How Sonder Abruptly Unraveled After Its Messy Marriott Breakup | WSJ What Went Wrong

Business Model & Financial Challenges - Sonder's business model, relying on long-term leases rather than owning real estate, led to costs outpacing revenue as the company expanded [5][7] - The company projected nearly $4 billion in revenue by 2025, but faced operational challenges due to leasing apartments and maintaining staff regardless of occupancy [5][7] - Sonder went public via a SPAC, a faster but riskier route, and received $400 million less than expected due to investors cashing out [8][10] - By 2025, Sonder's liabilities exceeded its assets, posting a loss of approximately $100 million in a six-month period [12] Partnership & Collapse - A licensing deal with Marriott International in 2024 aimed to integrate Sonder units into Marriott's booking system [11] - Sonder defaulted on its debts to Marriott, leading to the termination of the partnership in November 2025 [13] - Marriott covered $15 million in losses due to the Sonder partnership [15][16] - Sonder abruptly closed, leaving thousands of guests stranded and directing them to Marriott for assistance [2][14] Industry Implications - Sonder's failure highlights the importance of understanding a company's business model and its ability to achieve long-term profitability [16] - The case demonstrates the risks associated with SPACs and the challenges of maintaining profitability in the short-term rental market [8][9]