Sonder provides more information about Marriott partnership

Short-term rental company Sonder Holdings recently revealed more information about its deal with Marriott International. Sonder disclosed in its delayed third-quarter earnings report filed with the United States Securities and Exchange Commission that Marriott agreed to pay Sonder $15 million in total. Marriott already paid Sonder $7.5 million upfront in November 2024, with the remaining $7.5 million expected to be paid by March 31, 2025. This collaboration, initiated in August 2024, aims to integrate Sonder’s property inventory into Marriott’s booking system, allowing customers to access Sonder’s listings through Marriott’s channels.

The agreement between Marriott and Sonder is set for a 20-year term, but both parties have the option to terminate the deal after five years by paying an undisclosed termination fee. Sonder will also pay Marriott an undisclosed royalty fee for utilizing its services. This partnership was described by Sonder as part of its strategy to address financial challenges, including significant losses and negative cash flow. The company expressed doubts about its ability to continue as a going concern in the coming year due to its history of net losses and negative cash flow.

Throughout 2024, Sonder has downsized its portfolio, exiting 70 properties comprising 2,800 rentable units by September 30, with plans to exit an additional 10 properties. As of the end of the third quarter, Sonder had 10,100 live bookable units available, down from 11,800 units the previous year, marking a decline of more than 14%. Sonder’s growth strategy going forward primarily involves converting existing real estate agreements into bookable units.

Sonder’s third-quarter earnings report was delayed due to accounting errors related to the valuation of its operating lease right of use assets, which were later rectified. As of the filing of the third-quarter report, Sonder had seen a 22% increase in revenue per available room compared to the previous year, with an average daily rate increase of 22% as well. Despite an 84.8% occupancy rate, the total occupied nights declined by nearly 10% to 783,000 due to the downsizing of the company’s property portfolio. Third-quarter revenue increased by 1% year over year to $162.1 million, but the net loss for the period was $179.4 million, significantly higher than the $57.6 million loss reported the previous year.

Sonder’s CEO, Francis Davidson, acknowledged the challenges faced by the company but emphasized the progress made in advancing core value drivers and improving revenue generation and cost efficiency. Sonder’s collaboration with Marriott represents a significant step in expanding its market reach and enhancing customer accessibility through established channels. By integrating its inventory with Marriott’s booking system, Sonder aims to leverage the partnership to drive growth and secure a stronger foothold in the competitive hospitality industry.