A Struggling Sonder Signs Long-Term Licensing Deal With Marriott
The short-term lodging company also says it has secured $146 million to keep going
By Isabelle Durso August 19, 2024 12:52 pm
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Sonder has secured a long-term licensing deal with Marriott International and raised approximately $146 million in liquidity, a much needed lifeline for the struggling short-term lodging company, the company announced on Monday.
The agreement will see Sonder turn over more than 9,000 of its units to Marriott by the end of the year and an additional 1,500 units at later dates, Sonder said.
As part of the deal, Sonder will pay royalties to Marriott so its rooms will be available to book through Marriott’s site as a new collection called “Sonder by Marriott Bonvoy,” Bloomberg reported.
Sonder’s portfolio of approximately 200 properties worldwide will be fully integrated with the hotel brand’s platforms by 2025, the company said.
Sonder also announced on Monday that it had secured $146 million to support its growth under the new deal with Marriott — $43 million of which is preferred equity from investors, the company said. That’s on top of the $16 million in financing Sonder previously secured from existing shareholders.
“We’re delighted about our strategic agreement with Marriott,” Sonder CEO Francis Davidson said in a statement. “Benefitting from the extensive distribution, loyalty program and sales capabilities of a global hospitality leader will help us to prioritize our core value drivers, including our unique guest experience, while unlocking significant opportunities for increased revenue and cost efficiency.”
Spokespeople for Sonder and Marriott did not immediately respond to requests for additional comment.
“We are excited about this new agreement, which is set to expand our portfolio of longer-stay accommodations in key markets around the world,” Timothy Grisius, global officer at Marriott, said in a statement.
Sonder said it expects its integration with Marriott to “improve demand” and “drive substantial uplift in revenue per available room over time,” the company said.
And that could be good news for Sonder, where not everything has been quite so rosy since going public. After initial success following its 2014 launch as an Airbnb-copycat and a valuation of more than $1 billion in 2019, Sonder ran into numerous obstacles during the COVID-19 pandemic.
In 2021, Sonder announced its intention to go public by merging with a special purpose acquisition company (SPAC) at a valuation of $2.2 billion, Commercial Observer previously reported. The San Francisco-based company is one of many that went public through SPACs and has struggled since.
After finally going public in January 2022 and debuting at a $1.9 billion valuation, Sonder said it was forced to lay off 21 percent of its corporate employees and 7 percent of its frontline workers in June 2022 as it restructured its operations, CO reported.
In April 2023, Sonder received a notice from the Nasdaq stock exchange that it was in danger of being delisted, one week after coworking giant WeWork, who also went public via SPAC in October 2021, received a notice from the New York Stock Exchange that it was in danger of being delisted as well.
To make matters worse, in March 2024 Sonder announced that its financial statements for 2022 and 2023 “should no longer be relied upon” after it found some accounting errors, the San Francisco Business Times reported.
“With significantly improved financial flexibility from the support of our lenders and investors, Sonder now has a stronger balance sheet to fuel its value creation strategy as it embarks on its next chapter, including the strategic licensing agreement with Marriott,” Janice Sears, the lead independent director on Sonder’s board, said in a statement.
Isabelle Durso can be reached at idurso@commercialobserver.com.
