----

----

----

**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 March 31, 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 |
|----------------------|---------------------|

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

----

**INDEX**

**SONESTA      INTERNATIONAL HOTELS CORPORATION**

| Part                I. Financial Information | **Page**                                                                                                                                            |
|----------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|
|                                         |                                                                                                                                                |   |
| Item                1.                       | Financial                Statements (unaudited)                                                                                                     |   |
|                                         |                                                                                                                                                |   |
|                                         | Condensed                consolidated balance sheets — March 31, 2007 (unaudited) and December 31,                2006                        |   1 |
|                                         |                                                                                                                                                |   |
|                                         | Condensed                consolidated statements of operations — Three-month periods ended March                31, 2007 and 2006 (unaudited) |   3 |
|                                         |                                                                                                                                                |   |
|                                         | Condensed                consolidated statements of cash flows — Three-month periods ended March                31, 2007 and 2006 (unaudited) |   4 |
|                                         |                                                                                                                                                |   |
|                                         | Notes                to condensed consolidated financial statements — March 31, 2007 and                2006                                  |  5 |
|                                         |                                                                                                                                                |   |
| Item                2.                       | Management’s                Discussion and Analysis of Results of Operations and Financial Condition—                March 31, 2007     |   12 |
|                                         |                                                                                                                                                |   |
| Item                3.                       | Quantitative                and Qualitative Disclosure of Market Risk                                                                               |  15 |
|                                         |                                                                                                                                                |   |
| Item                4.                       | Internal                Controls and Procedures                                                                                                     | 16 |
|                                         |                                                                                                                                                |   |
| Part                II. Other Information    |                                                                                                                                                |
|                                         |                                                                                                                                                |   |
|                                         | Signature                page                                                                                                                       | 18 |
|                                         |                                                                                                                                                |   |
| Exhibits                31.1, 31.2, 31.3     | Certifications                by the Company’s Chief Executive Officers and Vice President and                Treasurer                       |    |
|                                         |                                                                                                                                                |   |
| Exhibit                99.1                  | 18                U.S.C. Section 1350 Certification by Company Officers                                                                             |    |

----

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

**SONESTA      INTERNATIONAL HOTELS CORPORATION**

**CONDENSED      CONSOLIDATED BALANCE SHEETS**

|                                                                                                              |   | (in                thousands) |    |
|-------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|---------|
|                                                                                                              |   | March                31, 2007 |    | December                31, 2006 |   |
|                                                                                                              |   |                          |    |   |   |
| ASSETS                                                                                                            |   |                          |    |   |   |   |   |
| Current                assets:                                                                                    |   |                          |    |   |   |   |   |
| Cash                and cash equivalents                                                                          |   | $                             | 20,889  |   | $ | 24,888 |   |
| Restricted                cash                                                                                    |   |                          | 442     |   |   | -- |   |
| Accounts                and notes receivable:                                                                     |   |                          |    |   |   |   |   |
| Trade,                less allowance of $86 ($87 at December 31, 2006) for  doubtful                accounts |   |                          | 7,640   |   |   | 6,928 |   |
| Other,                including current portion of long-term receivables and  advances                       |   |                          | 1,579   |   |   | 1,551 |   |
| Total                accounts and notes receivable                                                                |   |                          | 9,219   |   |   | 8,479 |   |
| Inventories                                                                                                       |   |                          | 593     |   |   | 532 |   |
| Current                deferred tax assets                                                                        |   |                          | 353     |   |   | 353 |   |
| Refundable                income taxes                                                                            |   |                          | 25      |   |   | 89 |   |
| Prepaid                expenses and other current assets                                                          |   |                          | 2,193   |   |   | 1,275 |   |
|                                                                                                              |   |                          |    |   |   |   |   |
| Total                current assets                                                                               |   |                          | 33,714  |   |   | 35,616 |   |
|                                                                                                              |   |                          |    |   |   |   |   |
| Long-term                receivables and advances                                                                 |   |                          | 6,430   |   |   | 6,879 |   |
|                                                                                                              |   |                          |    |   |   |   |   |
| Deferred                tax assets                                                                                |   |                          | 8,056   |   |   | 7,873 |   |
|                                                                                                              |   |                          |    |   |   |   |   |
| Investment                in development partnership                                                         |   |                          | 34,916  |   |   | 35,291 |   |
|                                                                                                              |   |                          |    |   |   |   |   |
| Property                and equipment, at cost:                                                                   |   |                          |    |   |   |   |   |
| Land                                                                                                              |   |                          | 2,102   |   |   | 2,102 |   |
| Buildings                                                                                                         |   |                          | 26,175  |   |   | 25,984 |   |
| Furniture                and equipment                                                                            |   |                          | 32,322  |   |   | 30,730 |   |
| Leasehold                improvements                                                                             |   |                          | 8,134   |   |   | 8,076 |   |
| Projects                in progress                                                                               |   |                          | 14      |   |   | 560 |   |
|                                                                                                              |   |                          | 68,747  |   |   | 67,452 |   |
|                                                                                                              |   |                          |    |   |   |   |   |
| Less:                accumulated depreciation and amortization                                                    |   |                          | 30,367  |   |   | 29,052 |   |
| Net                property and equipment                                                                         |   |                          | 38,380  |   |   | 38,400 |   |
|                                                                                                              |   |                          |    |   |   |   |   |
| Other                long-term assets                                                                             |   |                          | 2,243   |   |   | 2,369 |   |
|                                                                                                              |   | $                             | 123,739 |   | $ | 126,428 |   |

