248 | ) |   |   | (2,745 | ) |
| Interest                income (expense), net                                       |   |                                                   | (1,491 | ) |   |   | 781 |   |   |   | (710 | ) |
| Other                income                                                         |   |                                                   | --     |   |   |   | 19 |   |   |   | 19 |   |
| Segment                pre-tax income (loss)                                        |   |                                                   | 680    |   |   |   | (472 | ) |   |   | 208 |   |
|                                                                                |   |                                                   |   |   |   |   |   |   |   |   |   |   |
| Segment                assets                                                       |   |                                                   | 77,084 |   |   |   | 47,440 |   |   |   | 124,524 |   |
| Segment                capital additions                                            |   |                                                   | 1,876  |   |   |   | 25 |   |   |   | 1,901 |   |

|                                                                                                    |   | (in                thousands)                          |   |
|---------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------|--------|
|                                                                                                    |   | Owned                &Leased                Hotels |   |   | ManagementActivities |   |   | Consolidated |   |
|                                                                                                    |   |                                                   |   |   |   |   |   |   |   |
| Revenues                                                                                                |   | $                                                      | 21,770 |   |   | $ | 1,069 |   |   | $ | 22,839 |   |
| Other                revenues from managed and                                                          |   |                                                   |   |   |   |   |   |   |   |   |   |   |
| affiliated                properties                                                                    |   |                                                   | --     |   |   |   | 4,055 |   |   |   | 4,055 |   |
| Total                revenues                                                                           |   |                                                   | 21,770 |   |   |   | 5,124 |   |   |   | 26,894 |   |
| Operating                income (loss) before depreciation and amortization                expense |   |                                                   | 3,865  |   |   |   | (893 | ) |   |   | 2,972 |   |
| Depreciation                and amortization                                                            |   |                                                   | (2,733 | ) |   |   | (124 | ) |   |   | (2,857 | ) |
| Interest                income (expense), net                                                           |   |                                                   | (733   | ) |   |   | 324 |   |   |   | (409 | ) |
| Other                income                                                                             |   |                                                   | --     |   |   |   | 26 |   |   |   | 26 |   |
| Segment                pre-tax income (loss)                                                            |   |                                                   | 399    |   |   |   | (667 | ) |   |   | (268 | ) |
|                                                                                                    |   |                                                   |   |   |   |   |   |   |   |   |   |   |
| Segment                assets                                                                           |   |                                                   | 78,772 |   |   |   | 47,490 |   |   |   | 126,262 |   |
| Segment                capital additions                                                                |   |                                                   | 1,111  |   |   |   | 27 |   |   |   | 1,138 |   |
|                                                                                                    |   |                                                   |   |   |   |   |   |   |   |   |   |   |

----

**SONESTA      INTERNATIONAL HOTELS CORPORATION**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

|                                                                                |   | (in                thousands)                          |   |
|-------------------------------------------------------------------------------------|--------|--------------------------------------------------------|--------|
|                                                                                |   | Owned                &Leased                Hotels |   |   | ManagementActivities |   |   | Consolidated |   |
|                                                                                |   |                                                   |   |   |   |   |   |   |   |
| Revenues                                                                            |   | $                                                      | 44,294 |   |   | $ | 2,483 |   |   | $ | 46,777 |   |
| Other                revenues from managed and                                      |   |                                                   |   |   |   |   |   |   |   |   |   |   |
| affiliated                properties                                                |   |                                                   | --     |   |   |   | 8,367 |   |   |   | 8,367 |   |
| Total                revenues                                                       |   |                                                   | 44,294 |   |   |   | 10,850 |   |   |   | 55,144 |   |
| Operating                income (loss) before depreciation and amortization expense |   |                                                   | 7,387  |   |   |   | (1,315 | ) |   |   | 6,072 |   |
| Depreciation                and amortization                                        |   |                                                   | (5,118 | ) |   |   | (248 | ) |   |   | (5,366 | ) |
| Interest                income (expense), net                                       |   |                                                   | (1,465 | ) |   |   | 687 |   |   |   | (778 | ) |
| Other                income                                                         |   |                                                   | --     |   |   |   | 36 |   |   |   | 36 |   |
| Segment                pre-tax income (loss)                                        |   |                                                   | 804    |   |   |   | (840 | ) |   |   | (36 | ) |
|                                                                                |   |                                                   |   |   |   |   |   |   |   |   |   |   |
| Segment                assets                                                       |   |                                                   | 78,772 |   |   |   | 47,490 |   |   |   | 126,262 |   |
| Segment                capital additions                                            |   |                                                   | 3,938  |   |   |   | 146 |   |   |   | 4,084 |   |

