Marriott International recently signed a long-term licensing agreement with apartment-style accommodations company Sonder Holdings, which was expected to add over 9,000 rooms to Marriott’s inventory by the end of the year. This deal also includes an additional 1,500 rooms in the pipeline, expanding Marriott’s reach in the urban accommodation sector.
Partnership Details
The newly formed collection, Sonder by Marriott Bonvoy, will focus on providing apartment-style and boutique hotel accommodations in urban centers. Marriott will receive a royalty fee based on a percentage of Sonder’s gross room revenues, solidifying a financial partnership between the two companies. Founded in 2014, Sonder operates in over 45 urban markets in North America, Europe, and the Middle East, catering to a variety of travelers across different demographics.
Despite this promising partnership, Sonder Holdings has faced its fair share of challenges. In February, the company laid off 17% of its corporate staff, signaling internal struggles within the organization. Moreover, Sonder received a delinquency notice from Nasdaq in April due to accounting errors related to the valuation and impairment of operating lease right-of-use assets. This setback has put Sonder’s financial viability and compliance with Nasdqa listing rules at risk.
To mitigate some of these challenges, Sonder Holdings has reduced its portfolio this year by signing exit agreements with 80 buildings. The company’s future integration with Marriott’s digital channels is expected to be completed by 2025. However, the road ahead for Sonder is uncertain, with looming deadlines and financial hurdles that need to be addressed to ensure the company’s long-term sustainability in the competitive hospitality industry.
While the licensing agreement with Marriott International offers Sonder Holdings a promising opportunity for growth and expansion, the company’s internal challenges and financial struggles raise questions about its long-term success. By addressing these issues and focusing on operational efficiency and financial transparency, Sonder can navigate through these turbulent times and emerge as a stronger player in the accommodation sector.