Marriott Terminates Brief Partnership With Sonder

A partnership with Marriott International was a lifeline for Sonder, but the hotel giant is cutting the cord.

Marriott this weekend terminated its licensing agreement with the short-term rental operator, Reuters reported. The company claimed Sonder was in default on an agreement only signed last year.

The termination wiped out Sonder’s affiliation with Marriott Bonvoy and took Sonder properties offline for booking through Marriott. The ending of the partnership is expected to carry a slight hit to Marriott’s projected full-year net room growth.

But the damage to Sonder, which did not respond to the publication’s request for comment, could be far more catastrophic.

Sonder signed the licensing deal with Marriott last summer, bringing approximately 9,000 properties into Marriott’s system under the “Sonder by Marriott Bonvoy” brand. The integration was completed this summer, culminating in the exit of Sonder co-founder Francis Davidson.

The 20-year agreement provided Sonder with $126 million in financing when the company desperately needed capital after dealing with negative cash flow of $108 million and facing Nasdaq delisting notices.

Share prices sank when the company disclosed financial reporting errors affecting 2022 and 2023 statements. Investors filed additional litigation last June.

Share prices could tank much further when the markets get rolling on Monday morning. The company’s market value is $6.79 million, according to LSEG, a far cry from its $2.2 billion valuation at the time of its initial public offering in 2021.

Reports emerged last month that Sonder was pursuing an agreement outside of court with its creditors, viewed as an attempt to avoid a bankruptcy filing.

In its last quarterly report, Sonder cited “substantial doubt” about its ability to remain as a going concern as its liquidity toes the border of the company’s obligations. As of the end of June, Sonder had $1 billion of assets, but $1.5 billion in liabilities.

— Holden Walter-Warner