| **8.** | **Earnings                per Share** |
|--------|---------------------------------------|

|                                                            |   | Three                months ended June 30 |   |   | Six                months ended June 30 |   |
|-----------------------------------------------------------------|--------|-------------------------------------------|--------|--------|-----------------------------------------|--------|
|                                                            |   | 2007                                      |   |   | 2006                                    |   |   | 2007 |   |   | 2006 |   |
| Numerator:                                                      |   |                                      |   |   |                                    |   |   |   |   |   |   |   |
|   Income                (loss) from operations        |   | $                                         | 762    |   |                                    | $      | (233 | ) |   | $ | (59 | ) |   | $ | (223 | ) |
|                                                            |   |                                      |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
| Denominator:                                                    |   |                                      |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
|   Weighted                average number of           |   |                                      |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
|      shares                outstanding |   |                                      | 3,698  |   |                                    |   | 3,698 |   |   |   | 3,698 |   |   |   | 3,698 |   |
|                                                            |   |                                      |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |
| Net                income (loss) per share of common stock      |   | $                                         | 0.21   |   |                                    | $      | (0.06 | ) |   | $ | (0.01 | ) |   | $ | (0.06 | ) |

----

**SONESTA      INTERNATIONAL HOTELS CORPORATION**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

| **9.** | **Pension                Plan** |
|--------|---------------------------------|

|                                                                                                                                        |   | (in                thousands)           |   |
|---------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|--------|
|                                                                                                                                        |   | Six                Months ended June 30 |   |
|                                                                                                                                        |   | 2007                                    |   |   | 2006 |   |
|                                                                                                                                        |   |                                    |   |   |   |   |
| Service                cost                                                                                                                 |   | $                                       | --     |   |   | $ | 941 |   |
| Interest                cost                                                                                                                |   |                                    | 890    |   |   |   | 1,015 |   |
| Expected                return on assets                                                                                                    |   |                                    | (922   | ) |   |   | (853 | ) |
| Amortization                of prior service cost                                                                                           |   |                                    | --     |   |   |   | 45 |   |
| Amortization                of transition asset                                                                                             |   |                                    | --     |   |   |   | (44 | ) |
| Recognized                actuarial loss                                                                                                    |   |                                    | 19     |   |   |   | 341 |   |
| Total                plan benefit cost (credit)                                                                                             |   |                                    | (13    | ) |   |   | 1,445 |   |
| Less:                amounts charged to hotels operated under       management                agreements |   |                                    | --     |   |   |   | (181 | ) |
| Net                periodic benefit cost (credit) included in theconsolidated statements                of                operations        |   | $                                       | (13    | ) |   | $ | 1,264 |   |

| **10.** | **Chateau                Sonesta Hotel New                Orleans** |
|---------|---------------------------------------------------------------------|

**11.           Impact      of Recently Issued Accounting Standards**

*EITF      Issue No. 06-2 – Accounting for Sabbatical Leaves and other Similar      Benefits*

----

**SONESTA      INTERNATIONAL HOTELS CORPORATION**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

*FIN      48 – Accounting for Uncertainty in Income Taxes*

*EITF      Issue No. 06-3 – Presentation of Sales Taxes in Income Statements, Gross Versus      Net*

