Short-Term Rental Startup Sonder to Reopen Flatiron Hotel

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Short-term rental startup Sonder plans to reopen the Flatiron Hotel beginning next month, more than a year after it leased the property from Premier Equities, Sonder reported.

Sonder leased the property in 2019 after Premier Equities purchased the 64-unit hotel, at 9 West 26th Street, out of bankruptcy. Sonder was already in talks to take over the hotel at the time. 

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Because of the timing of the lease, Sonder did not begin paying rent until recently and was able to avoid the worst of the coronavirus shutdown months, when occupancy was below 30 percent at most New York City hotels, The Real Deal reported

And Sonder appears to have fared better than most during the pandemic. While it laid off a third of its staff in March 2020, the company raised $170 million in June, fresh off its $1 billion valuation the previous summer. 

Nevertheless, Sonder is facing lawsuits at two other locations in Manhattan over terminated leases. At Metroloft’s 20 Broad Street, Sonder’s first location in New York City, the landlord ended the lease and sued the short-term rental company for more than $100 million in back rent, TRD reported. In addition, Merchants Hospitality is suing Sonder for $2.5 million for backing out of its lease at the Z NYC Hotel in Long Island City, Queens. 

Sonder has five other locations in Manhattan, with close to 650 rooms, including the Flatiron, and is operational in more than 30 cities worldwide, including in London, Mexico City and Dubai. While Sonder’s first projects involved converting apartment units into apartment-style hotel rooms, a number of its properties include hotels like the Flatiron, as well as the CIRC Hotel and Abbey Hotel in Miami, and The Queen in Philadelphia.

Other flexible hospitality companies have folded during the pandemic, including Stay Alfred, the Airbnb-backed Lyric and Domio.