What Sonder's Collapse Means for Apartment Hotels

Published on Nov 15, 2025, 10:07 am CSTUpdated on Nov 15, 2025, 10:15 am CST

14 min read

In early November 2025, apartment-hotel startup Sonder Holdings abruptly announced it would wind down operations and file for Chapter 7 bankruptcy, just days after Marriott International terminated its partnership with the company¹. For a firm once hailed as a tech-savvy hybrid of hotel and home rental, this collapse was sudden and stunning. Guests in Sonder's apartments were stranded mid-stay, forced to find new lodging on 24 hours' notice in some cases, after Marriott yanked Sonder's units from its booking system virtually overnight². The incident has rippled through the travel industry, leaving travel advisors scrambling to assist affected clients and raising pressing questions about the viability of the "apartment hotel" model that Sonder championed.

Background: Sonder's Rise and Sudden Fall

Sonder launched in 2014 with a bold proposition - bridge the gap between traditional hotels and home rentals by offering professionally managed apartments that provide the space and local feel of an Airbnb with the consistency and service standards of a hotel. The concept gained traction; by the end of 2021 Sonder had gone public via SPAC at a multibillion-dollar valuation and was expanding into markets worldwide¹. Unlike a pure home-sharing platform, Sonder leased entire floors or buildings, then furnished and operated them like hotels with digital check-in and on-demand service via a mobile app. In theory, this vertical integration promised higher quality control than peer-to-peer rentals and trendier design and tech than many hotels.

A pivotal moment came in August 2024 when Marriott International - the world's largest hotel operator - inked a partnership to integrate Sonder's units into the Marriott system¹. Under that licensing deal, Sonder would join Marriott's Bonvoy loyalty program and distribution channels. Marriott's investment and endorsement boosted Sonder's credibility and finances by about $146 million, with plans to add over 9,000 Sonder-managed units to Marriott's portfolio by the end of 2024¹. Sonder's stock price surged on the announcement, as the startup appeared to gain a powerful ally to drive bookings and perhaps even fuel global expansion.

Behind the scenes, however, trouble was brewing. Integrating Sonder's technology and operations into Marriott's legacy systems proved far more challenging and costly than anticipated. By late 2025, Sonder was under severe financial strain. On November 9, 2025, Marriott abruptly terminated the partnership, citing a contractual default by Sonder¹. Marriott immediately removed all Sonder properties from its website and apps, stating that Sonder was "no longer affiliated with Marriott Bonvoy" and halting any new bookings through Marriott channels¹. This move effectively cut off a vital source of reservations for Sonder and rattled its remaining guests.

Within a day of Marriott's announcement, Sonder's interim CEO Janice Sears declared that the company would cease operations and pursue liquidation. In a public statement on November 10, Sonder acknowledged "severe financial constraints" and revealed it would file for Chapter 7 bankruptcy protection - a complete shutdown of U.S. business rather than a reorganization². The CEO's statement pointed to the integration delays and technical misalignment with Marriott as a key factor in Sonder's downfall, causing "significant, unanticipated integration costs" and a sharp revenue decline once Sonder joined Marriott's platform². In other words, the very partnership intended to amplify Sonder's reach ended up accelerating its collapse.

The speed of Sonder's unraveling was remarkable. The company operated roughly 140 properties totaling about 7,700 apartments globally at the time of collapse³. It had locations across North America, Europe, and the Middle East. Yet within 48 hours of Marriott pulling the plug, those units were taken offline or handed over to property owners, and thousands of upcoming reservations were canceled. In a particularly jarring twist, many guests already staying at Sonder properties (including loyal Marriott Bonvoy members) were told to vacate mid-trip via abrupt emails and without immediate alternative accommodations provided². Years of effort building a brand were effectively wiped out over a single weekend.

