Sonder Cofounder Reflects on the Challenges and Unexpected Collapse of Marriott Partnership

The precipitous decline of the short-term rental company Sonder has left cofounder Francis Davidson astounded. Former CEO, Davidson recounted to Business Insider his deep commitment to the enterprise, which he nurtured from the ground up.

For Sonder, establishing a partnership with hospitality behemoth Marriott was a critical strategy for survival. Just a few months ago, Davidson expressed on LinkedIn that finalizing the deal with Marriott was his most daunting task yet.

"Bringing this deal to fruition, alongside managing a complex, multi-party capital raise, stands as the toughest endeavor I've ever undertaken," Davidson remarked in a reflective post marking his departure as CEO last June.

Davidson is now taken aback by Sonder's planned bankruptcy and the dissolution of its relationship with Marriott, which occurred shortly thereafter. He confided to Business Insider, explaining, "From my college days in 2014 through the pandemic, I've invested every ounce of passion and effort into this company."

At the time of his exit, there was a positive outlook, Davidson noted. "When I left in June, we felt confident about the progress we were witnessing. The reality of the business hitting a deadlock now is quite unbelievable to me."

Unraveling of the Marriott Collaboration

Sonder's arrangement with Marriott, which permitted Marriott Bonvoy members to book stays via Marriott's platforms, disintegrated unexpectedly. The agreement was nullified when Marriott cited a breach of contract due to Sonder's default.

This chaotic termination threw numerous guests into disarray, leaving them displaced from their accommodations with minimal notice. Responding to this turmoil, Sonder intends to commence Chapter 7 bankruptcy proceedings and liquidate its U.S. operations. Globally, steps towards insolvency across various markets are also underway.

Once appraised over a billion dollars, Sonder reported severe financial struggles, challenged by ongoing difficulties in aligning company operations and booking systems with Marriott's requirements.

The Highs and Lows of a Major Partnership

In August 2024, a decisive 20-year licensing agreement was forged between Marriott and Sonder, inspiring a rebranding to Sonder by Marriott Bonvoy. This announcement saw Sonder's stock price soar by an impressive 125%, a milestone Davidson highlighted as transformative in his LinkedIn reflections.

Despite resigning soon after the integration concluded, Davidson recounted the adventurous journey that began during his college years. "During its infancy of just five years, the company's expansion was meteoric, catapulting from nonexistence to $143 million in revenue by 2019. We reached a valuation of $1.1 billion and harbored limitless aspirations," he wrote.

2019 was marked by signing nearly 10,000 rental agreements, anticipated to generate an additional half-billion dollars yearly once operational. However, grander ambitions set for 2020 were thwarted by the onset of the COVID-19 pandemic.

"Revenue streams evaporated overnight, and financial burn rates surged," Davidson noted. "Our business model, crafted to withstand any market shock, included strategies to negotiate concessions from property partners during recessions. Yet, the economic upheaval that ensued was unparalleled and far beyond imaginable predictions."