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Sonder Secures Financial Lifeline and Rebrands with Marriott
Marriott International is further expanding its offerings by partnering with Sonder Holdings, a short-term rental platform specializing in apartment-style accommodations in major cities.
Jordan B. & Han-Gwon Lung
August 20, 2024
Together with
Good morning. Marriott is venturing further into the short-term rental market through a new partnership with Sonder Holdings.
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Market Snapshot
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HOTEL HELP
Sonder Secures $126M and Rebrands with Marriott Partnership
Marriott International is further expanding its offerings by partnering with Sonder Holdings, a short-term rental platform specializing in apartment-style accommodations in major cities.
Financial lifeline: Sonder Holdings secured $126 million in new capital and will rebrand under Marriott to regain its footing. The funding includes $43 million in preferred equity and $83 million in loans, shoring up liquidity as the company’s market value plunged 98.7% from $2.3 billion to $29 million in just two years.
The partnership: Under a 20-year licensing agreement with Marriott International, Sonder will rebrand its 9,000 boutique hotel rooms and apartment-style rentals as “Sonder by Marriott Bonvoy.” This rebranding effort will allow Sonder to leverage Marriott’s extensive platform and global customer base, including the 180 million members of Marriott Bonvoy’s loyalty program. The integration is expected to be completed by 2025.
Wall St. is onboard: Sonder’s stock surged 131% following the announcement, reflecting renewed investor confidence. The partnership with Marriott is seen as a key move to reduce financial pressures by providing a cheaper way to secure bookings compared to online travel agencies like Expedia.
Operational challenges: Despite this boost, Sonder continues to face hurdles. The company reported a negative cash flow of $108 million last year and has been embroiled in legal disputes, including a lawsuit for $1.2 million in unpaid rent for the century-old Hotel Carlton in San Francisco. Additionally, Sonder has faced rounds of layoffs and had to renegotiate leases to cut costs.
➥ THE TAKEAWAY
Looking ahead: Marriott’s partnership with Sonder signals a strategic push into the short-term rental and apartment-style lodging market, further taking on rival AirBnb in the extended stay market. The Marriott deal is expected to ease financial pressure by providing a more cost-effective way to secure bookings, potentially reducing reliance on expensive online travel agencies like Expedia.
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✍️ Editor’s Picks
Fear and Greed: Your insights are needed. Please take 3 minutes to provide your perspective on the current sentiment within the CRE industry and your predictions on future price trends.
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Buyer’s remorse: The Stahl Organization was forced to secure a massive $750M, 5-year loan with a significant $250M investment for 277 Park Avenue, a trophy Manhattan office tower.
Lab lament: The US lab/R&D property market's positive net absorption streak ended in 2024, with availability up to 26.4%, driven by speculative construction.
🏘️ MULTIFAMILY
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Affordable initiative: NYBG leased 43.2 KSF in the Bronx to Albanese for affordable housing development, with $15.2M paid and up to 105 KSF of development rights.
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Power play: Rockrose acquired a Cobble Hill site in Brooklyn that was part of a former LICH campus project for $65M from Madison Realty.
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🏬 RETAIL
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🏢 OFFICE
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🏨 HOSPITALITY
Deal of the day: RIDA Development and Ares Management purchased the 315 KSF Hyatt Regency Orlando, with 1,641 rooms, for an eye-popping $1.07B.
📈 CHART OF THE DAY
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