Sonder Co-founder Shocked by Toughest Marriott Deal
The short-term rental firm Sonder recently faced upheaval after a tumultuous partnership with Marriott came to an end. Co-founder Francis Davidson expressed his shock over the latest developments, particularly after having viewed the collaboration with Marriott as a pivotal moment for the company.
Sonder’s Challenging Partnership with Marriott
Davidson highlighted that finalizing the deal with Marriott was the most challenging task he had ever undertaken. In a LinkedIn post from June, he mentioned the complexities involved in orchestrating not just the deal, but also a significant capital raise. This milestone, announced in August 2024, allowed Marriott Bonvoy members to book Sonder accommodations through Marriott’s platforms. However, this partnership unraveled unexpectedly.
Bankruptcy Announcement
On Sunday, Marriott terminated the licensing agreement, citing “Sonder’s default” as the primary reason. Subsequently, Sonder announced plans to file for Chapter 7 bankruptcy and to liquidate its U.S. business. This decision followed severe financial constraints that arose from difficulties in integrating its systems with Marriott International.
- Marriott signed the 20-year licensing deal with Sonder in August 2024.
- Sonder experienced rapid growth, reaching $143 million in revenue by 2019.
- The company was valued at over $1 billion at its peak.
- Sonder signed nearly 10,000 units in 2019, projecting significant future revenue.
Impact on Guests and Future Operations
Guests utilizing Sonder’s services were left confused and stranded as the partnership collapsed. Many reported being overcharged or ignored after the sudden termination of their accommodations. Following its U.S. bankruptcy filing, Sonder also mentioned it would “initiate insolvency proceedings” in other international markets where it operated.
Reflections from Co-founder Francis Davidson
Davidson, who began building Sonder as a college student, expressed his disbelief at the trajectory the company had taken. He noted feeling optimistic about the company’s prospects just before his departure as CEO. The COVID-19 pandemic had previously posed severe challenges, but Davidson believed pronounced improvements were underway.
Looking back, Davidson called his journey with Sonder an “epic journey.” The company’s ambitious plans for expansion in 2020, which were thwarted by the pandemic, contrasted sharply with the optimism he felt amidst its previous growth. Despite the setbacks, Davidson remained proud of his efforts to navigate through the challenges faced during these turbulent times.