*See      accompanying notes to condensed consolidated financial      statements.*

----

**SONESTA      INTERNATIONAL HOTELS CORPORATION**

**CONDENSED      CONSOLIDATED BALANCE SHEETS**

|                                                             |   | (in                thousands) |    |
|------------------------------------------------------------------|--------|-------------------------------|---------|
|                                                             |   | March                31, 2007 |    | December                31, 2006 |   |
|                                                             |   |                          |    |   |   |
|                                                             |   |                          |    |   |   |
| LIABILITIES                AND COMMON STOCKHOLDERS’ EQUITY |   |                          |    |   |   |   |   |
| Current                liabilities:                              |   |                          |    |   |   |   |   |
| Accounts                payable                                  |   | $                             | 3,135   |   | $ | 3,782 |   |
| Advance                deposits                                  |   |                          | 879     |   |   | 829 |   |
| Accrued                income taxes                              |   |                          | 214     |   |   | 449 |   |
| Accrued                liabilities:                              |   |                          |    |   |   |   |   |
| Salaries                and wages                                |   |                          | 715     |   |   | 1,053 |   |
| Rentals                                                          |   |                          | 1,652   |   |   | 3,127 |   |
| Interest                                                         |   |                          | 252     |   |   | 252 |   |
| Pension                and other employee benefits               |   |                          | 639     |   |   | 262 |   |
| Other                                                            |   |                          | 1,531   |   |   | 1,320 |   |
|                                                             |   |                          |    |   |   |   |   |
| Total                accrued liabilities                         |   |                          | 4,789   |   |   | 6,014 |   |
|                                                             |   |                          |    |   |   |   |   |
| Total                current liabilities                         |   |                          | 9,017   |   |   | 11,074 |   |
|                                                             |   |                          |    |   |   |   |   |
| Long-term                debt                                    |   |                          | 34,061  |   |   | 34,061 |   |
|                                                             |   |                          |    |   |   |   |   |
| Deferred                gain                                     |   |                          | 64,481  |   |   | 64,481 |   |
|                                                             |   |                          |    |   |   |   |   |
| Other                non-current liabilities                     |   |                          | 9,932   |   |   | 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                                 |   |                          | 13,650  |   |   | 14,773 |   |
| Treasury                shares—2,404, at cost              |   |                          | (12,053 | ) |   | (12,053 | ) |
| Accumulated                other comprehensive loss              |   |                          | (231    | ) |   | (231 | ) |
| Total                common stockholders’ equity           |   |                          | 6,248   |   |   | 7,371 |   |
|                                                             |   | $                             | 123,739 |   | $ | 126,428 |   |

*See      accompanying notes to condensed consolidated financial      statements.*

