Marriott International recently finalized a licensing agreement with Sonder Holdings, a company specializing in apartment-style accommodations. This deal is forecasted to provide Marriott with an additional 9,000 rooms by the end of the year, along with 1,500 more rooms in the pipeline. The newly acquired Sonder properties will be part of a distinct collection known as Sonder by Marriott Bonvoy, focusing on providing apartment-style and boutique hotel options in urban areas. As part of this agreement, Marriott will earn a royalty fee based on a percentage of Sonder’s gross room revenues.
Established in 2014, Sonder operates apartment-style accommodations and small boutique hotels across numerous urban markets in North America, Europe, and the Middle East. This digital-forward company offers a unique guest experience, allowing patrons to utilize their phones for check-ins, requests, and recommendations. Sonder is strategically positioned to appeal to various demographics, including younger travelers and individuals seeking extended stays. Overall, this partnership aims to improve guest experience and expand Marriott’s reach in urban centers.
Despite its promising growth prospects, Sonder has encountered several setbacks. In February, the company laid off 17% of its corporate employees, signaling internal challenges. Additionally, Sonder faced financial scrutiny when it received a delinquency notice from Nasdaq in April. The company’s delayed financial filings and accounting errors related to operating lease assets further compounded its troubles. Sonder has been given a deadline by Nasdaq to rectify these issues, highlighting the financial precariousness the company finds itself in.
To mitigate its challenges, Sonder has taken steps to streamline its operations. The company announced in June that it had agreed to exit arrangements with 80 buildings, reflecting a reduction in its portfolio. Despite these setbacks, Sonder is optimistic about its collaboration with Marriott, aiming to enhance its visibility and market presence. Success will depend on Sonder’s ability to address its financial and operational issues efficiently while leveraging Marriott’s expertise and reach to fuel future growth.
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