Sonder Stock Set For Big Hit As Marriott Pulls Plug On Partnership After Default

• Marriott on Sunday said it terminated its licensing agreement after Sonder defaulted.
• The hotel chain reduced its 2025 net room growth forecast to 4.5% from 5% earlier.
• The development marks a major blow for Sonder, which has been struggling and flagged going-concern risks last year.

Marriott International, Inc., on Sunday, announced that it is ending its partnership with Sonder Holdings, Inc., a major blow for the hotel-and-apartment rental company. 

The hotel chain said it ended the agreement after Sonder defaulted, and that Sonder’s properties will no longer be listed on Marriott’s site. Consequently, Marriott reduced its net room growth target for 2025 to 4.5% from 5% previously.

Marriott and Sonder entered a long-term licensing agreement in August 2024, which was supposed to see about 9,000 Sonder units become available on Marriott’s platforms by 2024 and to provide $15 million at the start of this year.

The partnership was seen as groundbreaking at the time, as it was an early instance of a traditional hotel group joining forces with a short-term rental company. It was a shot in the arm for Sonder, which had been struggling since its 2022 SPAC IPO. After the initial disruption caused by the COVID-19 pandemic, demand for stays remained weak.

Sonder responded by aggressively cutting costs and tweaking its agreements with the landlord, including reduced rents and the upfront payment of renovation costs. However, in September 2024, the company issued a going concern warning.

For Marriott, the development marks the removal of apartments and certain hotel inventory. In its earnings report last week, the company stated that strong demand for luxury stays was offsetting a soft uptake for budget accommodation, and raised its 2025 profit forecast.

On Stocktwits, the retail sentiment for MAR shifted to ‘neutral’ as of late Sunday from ‘bearish’ the previous day, while that for SOND remained in the ‘neutral’ zone.

A user said on the Sonder stream that the stock could drop to $0.25 on Monday. It had closed at $0.51 on Friday.

Founded in 2014, Sonder offers furnished apartments for short-term rentals through leases and revenue-sharing deals, bookable via its app, website, or sites like Airbnb. It expanded into hotels in 2019. The company’s stock has lost nearly all of its value since its 2021 IPO.

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