----

**SONESTA      INTERNATIONAL HOTELS CORPORATION**

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

|                                                                                |   | Three                Months Ended March                31 |   |
|-------------------------------------------------------------------------------------|--------|-----------------------------------------------------------|--------|
|                                                                                |   |                                                      |   |   |   |
|                                                                                |   | 2007                                                      |   | 2006 |   |
| Revenues:                                                                           |   |                                                      |   |   |   |   |   |
| Rooms                                                                               |   | $                                                         | 8,485  |   | $ | 14,871 |   |
| Food                and beverage                                                    |   |                                                      | 3,922  |   |   | 5,428 |   |
| Management,                license and service fees                                 |   |                                                      | 1,768  |   |   | 1,397 |   |
| Parking,                telephone and other                                         |   |                                                      | 1,208  |   |   | 2,242 |   |
|                                                                                |   |                                                      | 15,383 |   |   | 23,938 |   |
| Other                revenues from managed and affiliated properties                |   |                                                      | 4,900  |   |   | 4,312 |   |
| Total                revenues                                                       |   |                                                      | 20,283 |   |   | 28,250 |   |
|                                                                                |   |                                                      |   |   |   |   |   |
| Costs                and expenses:                                                  |   |                                                      |   |   |   |   |   |
| Costs                and operating expenses                                         |   |                                                      | 6,960  |   |   | 10,434 |   |
| Advertising                and promotion                                            |   |                                                      | 1,259  |   |   | 1,895 |   |
| Administrative                and general                                           |   |                                                      | 3,206  |   |   | 3,691 |   |
| Human                resources                                                      |   |                                                      | 285    |   |   | 399 |   |
| Maintenance                                                                         |   |                                                      | 856    |   |   | 1,394 |   |
| Rentals                                                                             |   |                                                      | 1,775  |   |   | 2,350 |   |
| Property                taxes                                                       |   |                                                      | 408    |   |   | 675 |   |
| Depreciation                and amortization                                        |   |                                                      | 1,371  |   |   | 2,509 |   |
|                                                                                |   |                                                      | 16,120 |   |   | 23,347 |   |
| Other                expenses from managed and affiliated properties                |   |                                                      | 4,900  |   |   | 4,312 |   |
| Total                costs and expenses                                             |   |                                                      | 21,020 |   |   | 27,659 |   |
|                                                                                |   |                                                      |   |   |   |   |   |
|                                                                                |   |                                                      |   |   |   |   |   |
| Operating                income (loss)                                              |   |                                                      | (737   | ) |   | 591 |   |
|                                                                                |   |                                                      |   |   |   |   |   |
| Other                income (deductions):                                           |   |                                                      |   |   |   |   |   |
| Interest                expense                                                     |   |                                                      | (743   | ) |   | (743 | ) |
| Interest                income                                                      |   |                                                      | 397    |   |   | 374 |   |
| Foreign                exchange gain                                                |   |                                                      | 2      |   |   | 6 |   |
| Gain                on sales of assets                                              |   |                                                      | --     |   |   | 4 |   |
|                                                                                |   |                                                      | (344   | ) |   | (359 | ) |
|                                                                                |   |                                                      |   |   |   |   |   |
| Income                (loss) before income tax provision (benefit)                  |   |                                                      | (1,081 | ) |   | 232 |   |
| Income                tax provision (benefit)                                       |   |                                                      | (260   | ) |   | 222 |   |
| Net                income (loss)                                                    |   |                                                      | (821   | ) |   | 10 |   |
|                                                                                |   |                                                      |   |   |   |   |   |
| Cumulative                effect of change in an accounting principle (see note 10) |   |                                                      | (302   | ) |   | -- |   |
|                                                                                |   |                                                      |   |   |   |   |   |
| Retained                earnings at beginning of period                             |   |                                                      | 14,773 |   |   | 19,036 |   |
| Retained                earnings at end of period                                   |   | $                                                         | 13,650 |   | $ | 19,046 |   |
|                                                                                |   |                                                      |   |   |   |   |   |
| Net                income (loss) per share of common stock                          |   | $                                                         | (0.22  | ) | $ | 0.003 |   |
|                                                                                |   |                                                      |   |   |   |   |   |
| Weighted                average number of shares outstanding                        |   |                                                      | 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)              |   |
|---------------------------------------------------------------------------------------------------|--------|--------------------------------------------|--------|
|                                                                                              |   | Three                Months Ended March 31 |   |
|                                                                                              |   | 2007                                       |   | 2006 |   |
| Cash                provided (used) by operating activities                                       |   |                                       |   |   |   |   |   |
| Net                income (loss)                                                                  |   | $                                          | (821   | ) | $ | 10 |   |
| Adjustments                to reconcile net income to net cash used by operating  activities |   |                                       |   |   |   |   |   |
| Depreciation                and amortization of property and equipment                            |   |                                       | 1,371  |   |   | 2,509 |   |
| Other                amortization                                                                 |   |                                       | 10     |   |   | 10 |   |
| Deferred                federal and state tax benefit                                             |   |                                       | (26    | ) |   | (203 | ) |
| Gain                on sales of assets                                                            |   |                                       | --     |   |   | (4 | ) |
|                                                                                              |   |                                       |   |   |   |   |   |
| Changes                in assets and liabilities                                                  |   |                                       |   |   |   |   |   |
| Restricted                cash                                                                    |   |                                       | (442   | ) |   | 267 |   |
| Accounts                and notes receivable                                                      |   |                                       | (428   | ) |   | 156 |   |
| Inventories                                                                                       |   |                                       | (61    | ) |   | 89 |   |
| Prepaid                expenses and other                                                         |   |                                       | (544   | ) |   | 183 |   |
| Accounts                payable                                                                   |   |                                       | (277   | ) |   | (1,124 | ) |
| Advance                deposits                                                                   |   |                                       | 50     |   |   | (289 | ) |
| Federal,                foreign and state income taxes                                            |   |                                       | (251   | ) |   | 111 |   |
| Accrued                liabilities                                                                |   |                                       | (1,487 | ) |   | (2,083 | ) |
| Cash                used by operating activities                                                  |   |                                       | (2,906 | ) |   | (368 | ) |
|                                                                                              |   |                                       |   |   |   |   |   |
| Cash                provided (used) by investing activities                                       |   |                                       |   |   |   |   |   |
| Expenditures                for property and equipment                                            |   |                                       | (1,295 | ) |   | (2,946 | ) |
| Payments                received on long-term receivables and advances                            |   |                                       | 322    |   |   | 2,678 |   |
| Payments                received from development partnership                                     |   |                                       | 250    |   |   | -- |   |
| Proceeds                from sales of assets                                                      |   |                                       | --     |   |   | 16 |   |
| New                loans and advances                                                             |   |                                       | --     |   |   | (1,370 | ) |
| Cash                used by investing activities                                                  |   |                                       | (723   | ) |   | (1,622 | ) |
| Cash                used by financing activities                                                  |   |                                       |   |   |   |   |   |
| Cash                dividends paid                                                                |   |                                       | (370   | ) |   | (370 | ) |
| Cash                used by financing activities                                                  |   |                                       | (370   | ) |   | (370 | ) |
|                                                                                              |   |                                       |   |   |   |   |   |
| Net                decrease in cash                                                               |   |                                       | (3,999 | ) |   | (2,360 | ) |
| Cash                and cash equivalents at beginning of period                                   |   |                                       | 24,888 |   |   | 24,941 |   |
| Cash                and cash equivalents at end of period                                         |   | $                                          | 20,889 |   | $ | 22,581 |   |

