Carol Tsai was just getting back to her Sonder hotel room after a long day of sightseeing in London when she read an email from the accommodation company informing her she needed to leave immediately.
“I literally freaked out,” said Tsai, who had been staying at the hotel for a few days and had paid for the stay in full.
“The first thing I said [was], ‘Where am I going to go now?’”
Guests at Sonder properties from New York to France say they were asked to leave their hotels abruptly after the company defaulted on payments, causing global chain Marriott to end a licensing deal it had with Sonder.
Sonder, which operated about 9,000 short-term rental and boutique hotel units in over 40 cities across the world — including Toronto, Vancouver and Montreal, where it was founded — announced on Monday it would be winding down operations and liquidating immediately.
“We are devastated to reach a point where a liquidation is the only viable path forward,” Janice Sears, Sonder’s interim CEO, said in the statement.
Marriott and Sonder announced a licensing agreement in 2024 that saw Sonder’s properties listed through Marriott’s platforms. But on Sunday, Marriott said that deal was done due to Sonder’s “default.”
Amina Balde said the situation has been equally jarring for employees as it has been for guests.
Balde, who has worked at the front desk at Sonder’s Apollon location in Old Montreal for two years, says she and her colleagues started seeing headlines about financial issues just days before Marriott ended the deal.
She said her supervisor received a phone call from their superiors on Sunday saying Sonder was bankrupt and they would effectively be losing their jobs, hours before she received any information from the company in writing — and around the same time guests started coming to the front desk with questions about the news.
“We’re just like, what? Is this a joke?” Balde said. “We were all completely shook.”
Balde says guests were frustrated but mostly understanding when they realized the employees were only just finding out about the closure, too.
In Monday’s statement, Sears said the company was “deeply grateful” to their employees for their dedication over the years.
“Due to their passion and effort, Sonder spent the last decade redefining hospitality with remarkable and accessible guest stay experiences,” Sears said.
Financial constraints at Sonder
Sonder was founded in Montreal in 2012 before the company’s headquarters moved to the U.S. The company pitched itself as something between a traditional hotel and a short-term rental company like Airbnb, combining the comfort of more apartment-like spaces with the reliability of hotel-like booking.
Sonder had reportedly raised $84 million by 2018 and was worth over $1 billion by 2019. The company was also promised a $30 million investment by the Quebec government to help with a promised $182 million expansion, though the government told CBC News in a statement Wednesday that the loan was never disbursed and the offer was cancelled.
When it first struck their deal with Marriott in 2024, Sonder expected the partnership to help them expand to new customers and bring “significant revenue opportunities.”
In the end, the company said it faced “severe financial constraints” in part from difficulties aligning its booking systems with Marriott’s, which led to unexpected costs and a “sharp decline in revenue” that made bankruptcy the only option.
Short-term rental hosts in Ontario’s cottage country say new rules and licensing fees in several municipalities will unfairly hurt smaller operators. For some, complying with the new rules isn’t worth it, and they’re taking their cottages off rental sites like Airbnb.
Wayne Smith, director of the Institute for Hospitality and Tourism Management at Toronto Metropolitan University, says being brought into the fold by a company like Marriott can have its benefits, but can also be really expensive.
“If you’re a small company and you’re giving up a pretty sizable percentage of the overall revenue to be part of that, It’s tough to maintain profitability,” Smith said.
He adds that trying to make space between giants like Airbnb and traditional hotels is also a “really difficult” business to be in.
Guest wants money back as ‘bare minimum’
Marriott says its immediate priority is supporting guests who were staying with Sonder, or who had upcoming reservations at one of their properties.
The company is currently in the process of contacting guests who booked a stay with Sonder directly through a Marriott platform, and urged guests who had booked through a third party company to reach out to that organization.
CBC News asked Marriott about what compensation and rebooking assistance options the company was offering to guests, but it didn’t respond in time for publication.
Tsai said she tried to contact customer service shortly after she was told she would have to leave her hotel, but she gave up waiting on hold when another customer told her they waited hours just to be told they should book another hotel.
Tsai, who is travelling from Thailand, says she was able to book another hotel, albeit on her own dime and further out from the city. She says she hasn’t tried to reach out to the company again, but adds it’s the first thing she’ll do when she gets home.
She wants to see a full refund for the days lost, plus have the company make up the difference between her original booking and her new, much pricier hotel.
“[Giving] my money back for the night that I didn’t stay — I think that’s the bare minimum,” Tsai said.
Smith with the Institute for Hospitality and Tourism Management says any guests still without a place to stay should try calling other hotels in the area rather than just looking online — as it’s possible other companies might see this as a chance to win over new customers by offering a lower price.
www.cbc.ca (Article Sourced Website)
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