Guests left stranded as boutique hotel chain Sonder goes bankrupt, Marriott cancels licensing deal
Carol Tsai was returning to her Sonder Hotel room after a long day of sightseeing in London when she read an email from the accommodation company informing her that she needed to leave immediately.
“I was really nervous,” said Tsai, who had been staying at the hotel for a few days and had paid in full for her stay.
“The first thing I said (was), ‘Where do I go now?'”
Guests at Sonder properties from New York to France say they were suddenly asked to leave their hotels after the company defaulted on payments, prompting global chain Marriott to end its licensing deal with Sonder.
Sonder, which operated approximately 9,000 short-term rental and boutique hotel units in more than 40 cities around the world, including Toronto, Vancouver and Montreal, where it was founded — announced on Monday that it would cease operations and enter liquidation immediately.
“We are devastated to have reached the point where liquidation is the only viable path forward,” Janice Sears, Sonder’s interim CEO, said in the statement.
Marriott and Sonder announced a licensing agreement through 2024 that lists Sonder’s properties through Marriott’s platforms. But on Sunday, Marriott said That deal was made due to Sonder’s “default”.
Amina Balde said the situation is as troubling for staff as it is for guests.
Balde, who has worked at the front desk at the Saunders Apollon location in Old Montreal for two years, says he and his colleagues started receiving headlines about financial issues just days before Marriott closed the deal.
He said his supervisor received a call from his superiors on Sunday telling him that Sonder had gone bankrupt and that he would effectively lose his job, just hours before he received any written notice from the company — and around the same time guests began coming to the front desk with questions about the news.
“We’re like, what? Is this a joke?” Balde said. “We were all completely shaken up.”
Balde says guests were disappointed, but mostly understood when they realized the staff was only just finding out about the closure.
In Monday’s statement, Sears said the company is “deeply grateful” for the dedication of its employees over the years.
“Due to his passion and effort, Sonder has spent the last decade redefining hospitality with remarkable and accessible guest stay experiences,” Sears said.
Financial constraints in Sonder
Sonder was founded in Montreal in 2012 before the company’s headquarters moved to the US. The company pitched itself between a traditional hotel and a short-term rental company like Airbnb, combining the comfort of more apartment-like spaces with the reliability of hotel-like booking.
Sonder reportedly raised $84 million by 2018 and was Worth over $1 billion Till 2019. The company was also promised a $30 million investment by the Quebec government to help Promised $182 million expansionHowever, the government told CBC News in a statement on Wednesday that the loan was never disbursed and the offer was cancelled.
When it first finalized its deal with Marriott in 2024, Sonder hoped the partnership would help them expand to new customers and bring “significant revenue opportunities.”
Ultimately, the company said it faced “severe financial constraints” due to difficulties aligning its booking systems with Marriott’s, which led to unexpected costs and a “sharp decline in revenues” that made bankruptcy the only option.
Short-term rental hosts in Ontario’s cottage country say new rules and licensing fees in many municipalities will disproportionately hurt small operators. For some people, it’s not worth it to comply with the new rules, and they are removing their cottages from rental sites like Airbnb.
Wayne Smith, director of the Institute for Hospitality and Tourism Management at Toronto Metropolitan University, says bringing in a company like Marriott could have its benefits, but it could also be really expensive.
“If you’re a small company and you’re giving up a large percentage of total revenue to be part of that, it’s hard to maintain profitability,” Smith said.
Trying to carve out a niche between giants like Airbnb and traditional hotels is also a “really tough” business, he says.
Guest wants ‘minimum’ money back
Marriott says its immediate priority is to assist guests who were staying with Sonder, or who had upcoming reservations at one of their properties.
The company is currently in the process of contacting guests who booked their stay directly with Sonder through the Marriott platform, and urging them to reach out to the organization for guests who booked through a third-party company.
CBC News asked Marriott what compensation and rebooking assistance options the company is offering guests, but it did not respond in time for publication.
Tsai said that when she was told she had to leave her hotel, she tried to contact customer service, but when another customer told her they waited for hours, she gave up waiting and was told she should book another hotel.
Tsai, who is traveling from Thailand, says she was able to book another hotel, albeit away from the city, with her own money. She says she hasn’t tried to reach the company again, but adds that that’s the first thing she’ll do when she gets home.
She wants a full refund of the days lost, as well as for the company to compensate her for the difference between her original booking and her new, more expensive hotel.
“(Giving) my money for the night I didn’t stay – I think it’s the minimum amount,” Tsai said.
The Institute for Hospitality and Tourism Management’s Smith says guests who don’t have a place to stay should try calling other hotels in the area rather than just looking online – as it’s possible other companies may see this as an opportunity to win new customers by offering lower prices.