*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) |   |
|-------------------------------------------------------------|--------|-------------------------------|--------|
|                                                        |   |                               |   |
|                                                        |   | March                31,2007  |   | December                31,2006 |   |
| Sharm                El Sheikh, Egypt (a)                   |   | $                             | 56     |   | $ | 126 |   |
| Sonesta                Hotel & Suites Coconut Grove (b) |   |                          | 4,252  |   |   | 4,346 |   |
| Trump                International Sonesta Beach Resort (c) |   |                          | 1,135  |   |   | 1,135 |   |
| Chateau                Sonesta Hotel New Orleans (d)        |   |                          | 1,895  |   |   | 1,895 |   |
| Other                                                       |   |                          | 404    |   |   | 565 |   |
|                                                        |   |                               |   |  |   |
| Total                long-term receivables                  |   |                          | 7,742  |   |   | 8,067 |   |
| Less:                current portion                        |   |                          | 1,312  |   |   | 1,188 |   |
|                                                        |   |                               |   |  |   |
| Net                long-term receivables                    |   | $                             | 6,430  |   | $ | 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                bears                interest at the prime rate (8.25% at March 31, 2007) and is adjusted                semi-annually. The loan is being repaid with monthly payments of                $23,800. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (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 March 31, 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. Unless the Company acquires the hotel,                the                Company expects to recover these advances, together with interest,                out of                available income from the hotel. The interest rate on these advances                ranges from prime (8.25% at March 31, 2007) plus one (1) to three                (3)                percentage points. The Company is in the process of acquiring the                hotel                (see Note 9 - Chateau Sonesta                Hotel). |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **3.** | **Borrowing                Arrangements** |
|--------|-------------------------------------------|