----

**Part      I – Item 2**

**MANAGEMENT’S      DISCUSSION AND ANALYSIS**

**OF      RESULTS OF OPERATIONS AND FINANCIAL CONDITION**

**RECENT      DEVELOPMENTS**

**FIRST      SIX MONTHS 2007 COMPARED TO 2006**

**REVENUES**

|                                                                                                   |   | TOTAL                REVENUES(in                thousands) |   |
|--------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------|--------|
|                                                                                                   |   | NO.                OFROOMS                                 |   |   | 2007 |   |   | 2006 |   |
| Sonesta                Beach Resort Key Biscayne                                                       |   |                                                       | 300    |   |   | $ | -- |   |   | $ | 16,631 |   |
| Royal                Sonesta Hotel Boston (Cambridge)                                                  |   |                                                       | 400    |   |   |   | 12,994 |   |   |   | 12,091 |   |
| Royal                Sonesta Hotel New Orleans                                                         |   |                                                       | 500    |   |   |   | 17,329 |   |   |   | 15,572 |   |
| Management                and service fees and other revenues                                          |   |                                                       |   |   |   |   | 3,178 |   |   |   | 2,483 |   |
| Total                revenues, excluding revenues frommanaged and affiliated                properties |   |                                                       |   |   |   | $ | 33,501 |   |   | $ | 46,777 |   |

----

**MANAGEMENT’S      DISCUSSION AND ANALYSIS**

**OF      RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued)**

**OPERATING      INCOME**

|                                                                          |   | OPERATING                INCOME (LOSS)(in                thousands) |   |
|-------------------------------------------------------------------------------|--------|---------------------------------------------------------------------|--------|
|                                                                          |   | 2007                                                                |   |   | 2006 |   |
| Sonesta                Beach Resort Key Biscayne                              |   | $                                                                   | --     |   |   | $ | 1,308 |   |
| Royal                Sonesta Hotel Boston (Cambridge)                         |   |                                                                | 1,300  |   |   |   | 260 |   |
| Royal                Sonesta Hotel New Orleans                                |   |                                                                | 872    |   |   |   | 701 |   |
| Operating                income from hotels after management and service fees |   |                                                                | 2,172  |   |   |   | 2,269 |   |
| Management                activities and other                                |   |                                                                | (1,273 | ) |   |   | (1,563 | ) |
| Operating                income                                               |   | $                                                                   | 899    |   |   | $ | 706 |   |

----

**MANAGEMENT’S      DISCUSSION AND ANALYSIS**

**OF      RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued)**

**OTHER      INCOME (DEDUCTIONS)**

**SECOND      QUARTER 2007 COMPARED TO 2006**

**REVENUES**

|                                                            |   | TOTAL                REVENUES(in                thousands) |   |
|-----------------------------------------------------------------|--------|------------------------------------------------------------|--------|
|                                                            |   | NO.                OFROOMS                                 |   |   | 2007 |   |   | 2006 |   |
| Sonesta                Beach Resort Key Biscayne                |   |                                                       | 300    |   |   | $ | -- |   |   | $ | 7,037 |   |
| Royal                Sonesta Hotel Boston (Cambridge)           |   |                                                       | 400    |   |   |   | 8,598 |   |   |   | 8,189 |   |
| Royal                Sonesta Hotel New Orleans                  |   |                                                       | 500    |   |   |   | 8,127 |   |   |   | 6,544 |   |
| Management                and service fees and other revenues   |   |                                                       |   |   |   |   | 1,393 |   |   |   | 1,069 |   |
| Total                revenues, excluding revenues from          |   |                                                       |   |   |   |   |   |   |   |   |   |   |
| managed                and affiliated                properties |   |                                                       |   |   |   | $ | 18,118 |   |   | $ | 22,839 |   |

