San Francisco / New York City — In a dramatic turn of events, Sonder Holdings—the once‑fast‑rising startup blending short‑term rentals with hotel‑style service—announced on November 10, 2025, that it will wind down operations, initiate liquidation proceedings and file for Chapter 7 bankruptcy in the U.S. The collapse of the firm marks a significant moment in the hospitality industry and raises critical questions about the startup model, partnerships and financial sustainability.
The Rise and Vision of Sonder
Founded in 2014 in Montreal and later headquartered in San Francisco, Sonder sought to combine the appeal of furnished apartments with the consistency of a hotel experience. It expanded globally to more than 9,000 units across over 40 cities, operating in North America, Europe and beyond.
The company went public via a SPAC in 2022, with valuations reaching around $1.9 billion, driven by investor excitement over hybrid lodging models in the post‑pandemic era.
How Things Went Wrong
Despite early promise, several structural issues piled up:
Lease and cost burdens: Sonder used a model similar to co‑living ventures—leasing units long‑term and renting them short‑term—which left it vulnerable in downturns. Mounting losses: The company failed to turn a profit, with sustained losses and late earnings reports raising red flags. Leadership turnover and integration issues: Executives exited, and a pivotal licensing agreement with Marriott International—announced in August 2024—turned into a liability.
The Endgame: Marriott Pulls the Plug
On November 9 2025, Marriott terminated its licensing agreement with Sonder, citing defaults by the company. The deal had been expected to add thousands of rooms to Marriott’s Bonvoy system and provide liquidity to Sonder. Instead, its termination triggered immediate removal of Sonder‑branded properties from Marriott’s platforms.
The next day, Sonder confirmed it would wind down operations, liquidate its U.S. business and initiate insolvency proceedings abroad.
Impact on Guests, Partners and Market Confidence
For guests and employees, the fallout was abrupt and painful. Many travelers with bookings at Sonder properties were notified at short notice to vacate. One stay in New York involved a guest receiving an email telling them to leave by 8 a.m. the next day.
Marriott pledged to support clients who booked via its platforms, but reports suggest support was inconsistent. The company’s projections for net‑room growth also had to be scaled back—from 5% to roughly 4.5%.
The market reaction was swift: Sonder’s shares plummeted (down 60+%) and its market capitalization shrank into the single‑digit millions from its multi‑billion‑dollar peak.
What This Means for the Hospitality and Startup World
Model scrutiny: The rapid unraveling of Sonder raises questions about the viability of lease‑heavy short‑term rental platforms and their ability to weather economic fluctuations.
Partnership risks: The breakdown between Sonder and Marriott signals how dependent startup‑hotel partnerships can be fragile when foundational metrics don’t align.
Investor caution: The era of high valuations for alternative lodging models appears to have been followed by sharp recalibrations—echoing other SPAC‑era disappointments. Guest trust and operations: Sudden disruptions to guest stays and property access highlight operational risks in non‑traditional lodging companies.
Final Thoughts
What started as a promising disruptor in hospitality has ended in a rapid unraveling. While Sonder’s concept captured attention and capital, the combination of business‑model vulnerability, failed integration and abrupt contract termination laid bare the fragility of some hotel‑tech hybrids. For travelers, employees and investors alike, the lessons will be watched closely in the months ahead as the industry digests this dramatic collapse.
Sources
Business Insider: Airbnb rival Sonder Holdings to file for bankruptcy after Marriott ends partnership
Reuters: Marriott terminates licensing agreement with lodging rentals company Sonder
San Francisco Chronicle: San Francisco Airbnb rival collapses as Marriott ends hotel partnership
The Wall Street Journal: Struggling rental company Sonder tries to dodge WeWork plight
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