*Credit      Line*

*Long-Term      Debt*

----

**SONESTA      INTERNATIONAL HOTELS CORPORATION**

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

| **4.** | **Hotel                Costs and Operating                Expenses** |
|--------|----------------------------------------------------------------------|

|                                     |   | (in                thousands)              |   |
|------------------------------------------|--------|--------------------------------------------|--------|
|                                     |   | Three                Months Ended March 31 |   |
|                                     |   | 20077                                      |   | 2006 |   |
| Direct                departmental costs |   |                                       |   |   |   |   |   |
| Rooms                                    |   | $                                          | 2,325  |   | $ | 3,200 |   |
| Food                and beverage         |   |                                       | 3,253  |   |   | 4,756 |   |
| Heat,                light and power     |   |                                       | 714    |   |   | 1,246 |   |
| Other                                    |   |                                       | 668    |   |   | 1,232 |   |
|                                     |   | $                                          | 6,960  |   | $ | 10,434 |   |

| **5.** | **Federal,                Foreign and State Income                Tax** |
|--------|-------------------------------------------------------------------------|

|                                                          |   | (in                thousands)              |   |
|---------------------------------------------------------------|--------|--------------------------------------------|--------|
|                                                          |   |                                            |   |
|                                                          |   | Three                Months Ended March 31 |   |
|                                                          |   | 2007                                       |   | 2006 |   |
|                                                          |   |                                       |   |   |   |
| Current                federal income tax provision (benefit) |   | $                                          | (355   | ) | $ | 273 |   |
| Current                foreign income tax provision           |   |                                       | 101    |   |   | 103 |   |
| Current                state income tax provision             |   |                                       | 20     |   |   | 49 |   |
| Deferred                state income tax provision            |   |                                       | 9      |   |   | 24 |   |
| Deferred                federal income tax benefit            |   |                                       | (35    | ) |   | (227 | ) |
| Income                tax provision (benefit)                 |   | $                                          | (260   | ) | $ | 222 |   |

----

**SONESTA      INTERNATIONAL HOTELS CORPORATION**

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

| **6.** | **Segment                Information** |
|--------|----------------------------------------|

|                                                                                     |   | (in                thousands)                          |   |
|------------------------------------------------------------------------------------------|--------|--------------------------------------------------------|--------|
|                                                                                     |   |                                                        |   |
|                                                                                     |   | Owned                &Leased                Hotels |   | ManagementActivities |   |  Consolidated |   |
|                                                                                     |   |                                                   |   |   |   |   |   |
| Revenues                                                                                 |   | $                                                      | 13,598 |   | $ | 1,785 |   | $ | 15,383 |   |
| Other                revenues from managed and        |   |                                                   |   |   |   |   |   |   |   |   |
| affiliated                properties                                                     |   |                                                   | --     |   |   | 4,900 |   |   | 4,900 |   |
| Total                revenues                                                            |   |                                                   | 13,598 |   |   | 6,685 |   |   | 20,283 |   |
| Operating                income (loss) before depreciation and amortization expense      |   |                                                   | 898    |   |   | (264 | ) |   | 634 |   |
| Depreciation                and amortization                                             |   |                                                   | (1,248 | ) |   | (123 | ) |   | (1,371 | ) |
| Interest                income (expense), net                                            |   |                                                   | (741   | ) |   | 395 |   |   | (346 | ) |
| Other                income                                                              |   |                                                   | --     |   |   | 2 |   |   | 2 |   |
| Segment                pre-tax income (loss)                                             |   |                                                   | (1,091 | ) |   | 10 |   |   | (1,081 | ) |
|                                                                                     |   |                                                   |   |   |   |   |   |   |   |   |
| Segment                assets                                                            |   |                                                   | 78,022 |   |   | 45,717 |   |   | 123,739 |   |
| Segment                capital additions                                                 |   |                                                   | 1,288  |   |   | 7 |   |   | 1,295 |   |

