Marriott International and urban apartment-style
accommodation provider Sonder have inked a long-term licensing agreement
that will add more than 9,000 rooms to Marriott’s portfolio by the end of the
year, with 1,500 rooms in the pipeline, the companies announced Monday. The deal comes as the hotel giant chases the higher
end long-stay market.
Sonder, according to its website, currently operates
accommodations—often in multiple properties—in 25 cities in North America,
including key business gateways like Atlanta, Boston, Chicago, Dallas, Los
Angeles, Mexico City Minneapolis, Montreal, San Francisco, Seattle and Toronto.
It also has units in 15 cities in Europe and the Middle East, including Amsterdam,
Barcelona, Dubai, London, Milan, Paris and others. It leverages a digital-first
operating model, supplemented by human support.
The units will be added to the Marriott portfolio under the
name “Sonder by Marriott Bonvoy.” Marriott will receive a royalty fee based on
a percentage of Sonder gross room revenue, according to a press release sent by
Marriott.
“We are excited about the addition of Sonder’s portfolio to
our system, which will expand our portfolio of longer-stay accommodations in
key markets around the world,” said Marriott global officers of mergers and
acquisitions, business development and real estate Tim Grisius in a statement.
Sonder’s Troubled Finances
Sonder
in 2022,
2023
and 2024
implemented several rounds of layoffs. In
April, Nasdaq sent Sonder a delinquency notice regarding failure to
file proper documentation to continue its listing. Sonder said it was
addressing “accounting errors” at that time.
The move from Marriott comes as Sonder over the summer
actively
exited or reduced rent for 105 buildings, representing 4,300 units, in an
effort to strengthen its financial foundation. The company in June said it had
finalized exit agreements with 80 buildings in its then-portfolio and already
had exited 60 of them. The company also said in June that it had raised $10
million in funding commitments.
The Sonder release issued Monday said the company had enhanced
its liquidity profile by approximately $146 million to support its long-term
profitable growth and integration efforts under the new agreement with Marriott,
with Sonder expecting to have access to the funds “in the coming months.”
Marriott added that beginning later this year, Bonvoy
members would be able to earn and redeem points on stays at approximately 200
Sonder by Marriott properties. Full integration of the Sonder properties into
Marriott’s digital channels is expected in 2025, according to Marriott.
