Sonder Holdings said on Monday it will wind down its operations and file for bankruptcy one day after Marriott International abruptly announced that it had terminated its licensing agreement with the San Francisco operator of thousands of rental properties.
The one-two punch of news has caused chaos for employees and guests alike. Shares of Sonder have plummeted more than 64% as of mid-day trading on Monday.
In a statement Monday, Sonder said it expects to file for Chapter 7 bankruptcy and liquid its U.S. business, in addition to initiating insolvency proceedings in the international countries where it operates.
“We are devastated to reach a point where a liquidation is the only viable path forward,” said Janice Sears, interim chief executive officer of Sonder. “We explored all viable alternatives to avoid this outcome, but we are left with no choice other than to proceed with an immediate wind-down of our operations and liquidation of our assets.”
Neither Marriott nor Sonder immediately responded to a request for comment from Fast Company.
Bethesda, Maryland-based Marriott said in a statement on Sunday that its “immediate priority is supporting guests currently staying at Sonder properties and those with upcoming reservations” and that it would contact guests who booked directly through Marriott channels to address their reservation and booking needs. “Marriott remains committed to minimizing disruption to guests’ travel plans.”
EMPLOYEES, GUESTS IN CHAOS
But the experiences of guests and employees alike indicate that this news has been nothing short of chaotic.
On social media platforms including Reddit and LinkedIn, Sonder employees and guests recounted how the news of the termination of the Marriott partnership reached them—with some employees saying they learned their jobs had been terminated from news reports, while guests reported receiving notices that they had to vacate their rental immediately.
One New York-based former Sonder employee, who asked to remain anonymous, said that she and her colleagues extended their shifts on Sunday to try to help guests and were on-site Monday cleaning things out and closing operations for the last time. She added that the now-former employees had “no idea” what would happen with their paid time off and sick time payouts.
Another Sonder employee declined to comment about the situation amid “a few developing scenarios” that are currently taking place.
On its website, Sonder said it has approximately 1,400 employees in more than 35 cities in 10 different countries.
Meanwhile, guests have also been thrown into limbo during their stays.
One Reddit user posted Sunday that they had been “kicked out of a Sonder hotel mid-stay” and weren’t allowed back in the room in the evening. The user didn’t immediately respond to a request for an interview from Fast Company, but commented on another subreddit that after waiting on-hold with Marriott customer service for two hours, they had been refunded half of the $2,000 booking, along with a $50 credit for the inconvenience.
Another Redditor posted Monday that the heating has been turned off and that they’ve been asked to leave during a winter storm warning in Chicago.
On LinkedIn, a woman shared that she had been staying at a Sonder location in London on Sunday night only to learn of the change from an email and note slipped under her door overnight. “What a mess,” she wrote.
SONDER’S WOES
Financial woes for Sonder appear to have been too great for even a partnership with the world’s largest hotel chain to solve. The Marriott-Sonder partnership was announced in August 2024, and now the two companies are pointing fingers at each other, to some extent.
“Sonder has faced severe financial constraints arising from, among other things, prolonged challenges in the integration of the company’s systems and booking arrangements with Marriott International,” Sears said in the statement.
Both Sonder’s CEO and CFO had left the company earlier in the year and the company had fallen into a pattern of reporting its earnings reports late.
Sonder is also the latest bankruptcy victim that stems from the frenzy of special purpose acquisition company (SPAC) deals that began about five years ago. These so-called blank check deals saw a number of companies go public, only to later file for bankruptcy, including 23andMe and WeWork. The hotelier went public with a blank-check deal with Gores Metropoulos II in January 2022.
FALLOUT FOR MARRIOTT
Marriott, meanwhile, could emerge from the dissolution of this experimental partnership relatively unscathed.
The company said the termination was “due to Sonder’s default” when it announced the news on Sunday. In a separate statement, Marriott scaled back its financial outlook for net room growth in 2025, to roughly 4.5% with the removal of Sonder rooms from its system, down from a prior forecast of approximately 5%.
On Monday, Marriott announced a new agreement with Pacifica Hotels to convert two existing hotels in Osaka, Japan to its line of City Express Hotels by Marriott next year.
Marriott shares fell about 0.2% in mid-day trading. And Jefferies analyst David Katz even upgraded his price target for the stock on Monday to $315, up from $308.