Sonder Holdings has entered into a long-term strategic licensing agreement with Marriott International. Through the agreement, more than 9,000 active Sonder units are expected to join the Marriott portfolio by the end of 2024, with approximately 1,500 additional contracted units anticipated to join the Marriott system at later dates.
The deal is similar to the licensing agreement Marriott formed with MGM Resorts International last year.
Founded in 2014, Sonder currently operates approximately 200 apartment-style accommodations and small boutique hotels in urban markets across North America, Europe and the Middle East. Sonder’s properties are expected to be fully integrated with Marriott’s distribution channels and be available for booking on Marriott.com and the Marriott Bonvoy mobile app as a new collection called Sonder by Marriott Bonvoy. Sonder anticipates that full integration with Marriott's digital channels and platform will occur in 2025; however, the companies expect that Marriott.com will include link-offs to Sonder's digital platforms to support shopping, booking, earning and redeeming by Marriott Bonvoy members and customers before the end of 2024.
“We are excited about this new agreement, which is set to expand our portfolio of longer-stay accommodations in key markets around the world,” Tim Grisius, global officer, M&A, business development and real estate, Marriott International, said in a statement. “With the planned addition of Sonder by Marriott Bonvoy, we will be able to provide guests seeking apartment-style urban accommodations with even more options in the Marriott Bonvoy portfolio.”
“Benefitting from the extensive distribution, loyalty program and sales capabilities of a global hospitality leader will help us to prioritize our core value drivers, including our unique guest experience, while unlocking significant opportunities for increased revenue and cost efficiency,” Sonder CEO and co-founder Francis Davidson said.
Sonder Benefits
- Following full integration with Marriott’s global sales and marketing capabilities, loyalty platform and distribution and booking channels, Sonder expects these sources of new and improved demand to drive uplift in revenue per available room over time.
- The full integration is expected to complement Sonder’s existing technology which powers end-to-end digital guest journeys and operating efficiencies. Sonder expects to realize customer acquisition cost savings through improved distribution channel mix and preferred distribution channel rates.
- Sonder believes that the strategic agreement with Marriott will enhance Sonder’s value proposition to real estate owners who can expect to realize the unique combination of Sonder’s product and Marriott’s distribution.
Strengthened Balance Sheet
Sonder also announced that it has enhanced its liquidity profile by approximately $146 million to support its long-term profitable growth and the integration efforts under the strategic agreement with Marriott. Sonder is expected to have access to these additional funds over the coming months:
- A consortium of investors has committed to purchase approximately $43 million of a newly designated series of convertible preferred equity of Sonder.
- Sonder’s existing noteholders have provided a total of approximately $83 million in additional liquidity, including $4 million in financing funded on Aug. 13 and approximately $79 million in the form of a 30-month extension (through the end of 2026) of the paid-in-kind feature of the Note Purchase Agreement (21 months of which is at Sonder’s option).
- Other sources of liquidity totaling $20 million.
The above is in addition to the previously announced $16 million in financing from Sonder’s existing noteholders.