Short-term rentals company Sonder on Monday said it plans to file for bankruptcy, a day after Marriott International said a licensing agreement between the two companies had ended.
The deal, signed in August 2024, allowed Sonder hotels to be booked via Marriott's Bonvoy website and was widely considered a lifeline for the San Francisco-based company, which struggled financially through the Covid-19 pandemic, and after going public via a SPAC merger in 2022.
In a statement published Sunday, Marriott said the 20-year licensing agreement was "no longer in effect," citing Sonder's "default" as the reason.
In its own statement on Monday, Sonder said it made "comprehensive efforts" to improve the company's finances following Marriott's announcement, to no avail.
"In light of these unsuccessful efforts and [Sonder's] financial condition, the Board of Directors made the difficult decision to wind-down operations and pursue a court-supervised liquidation of the U.S. business immediately," the statement read.
Janice Sears, Sonder's interim chief executive officer, said technical integration problems with Marriott's Bonvoy website caused "significant, unanticipated integration costs, as well as a sharp decline in revenue".
"We are devastated to reach a point where a liquidation is the only viable path forward," Sears added.
The one-time unicorn, which was valued at $1.9 billion at its IPO, said it plans to file insolvency proceedings abroad too.
The company, which operates in 40 cities worldwide, was billed as a blend between Airbnb and hotels, offering long-term stays in tech-enabled properties popular with remote workers. The company operated many hotels via long-term leases, resulting in an "asset-heavy" strategy that many in the hospitality space now avoid.
'People were scrambling'
Sonder hotel guests that CNBC spoke to said they were caught off-guard by the news, with some saying they were ordered to vacate their hotel rooms with less than 24 hours' notice.
One traveler, Connie Yang, told CNBC that she pre-paid for a stay at Sonder Battery Park in New York from Nov. 7 to Nov. 17.
On Sunday, Nov. 9, she received an email saying she had to vacate the hotel by 9 a.m. the next day, she said.
"The reason stated was the end of a licensing agreement between Sonder and Marriott," she said. "The entire building was asked to vacate."
"My neighbor is helping her husband through cancer therapy, and they have paid for the month," she added. "It is beyond comprehension."
She also recounted finding some of Sonder's onsite staff in tears as "they knew nothing."
On Monday morning, "people were scrambling to leave before they locked down the building," she said.
Other travelers have posted stories on social media about Sonder's shuttering, including attempts to get assistance from Marriott's customer service.
Yang said she also contacted Marriott. "I called Marriott and spoke with [a] supervisor who said they were not allowed to give us better rates… nor were they going to find us rooms," she said. "We were all left to scramble."
Marriott did not immediately return CNBC's request for comment.
A company statement on Sunday said Marriott's "immediate priority is supporting guests currently staying at Sonder properties and those with upcoming reservations," adding that Marriott will reach out to guests "who booked directly through Marriott channels."
Yang, who booked her stay through Booking.com, said that a representative at the platform "assured me I would get a refund."
In the end, she said she found an alternative accommodation on her own — at a "Hilton."
English (US) · 