Marriott International has agreed a deal to add the Sonder brand and portfolio to its accommodation offering. The move will add over 9,000 apartments and hotel rooms to the group’s international portfolio this year.
The long term licensing agreement will have the Sonder properties promoted by the hotel giant as “Sonder by Marriott Bonvoy”, with every location available to Bonvoy loyalty members to either spend loyalty points on a booking, or earn points from a stay.
A broader guest offer
Marriott says the additions will broaden its longer stay offering for customers, with Sonder holding apartments and boutique hotels in urban markets across the US and other key international markets such as Europe and the Middle East. Founded in 2014, Sonder has grown its business based around a technology-first approach, appealing particularly to younger business and leisure travellers.
Marriott already operates an established long stay aparthotel brand, Residence Inn, which has close to 900 properties globally. The group also offers longer stay property via its collection brands Marriott Executive Apartments, and Homes and Villas by Marriott Bonvoy. However, both of these are luxury products, with the latter is aimed more at families and groups travelling together. Thus, Marriott views the Sonder offering as having an appeal to a different type of longer staying guest.
For Sonder, the link with Marriott holds out the promise of helping the business navigate a way to profitability. Sonder CEO Francis Davidson said the deal “will help us to prioritize our core value drivers, including our unique guest experience, while unlocking significant opportunities for increased revenue and cost efficiency.”
There should be cost savings to come, from the lower cost of distribution, and by growing operating efficiencies. In addition, with Marriott behind it, Sonder is expected to be able to secure new properties more easily in future, and on more attractive terms, as landlords see the power of the partnership.
Sonder strengthens its finances
Sonder listed on the US stock market in early 2022, and since then has continued to lose money as it looks to scale up its operations. Concurrently with the Marriott agreement, the company also announced it had been able to secure fresh funding and an extension of existing debt obligations, ensuring its liquidity into the future. USD43m has been generated by the issue of a new series of convertible preferred equity; while existing note holders have granted a further 30 month extension to their previous repayment schedule, affecting USD79m of debt.
Among Sonder’s pipeline buildings are properties in Chicago and New York. The Midtown Hotel New York will be created from a former retail property, with up to 363 rooms and amenities on the top floor. And in Chicago, the owner of a city skyscraper is converting five vacant floors in the building to create a 101 room for Sonder at the Axis Apartments & Lofts.
