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Worldwide: Short-term rental apartment management company Sonder has entered into a long-term licensing agreement with Marriott, in addition to securing $146 million in liquidity.
More than 9,000 live Sonder units are expected to join Marriott’s portfolio by the end of 2024, with approximately 1,500 units anticipated to join its system in the future.
The Sonder by Marriott Bonvoy collection will be available to book on Marriott’s website as well as its mobile app Marriott Bonvoy. A full integration is expected in 2025.
Francis Davidson, co-founder and CEO of Sonder, said: “We’re delighted about our strategic agreement with Marriott. Benefitting from the extensive distribution, loyalty programme and sales capabilities of a global hospitality leader will help us to prioritise our core value drivers, including our unique guest experience, while unlocking significant opportunities for increased revenue and cost efficiency.
“We look forward to welcoming Marriott Bonvoy members to our approximately 200 properties worldwide, creating new opportunities for guests to enjoy Marriott’s award-winning loyalty programme. Thank you to all our employees, guests, partners and stakeholders as we launch this exciting new chapter,” he added.
Tim Grisius, global officer – M&A, business development and real estate, Marriott International, said: “We are excited about this new agreement, which is set to expand our portfolio of longer-stay accommodations in key markets around the world.
“Marriott has long believed in providing the right product at the right price point for all trip purposes and generations of travellers. 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,” Grisius added.
Sonder has also secured approximately $146 million in additional liquidity, including approximately $43 million convertible preferred equity investment. The additional funds include:
• A consortium of investors, which has committed to purchase approximately $43 million of a newly designated series of convertible preferred equity of Sonder.
• Sonder’s existing noteholders have provided approximately $83 million in additional liquidity, including $4 million in financing funded on 13 August 2024, 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 totalling $20 million.
Janice Sears, lead independent director of Sonder’s board of directors, said: “Today’s announcement is the result of deliberate and thoughtful planning by the board and the management team to best position Sonder to deliver value for all stakeholders.
“Sonder has been relentlessly focused on operational efficiency to deliver long-term profitability and these actions are the next step in achieving that goal. With significantly improved financial flexibility from the support of our lenders and investors, Sonder now has a stronger balance sheet to fuel its value creation strategy as it embarks on its next chapter, including the strategic licensing agreement with Marriott,” she added.
In June, Sonder announced a significant reduction in its portfolio and a $10 million financing to “improve the company’s unrestricted liquidity”. At the time, the company said that it had signed agreements to exit or reduce rents in 105 buildings, accounting for 4,300 units, by the end of 2024.