|                                                                                |   | (in                thousands)                          |   |
|-------------------------------------------------------------------------------------|--------|--------------------------------------------------------|--------|
|                                                                                |   |                                                        |   |
|                                                                                |   | Owned                &Leased                Hotels |   | ManagementActivities |   |  Consolidated |   |
|                                                                                |   |                                                   |   |   |   |   |   |
| Revenues                                                                            |   | $                                                      | 22,524 |   | $ | 1,414 |   | $ | 23,938 |   |
| Other                revenues from managed and                                      |   |                                                   |   |   |   |   |   |   |   |   |
| affiliated                properties                                                |   |                                                   | --     |   |   | 4,312 |   |   | 4,312 |   |
| Total                revenues                                                       |   |                                                   | 22,524 |   |   | 5,726 |   |   | 28,250 |   |
| Operating                income (loss) before depreciation and amortization expense |   |                                                   | 3,523  |   |   | (423 | ) |   | 3,100 |   |
| Depreciation                and amortization                                        |   |                                                   | (2,385 | ) |   | (124 | ) |   | (2,509 | ) |
| Interest                income (expense), net                                       |   |                                                   | (732   | ) |   | 363 |   |   | (369 | ) |
| Other                deductions                                                     |   |                                                   | --     |   |   | 10 |   |   | 10 |   |
| Segment                pre-tax income (loss)                                        |   |                                                   | 406    |   |   | (174 | ) |   | 232 |   |
|                                                                                |   |                                                   |   |   |   |   |   |   |   |   |
| Segment                assets                                                       |   |                                                   | 80,460 |   |   | 46,122 |   |   | 126,582 |   |
| Segment                capital additions                                            |   |                                                   | 2,827  |   |   | 119 |   |   | 2,946 |   |

----

**SONESTA      INTERNATIONAL HOTELS CORPORATION**

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

| **7.** | **Earnings                per Share** |
|--------|---------------------------------------|

|                                                         |   | Three                months ended March                31 |   |
|--------------------------------------------------------------|--------|-----------------------------------------------------------|--------|
|                                                         |   |                                                           |   |
|                                                         |   | 2007                                                      |   | 2006 |   |
| Numerator:                                                   |   |                                                      |   |   |   |   |   |
| Income                (loss) from operations                 |   | $                                                         | (821   | ) | $ | 10 |   |
|                                                         |   |                                                      |   |   |   |   |   |
| Denominator:                                                 |   |                                                      |   |   |   |   |   |
| Weighted                average number of shares outstanding |   |                                                      | 3,698  |   |   | 3,698 |   |
|                                                         |   |                                                      |   |   |   |   |   |
| Net                income (loss) per share of common stock   |   | $                                                         | (0.22  | ) | $ | .003 |   |

| **8.** | **Pension                Plan** |
|--------|---------------------------------|

