Sonder announced Monday it is immediately winding down operations and plans to file for bankruptcy, just one day after Marriott International terminated its licensing agreement with the hospitality company.
The short-term rental operator, which offers apartment-style accommodations and boutique hotel stays, said it intends to file for Chapter 7 bankruptcy protection amid “severe financial constraints” linked to challenges integrating its systems with Marriott International.
“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,” Janice Sears, interim CEO of Sonder, said in a statement.
MARRIOTT TARGETS BUDGET TRAVELERS WITH NEW MID-SCALE EXTENDED-STAY OPTION
Marriott said Sunday it ended the licensing deal due to a default by Sonder.
The company confirmed Sonder properties are no longer part of Marriott Bonvoy and can no longer be booked through Marriott channels.
“Marriott’s immediate priority is supporting guests currently staying at Sonder properties and those with upcoming reservations,” the company said in a statement. “Marriott will be contacting guests who booked directly through Marriott channels, including marriott.com, the Marriott Bonvoy App and Marriott’s worldwide reservation centers, to address their reservation and booking needs.”
The sudden collapse has reportedly left some travelers scrambling.
ELON MUSK’S DOGE TEAM SAYS GOVERNMENT SYSTEMS CAN HAVE APPLE STORE-LIKE ‘EXPERIENCE’
Marriott-Sonder guests described “travel chaos, employee mismanagement, financial fallout, and a loss of trust in the Marriott brand,” Business Insider reported.
One Marriott Bonvoy Elite member, Steve McGraw, told the outlet he received emails from Marriott and Sonder about a week into his New York City stay instructing him to vacate his room by 9 a.m. the next day.
“We ended up spending several thousand dollars more to find a new place,” McGraw told Business Insider. “It was very, very disruptive. They treated us so poorly.”
Another guest, Paul Strack, told Business Insider he returned to his Sonder apartment in Boston to find his belongings packed into suitcases and placed in the hallway.
KEVIN HART, FERRARI, OTHERS ENLISTED BY AIRBNB IN MARKETING TACTIC TO BOOST DEMAND
Founded in 2014, Sonder operates about 9,000 units worldwide. The company signed a deal with Marriott last year that sent its shares soaring.
Under the agreement, Sonder enhanced its liquidity by roughly $146 million and planned to integrate more than 9,000 units into the Marriott system by the end of 2024, Reuters reported.
As a result of the termination, Marriott now expects its full-year net rooms growth to dip to 4.5%, down from the previous week’s forecast.
Sonder and Marriott International did not immediately respond to FOX Business’ request for comment.
Read the full article here
