Marriott International and Sonder Holdings have recently signed a 20-year strategic licensing deal that will expand the portfolio of places where members of the Marriott Bonvoy loyalty program can earn and redeem points. Sonder offers about 9,000 units with hotel-style professional stays, with many of them being apartment buildings. The deal will provide guests seeking apartment-style urban accommodations with even more options within the Marriott Bonvoy portfolio. Additionally, Sonder has secured about $146 million in additional liquidity to strengthen its balance sheet and support long-term growth, which will benefit both companies in the partnership.
Marriott will benefit from the partnership with Sonder through a royalty fee based on a percentage of Sonder’s gross room revenues. This loyalty licensing deal is similar to one Marriott arranged last year with MGM Resorts, and it will enable Marriott to maintain its goal of having at least 6% net room growth of its portfolio for the full year. The integration with Marriott’s digital platforms is expected to be fully completed next year. Sonder’s expertise in running apartment buildings as licensed hotels has enabled the company to operate in neighborhoods where traditional hotels are scarce, providing Marriott with added reach in this regard. The deal raises the question of how the “Sonder by Marriott Bonvoy” brand will compare to other vacation rental offerings under Marriott.
Sonder, which went public in a special purpose acquisitions company merger in 2022, has been struggling financially and has faced some challenges with profitability and portfolio management. However, with Marriott’s support and endorsement, Sonder has attracted funding from unnamed investors, including a $43 million convertible preferred equity investment, $50 million in new real estate debt financing, and $53 million from the monetization of existing security deposits. Sonder’s CEO, Francis Davidson, expressed confidence in the partnership with Marriott, highlighting the significant opportunities for increased revenue and cost efficiency that will result from the collaboration between the two companies.
The performance of hotels and short-term rental sector stocks within the ST200 index, which includes nearly 200 travel companies, reflects the current state of the accommodations sector. The index encompasses companies publicly traded across global markets, including international and regional hotel brands, hotel REITs, hotel management companies, alternative accommodations, and timeshares. This data provides a comprehensive overview of the financial performance of the accommodations sector year-to-date, giving insights into the industry trends and market conditions affecting companies in the hospitality and real estate sectors.
Marriott’s heft and distribution system will be instrumental in boosting Sonder, which has been facing challenges since going public in a blank check deal in 2022. The deal will allow Marriott to gain access to Sonder’s units, most of which are spacious apartment-style lodgings located in neighborhoods where hotel development is limited. With the combination of Marriott’s global hospitality capabilities and Sonder’s expertise in managing apartment-style accommodations, the partnership is poised to create valuable opportunities for both companies in the competitive accommodations sector.
Overall, the strategic licensing deal between Marriott International and Sonder Holdings represents a significant development in the accommodations sector, offering new opportunities for guests seeking apartment-style urban accommodations and providing financial support for Sonder’s long-term growth. By integrating Sonder’s units into the Marriott Bonvoy portfolio, both companies stand to benefit from increased revenue and cost efficiency, as well as expanded reach in neighborhoods with limited hotel options. The partnership demonstrates the importance of collaboration and innovative solutions in the ever-evolving hospitality industry, showcasing the potential for growth and success through strategic alliances and mutual support.