|                                                                                                         |   | (in                thousands)              |   |
|--------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|--------|
|                                                                                                         |   |                                            |   |
|                                                                                                         |   | Three                Months ended March 31 |   |
|                                                                                                         |   | 2007                                       |   | 2006 |   |
|                                                                                                         |   |                                       |   |   |   |
| Service                cost                                                                                  |   | $                                          | --     |   | $ | 449 |   |
| Interest                cost                                                                                 |   |                                       | 434    |   |   | 484 |   |
| Expected                return on assets                                                                     |   |                                       | (443   | ) |   | (419 | ) |
| Amortization                of prior service cost                                                            |   |                                       | --     |   |   | 22 |   |
| Amortization                of transition asset                                                              |   |                                       | --     |   |   | (21 | ) |
| Recognized                actuarial loss                                                                     |   |                                       | 9      |   |   | 163 |   |
| Total                plan benefit cost                                                                       |   |                                       | --     |   |   | 678 |   |
| Less:                amounts charged to hotels operated under management                agreements           |   |                                       | --     |   |   | (93 | ) |
| Net                periodic benefit cost included in the consolidatedstatements                of operations |   | $                                          | --     |   | $ | 585 |   |

| **9.** | **Chateau                Sonesta Hotel New                Orleans** |
|--------|---------------------------------------------------------------------|

----

**SONESTA      INTERNATIONAL HOTELS CORPORATION**

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

**10.         **
**Impact      of Recently Issued Accounting Standards**

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

*FIN      48 - Accounting for Uncertainty in Income Taxes*

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

----

**SONESTA      INTERNATIONAL HOTELS CORPORATION**

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

----

**Part      I - Item 2**

**MANAGEMENT’S      DISCUSSION AND ANALYSIS**

**OF      RESULTS OF OPERATIONS AND FINANCIAL CONDITION**

**FIRST      QUARTER 2007 COMPARED TO 2006**

**REVENUES**

|                                                                                                          |   | TOTAL                REVENUES(in                thousands) |   |
|---------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------|--------|
|                                                                                                          |   |                                                            |   |
|                                                                                                          |   | NO.                OFROOMS                                 |   |  2007 |   |  2006 |   |
| Sonesta                Beach Resort Key Biscayne                                                              |   |                                                       | 300    |   | $ | -- |   | $ | 9,594 |   |
| Royal                Sonesta Hotel Boston (Cambridge)                                                         |   |                                                       | 400    |   |   | 4,396 |   |   | 3,902 |   |
| Royal                Sonesta Hotel New Orleans                                                                |   |                                                       | 500    |   |   | 9,202 |   |   | 9,028 |   |
| Management                and service fees and other revenues                                                 |   |                                                       |   |   |   | 1,785 |   |   | 1,414 |   |
| Total                revenues, excluding revenues from  managed                and affiliated properties |   |                                                       |   |   | $ | 15,383 |   | $ | 23,938 |   |

----

**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                                                    |   | $                                                                   | --     |   | $ | 1,773 |   |
| Royal                Sonesta Hotel Boston (Cambridge)                                               |   |                                                                | (902   | ) |   | (1,299 | ) |
| Royal                Sonesta Hotel New Orleans                                                      |   |                                                                | 552    |   |   | 663 |   |
| Operating                income (loss) from hotels after management and service                fees |   |                                                                | (350   | ) |   | 1,137 |   |
| Management                activities and other                                                      |   |                                                                | (387   | ) |   | (546 | ) |
| Operating                income (loss)                                                              |   | $                                                                   | (737   | ) | $ | 591 |   |

----

**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 |   | $ | 35,274 |   |
| Average                interest rate |   |   | 8.6    | %      |   | 8.6    | %      |   | 8.6    | % |   | 8.6 | % |   | 8.6 | % |   |   |   |   |   |   |

----

**PART      I - Item 4**

**INTERNAL      CONTROLS AND PROCEDURES**

----

**PART      II - Other Information**

**Item      Numbers 1, 2, 3, 4, 5 and 6 **

----

**SIGNATURE**

|   | **SONESTA                INTERNATIONAL HOTELS CORPORATION** |
|--------|-------------------------------------------------------------|
|   |                                                        |   |
|   |                                                        |   |
|   | By:                                                         | /S/                Boy                van Riel |
|   |                                                        | Boy                van Riel |
|   |                                                        | Vice                President and Treasurer |
|   |                                                        |   |
|   |                                                        | (Authorized                to sign on behalf of the Registrant as Principal Financial                Officer) |
|   |                                                        |   |
|   | Date:                May 11, 2007                           |

----