In a classic tale of business gone wrong, Sonder, a hospitality startup that aimed to shake up the traditional hotel experience, has fallen hard and fast. Not too long ago, this once-promising company was worth nearly $2 billion, boasting of stylishly managed apartments combined with hotel-like services. But fast forward to the present, and guests in Montreal found themselves abruptly evicted from their rooms, as the company’s ambitions crumbled into chaos. It seems Sonder, once riding high on ambitious growth plans, has now left many stranded, with little more than the contents of their suitcases.
Sonder was the brainchild of Francis Davidson, who had a brilliant idea while trying to sublet his apartment back in 2012. He noticed that Montreal’s summer brought in throngs of visitors but also left many rental apartments sitting empty. He thought, “Why not pair visitors with these unoccupied spaces?” With this vision in mind, he and his co-founders launched Sonder in 2014. They set themselves apart from traditional hotels by entering long-term leases and transforming residential units into stylish short-term rentals. Investors clamored to join the party, excited by the promise of big returns as the company expanded internationally.
However, behind the glittering promises lay troubling operational challenges. Sonder’s business model required it to pay hefty rent and maintain a workforce, regardless of how many apartments were booked. As the company grew, its expenses quickly outpaced revenue. The looming costs made it difficult to sustain operations and the dream began to crack. Even as Sonder tried to pivot during the pandemic, focusing on longer stays, the financial strain was already taking its toll.
Efforts to go public in 2021 through a Special Purpose Acquisition Company (SPAC) were fraught with challenges as investors became more wary. The hype that had once buoyed the IPO market began to wane and Sonder’s market value subsequently plummeted. Even a much-hyped partnership with Marriott in 2024, which allowed Sonder units to appear on the hotel giant’s booking system, couldn’t save them from spiraling into deeper financial troubles.
By 2025, it became clear that Sonder was in dire straits. Liabilities had eclipsed assets, leading to a staggering loss of around $100 million in just six months. As investors lost faith and the company attempted to seek a buyer, it became evident that the financial health of Sonder was anything but solid. When Marriott finally severed its ties after Sonder defaulted on their partnership agreement, it was a classic case of too little, too late. The fallout saw many guests left high and dry as Marriott scrambled to support those affected.
In the aftermath, Sonder’s strategy, which seemed so innovative at its inception, raises crucial questions about the viability of modern business models in the hospitality sector. With Marriott stepping in to manage the situation—offering refunds and trying to assist stranded guests—it highlights an essential lesson in the world of business: market trends are fickle, and success does not always guarantee long-term prosperity. The tale of Sonder serves as a cautionary reminder to keep a watchful eye on the profitability of even the most promising ventures.
