‘Airbnb rival’ Sonder to file for bankruptcy after Marriott cuts ties

Tech-led aparthotel collection Sonder has immediately ceased operations and entered liquidation.

It comes after Marriott International terminated its licensing agreement with the San Francisco-based company, once dubbed a competitor to Airbnb, earlier this week.

In a separate announcement, Sonder Holdings said it would complete winding down operations and initiate a Chapter seven liquidation of its US business.

It also said it planned to initiate insolvency proceedings in the nine international countries in which it operates, including the UK.

Sonder was launched in 2014 by Francis Davidson, who was featured in Forbes’ 30 Under 30 list in 2018. The company was once valued at $1b for its design-forward apartments and boutique hotels, which were known for offering tech-led stays.

A 2020 article from Forbes said the company grew out of renting vacant college apartments in trendy neighbourhoods.

Just last year, it entered a long-term strategic licensing agreement with Marriott with the aim of building “significant revenue opportunities and operating efficiencies”, according to spokespeople at the time.

However, this June, Davidson, the co-founder and chief executive of Sonder, stepped down from the business.

In its latest press statement, Sonder said it had faced “severe financial constraints arising from, among other things, prolonged challenges in the integration of the company’s systems and booking arrangements with Marriott International”.

Sonder had looked to sell the business and its operations to improve its financial position but failed to obtain additional liquidity.

Janice Sears, interim chief executive at Sonder, said: “We are devastated to reach a point where a liquidation is the only viable path forward. Unfortunately, our integration with Marriott International was substantially delayed due to unexpected challenges in aligning our technology frameworks, resulting in significant, unanticipated integration costs, as well as a sharp decline in revenue arising from Sonder’s participation in Marriott’s Bonvoy reservation system.

“These issues persisted and contributed to a substantial and material loss in working capital. We explored all viable alternatives to avoid this outcome, but we are left with no choice other than to proceed with an immediate wind-down of our operations and liquidation of our assets.”

CNN reported the sudden collapse of the Marriott-backed hotel chain led to guests being stranded mid-stay, with one reportedly having to leave the building in 15 minutes.

Sonder properties operated across 37 cities in nine countries and three continents.