Sonder Bankruptcy: How a Travel Giant Crashed
- UpperKey
- 2 hours ago
- 6 min read
Sonder, a hospitality startup that once promised to reshape modern travel, spent ten years positioning itself as a forward-thinking force in the industry. With operations spread across three continents, including a significant presence in London, the company set out to deliver hotel-level consistency combined with the space and comfort of an apartment. By 2022, it had gone public with a multibillion-dollar valuation, expanded into major global cities, and secured a strong foothold in the short-term rental market, competing directly with boutique hotels and Airbnb listings.
In late 2025, its trajectory reversed almost instantly. The company closed operations across the United States, guests were instructed to leave their accommodation mid-stay, employees were let go, and the company filed for Chapter 7 liquidation in Delaware, triggering a full court-supervised wind-down. The sudden collapse left the hospitality sector questioning how a brand that once positioned itself as a market leader could unravel so quickly.
Table of Contents
A Vision Built on a New Travel Standard
When Sonder launched in 2014, it entered a short-term rental market that had already been transformed by Airbnb. Guests were comfortable booking apartments, yet still wanted the reassurance of hotel reliability. Sonder’s founders believed they could offer that stability by controlling every part of the guest experience. The idea relied on several core principles:
Predictability for guests Travelers sought clean spaces, uniform layouts, and dependable support, not the uncertainty that sometimes came with private hosts.
Full control of the product The company signed long-term leases on apartments and hotel buildings, then renovated and furnished them according to a strict brand template.
A hotel-style experience inside an apartment Each unit followed the same design standards and offered hotel-level amenities within a larger apartment-style layout.
A digital-first service model Guests relied on the Sonder app for check-in steps, entry codes, and support requests, reducing the need for round-the-clock on-site staff.
This mix of design consistency, technology use, and scalable operations attracted major investment. Sonder presented itself as a tech-enabled hospitality company rather than a conventional operator. By its 2022 public listing, it managed thousands of serviced apartments and apartment-hotels in New York, San Francisco, London, Rome, Dubai, and other key cities. For several years, its vision of modern, apartment-style hospitality appeared to hold strong.
The Financial Strain Hidden Beneath Rapid Growth
However, the company’s expansion came with rapidly increasing financial obligations. Its core model required controlling entire buildings without owning them, resulting in high fixed costs across every market. This included:
Long-term leases and deposits Sonder entered multi-year lease agreements in numerous cities, locking itself into hefty fixed payments regardless of seasonal or local demand.
Renovation and furnishing expenses Each new property needed upgrades, furnishing, and design alignment to meet brand requirements.
Ongoing operations and maintenance Cleaning, repairs, local staffing, and building-wide service agreements created continuous recurring costs.
Dependence on nightly rates The company attempted to cover these obligations through short-term rental income, absorbing the full impact of any vacancy.
This structure functioned only when demand remained steady. As soon as bookings dipped:
Lease payments remained unchanged.
Furniture and interiors continued to wear across thousands of units.
Staff and contractors still required payment regardless of occupancy levels.
Financial filings revealed the pattern clearly:
Revenue grew annually, but losses increased at an even faster pace.
Cash flow stayed negative throughout the company’s public life.
Many markets struggled with weak unit-level profitability.
Industry analysts noted that Sonder depended on consistently high occupancy, a difficult goal in a sector shaped by seasonal demand shifts, rising costs, and strong competition. By 2024, the company was already battling mounting financial pressure across its international portfolio.
The broader it grew, the more vulnerable its financial structure became, and the faster it burned through available cash.
The Marriott Partnership That Was Meant to Transform the Company
In August 2024, Sonder announced a major licensing partnership with Marriott International. The deal aimed to list more than nine thousand units under the “Apartments by Marriott” banner. For the first time, Sonder expected to plug into Marriott’s global reservation infrastructure and loyalty network, which could boost both visibility and occupancy.
To internal teams and investors, the agreement appeared to mark a turning point. A successful integration promised:
A steady stream of high-value bookings
Increased trust through Marriott’s global reputation
A clearer path to financial stability
However, the process of integration quickly became a challenge. The company had to realign its own booking technology with Marriott’s Bonvoy system, update thousands of property profiles, and meet new brand and operational requirements. These adjustments consumed significantly more time and resources than expected.
Throughout 2025, cash flow tightened further. Team members reported growing strain within the organisation. During integration, bookings slowed instead of rising. Costs increased, but revenue did not follow.
On 9 November 2025, Marriott officially terminated the agreement, citing default. Without the partnership, the company lost a critical part of its recovery plan. The following day, it began winding down operations in the United States.
The Collapse and Its Immediate Impact
The shutdown unfolded quickly. Many guests staying in serviced apartments received short-notice messages instructing them to leave. Some were informed at the door. Others learned through app notifications. Travelers who had booked long stays found themselves suddenly displaced, and those who booked through Marriott expected premium reliability, only to face unexpected disruption.
Employees experienced similar instability. Staff in customer service, operations, housekeeping, and management were dismissed with little notice. Contractors and service partners lost ongoing work. Local providers who relied on steady business from Sonder were left without commitments.
Landlords also faced major consequences. Many had leased entire buildings to the company on long-term contracts. Once payments stopped, these landlords were left with empty properties and substantial unpaid rent. Several buildings required refurbishment before they could be re-listed.
Across the hospitality sector, the collapse raised questions about the viability of hybrid rental operators. Sonder had been one of the most prominent models in this space, and its failure forced many to reconsider the risks and sustainability of similar approaches.
The Forces That Drove the Sonder Bankruptcy
Industry analysis and bankruptcy filings point to several fundamental issues:
Heavy lease commitments amplified every market shift. Fixed payments limited flexibility in downturns.
Expansion outpaced proven profitability. Cities were added before economic viability was established.
Dependence on constant, high occupancy. The business model required unrealistic stability in fluctuating markets.
Persistent cash flow challenges. Negative cash flow left the company exposed to even small disruptions.
A major partnership that increased financial pressure. The Marriott integration was costly and did not produce the expected revenue lift.
A branding strategy that did not match the economics. The company presented itself as a tech platform while carrying the obligations of a traditional hotel operator.
The Industry Response and Long-Term Implications
The Sonder bankruptcy has influenced discussions across hospitality, real estate, and investment. Stakeholders now view aggressive, lease-based hospitality models with greater caution. Investors expect clearer financial discipline. Landlords who were once eager to work with new operators now demand stronger guarantees and more secure terms.
Travelers, too, may think twice about emerging hospitality brands with rapid expansion but limited track records. The abrupt nature of the shutdown left thousands of guests stranded, making reliability a more important factor for future bookings.
Despite these events, demand for flexible, apartment-style accommodation continues to rise. Business travelers, remote workers, and families still seek alternatives to traditional hotels. The question now is which operators can meet that demand with a financially sustainable model.
Conclusion
Sonder built an appealing hospitality concept that many guests enjoyed, but the economic structure behind the vision was not strong enough to support its aggressive expansion. Once its major partnership dissolved, the company lacked the financial resilience to continue operating. The Sonder bankruptcy highlights the risks of rapid growth without a durable foundation and reinforces the need for sustainable planning in modern hospitality.
If you are a London landlord looking for a stable and trustworthy partner for short-term rental management, UpperKey provides transparent, professional, and fully managed support to help you protect and maximise your property’s potential.
