Copyright The Philadelphia Inquirer
Guests staying at Sonder residencies in Center City were told to vacate their rooms over the weekend, scrambling to find places to go. It’s all part of the aftermath caused by the San Francisco-based short-term rental company’s sudden closure. Sonder lost its deal with Marriott over the weekend and shortly after announced bankruptcy plans. Here’s what we know so far. A competitor with Airbnb and Vrbo, Sonder is a short-term rental company that offered modern “apartment-style hotels.” The company was founded in 2014 and quickly expanded nationwide, partnering with landlords, hotel owners, and property management firms to lease and operate thousands of properties. » READ MORE: Hospitality venture Sonder expands in Philly, leasing whole apartment projects for short-term visitors In 2019, the company was valued at more than $1 billion. By 2022, it went public but struggled to become profitable, the New York Times reported. The hospitality startup was optimized with intentionally low overhead and minimal on-site staff, using tech and automation such as contactless check-ins and a digital concierge to keep pricing competitive. Last year, Sonder signed a leasing deal with Marriott International. The company rebranded as Sonder by Marriott Bonvoy. Sonder announced its closure and bankruptcy filing on Monday, citing “severe financial constraints” caused in part by integration issues with Marriott’s systems. A day earlier, Marriott International announced it was done with Sonder. Marriott announced on Sunday, Nov. 9, that it was ending its relationship with Sonder and that the rental company had defaulted on its agreement. Guests staying at Sonders within Marriott properties were told day-of that they had less than 24 hours to leave, regardless of the scheduled length of their stay, according to several impacted customers and social media accounts. “It’s a terrible upheaval,” one guest who was staying at a Sonder in Center City told 6ABC. One woman told the outlet she and her friend were using the Sonder for a two-month stay while her friend recovered from knee surgery. Another was using the Sonder for five months because he works in Philly. Marriott said in its statement Sunday that it was severing ties completely with Sonder and that Sonder properties were no longer available via Marriott. Of course, the existing and upcoming guests who have had their plans derailed. Marriott said in its statement that guests who booked through them could reach out to customer service for assistance. On Reddit, some users who say they were impacted said they’d received refunds and Marriott credits for the inconvenience. Upcoming stays booked officially through Sonder or Marriott will be automatically refunded, while guests who booked through third-party vendors are advised to go through those companies directly. Sonder had approximately 1,400 employees according to the company. Many of those employees say they found out their jobs were terminated via news reports. One former employee who spoke with Fast Company said she and other colleagues extended their shifts to try and help upheaved guests. She said she has “no idea” what will happen to their paid time off and sick time payouts. Shares of Sonder nose-dived more than 64% as of midday trading on Monday. As of Wednesday, they’re at about 13 cents per share. At its height, Sonder said it offered about 9,000 units across 40 cities and multiple countries, including Denver, San Francisco, London, Paris, and Philadelphia. Sonder expanded its presence to Philadelphia in 2019, according to Inquirer archives. It was involved in converting properties, including Center City’s historic Witherspoon Building, the former Frank P. Heid & Co. hat factory, and buildings in Rittenhouse and Old City into apartments. But things got rockier last year. Sonder was supposed to move into the former Kensington National Bank Building, but the deal was called off. Those units are now being leased as market-rate apartments. Sonder’s website does not allow guests to view its properties or book trips as of Wednesday. According to TripAdvisor, there were four Sonder properties in Philly: Sonder said in its statement Monday that it’s winding down operations and expects to file for Chapter 7 bankruptcy protection, liquidating its U.S. business and intending to fold its international efforts. Chapter 7 bankruptcy typically means the company will cease operations entirely and sell off assets (unlike Chapter 11 filing which calls for reorganization).