----

**MANAGEMENT’S      DISCUSSION AND ANALYSIS**

**OF      RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued)**

**OPERATING      INCOME**

|                                                                          |   | OPERATING                INCOME (LOSS) (in                thousands) |   |
|-------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------|--------|
|                                                                          |   | 2007                                                                      |   |   | 2006 |   |
| Sonesta                Beach Resort Key Biscayne                              |   | $                                                                         | --     |   |   | $ | (465 | ) |
| Royal                Sonesta Hotel Boston (Cambridge)                         |   |                                                                      | 2,202  |   |   |   | 1,559 |   |
| Royal                Sonesta Hotel New Orleans                                |   |                                                                      | 320    |   |   |   | 38 |   |
| Operating                income from hotels after management and service fees |   |                                                                      | 2,522  |   |   |   | 1,132 |   |
| Management                activities and other                                |   |                                                                      | (886   | ) |   |   | (1,017 | ) |
| Operating                income                                               |   | $                                                                         | 1,636  |   |   | $ | 115 |   |

----

**MANAGEMENT’S      DISCUSSION AND ANALYSIS**

**OF      RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued)**

**OTHER      INCOME (DEDUCTIONS)**

**FEDERAL,      FOREIGN AND STATE INCOME TAXES**

**LIQUIDITY      AND CAPITAL RESOURCES**

----

**PART      I – Item 3**

**QUANTITATIVE      AND QUALITATIVE DISCLOSURE OF MARKET RISK**

|                                 |   | YEAR   |   |   |   |   |   |   |   |   |   |   |
|--------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                 |   | 2007   |   |   | 2008   |   |   | 2009   |   |   | 2010   |   |   | Thereafter |   |   | Total |   |   | Fair                Value |   |
| Fixed                rate            |   | $      | --     |   |   | $      | 602    |   |   | $      | 665    |   |   | $ | 32,794 |   |   | $ | -0- |   |   | $ | 34,061 |   |   | $ | 35,186 |   |
| Average                interest rate |   |   | 8.6    | %      |   |   | 8.6    | %      |   |   | 8.6    | %      |   |   | 8.6 | % |   |   | 8.6 | % |   |   |   |   |   |   |   |   |

----

**PART      I – Item 4**

**INTERNAL      CONTROLS AND PROCEDURES**

----

**PART      II – Item 4**

**SUBMISSION      OF MATTERS TO A VOTE OF SECURITY HOLDERS**

**ELECTION      OF COMMON STOCK DIRECTORS**

**DIRECTOR                                                                                                            VOTES      RECEIVED                                                           VOTES      WITHHELD**

| George                S. Abrams    | 2,949,911 | 89,222  |
|------------------------------------|-----------|---------|
| Vernon                R. Alden     | 2,515,893 | 523,240 |
| Joseph                L. Bower     | 3,030,880 | 8,253   |
| Charles                J. Clark    | 3,030,880 | 8,253   |
| Peter                J. Sonnabend  | 3,025,080 | 14,053  |
| Roger                P. Sonnabend  | 2,640,374 | 398,759 |
| Stephanie                Sonnabend | 3,025,052 | 14,081  |
| Stephen                Sonnabend   | 3,025,080 | 14,053  |
| Jean                C. Tempel      | 3,030,880 | 8,253   |

**PART      II – Other Information**

**Item      Numbers 1, 2, 3, 5 and 6**

----

**SIGNATURE**

|   | **SONESTA                INTERNATIONAL HOTELS CORPORATION** |
|--------|-------------------------------------------------------------|
|   |                                                        |   |
|   |                                                        |   |
|   | By:                                                         |   |
|   |                                                        | Boy                van Riel |
|   |                                                        | Vice                President and Treasurer |
|   |                                                        |   |
|   |                                                        | (Authorized                to sign on behalf of the Registrant as Principal Financial                Officer) |
|   |                                                        |   |
|   | Date:                August 13, 2007                        |

----