Financially, Sonder's trajectory had turned sharply negative well before this final crisis. The company had never turned a profit and was burning cash on expensive leases. According to one report, Sonder's Q2 2025 losses were nearly five times its prior-year levels (a 469% decline in year-over-year profit), underscoring how unsustainable its situation had become⁴. By the time of bankruptcy, Sonder's market capitalization had plummeted to under $7 million - essentially a rounding error for a firm valued in the billions just a couple of years prior¹. The Marriott partnership may have been an attempt to stanch the bleeding by boosting occupancy, but ultimately it was "too little, too late" once execution problems emerged.

Sonder's fall from grace carries implications far beyond the immediate disruption to guests. The company had been a leading name in the serviced apartment and aparthotel niche, managing thousands of stylish apartments and boutique hotel rooms in major cities. Its demise raises critical issues: What went wrong with Sonder's business model? How will travelers' trust be impacted when booking alternative accommodations? What does this mean for hotel giants like Marriott dabbling in partnerships with startups, and for other companies offering apartment-style stays? This comprehensive insight will delve into the causes of Sonder's collapse, examine the impact on travelers and the broader hospitality sector, and explore how the apartment-hotel landscape is likely to evolve in its aftermath.

Why Did Sonder Fail?

Sonder's collapse can be attributed to a convergence of strategic and operational failures, some specific to the Marriott deal and others inherent to its business model. Understanding these factors is key to interpreting what this event means for the apartment-hotel concept as a whole.

Costly Integration Missteps

By Sonder's own admission, the integration with Marriott's reservation system was a nightmare. The technical alignment of Sonder's digital-forward platform with Marriott's established infrastructure "was substantially delayed" and far more complicated than planned². This resulted in ballooning integration expenses and lost revenue as units sat under-utilized during the transition. The delay meant Sonder's properties weren't generating the expected bookings through Marriott, and many units went empty even as fixed costs like rent and staffing continued. What was supposed to be a lifeline turned into a millstone that dragged Sonder deeper into the red. This highlights a classic startup-corporate culture clash: a young tech-driven firm struggled to mesh with an older hospitality giant's systems and timelines.

Fixed Costs and Cash Burn

Like several of its peers in the short-term rental startup realm, Sonder was burdened by hefty fixed lease obligations. The company typically signed multi-year leases on apartment buildings to ensure supply, a strategy that backfired if rooms went unsold. During the COVID-19 pandemic in 2020, similar startups Stay Alfred, Lyric, and Domio failed when travel demand collapsed and they couldn't cover their guaranteed rents⁵. Sonder survived that downturn (thanks to new funding and cost cuts), but its underlying model remained risky. By 2023-2025, rising interest rates and economic uncertainty meant venture capital infusions slowed, leaving Sonder with dwindling cash to cover lease payments. When the Marriott integration stumbled and bookings fell short, Sonder simply could not withstand the cash burn rate inherent in its lease-and-operate model. In contrast, competitors that shifted to revenue-sharing deals with property owners (instead of fixed leases) have proven more resilient⁵.

Overexpansion and Oversupply

Sonder's growth was aggressive - by 2022 it was in 35+ cities worldwide. Such rapid expansion can lead to operational weak spots, uneven quality, and difficulty adapting to local regulations. There is evidence Sonder overextended in certain markets. For instance, in New York City, a strict short-term rental law took effect in 2023 requiring hosts to register and be present for stays under 30 days, effectively outlawing many of Sonder's unstaffed apartment rentals in the city⁵. Regulatory crackdowns in other cities also loomed. At the same time, the broader short-term rental market saw oversupply in urban areas as travel rebounded-Airbnb listings surged, and hotels recovered occupancy, making it harder for Sonder to maintain the high occupancy rates it needed to be profitable. In sum, the company may have added units faster than demand could support, especially once travel patterns normalized post-pandemic.

Trust and Brand Damage

The way Sonder's final days unfolded - with guests being evicted mid-stay and many learning about cancellations through impersonal emails - dealt a severe blow to its brand reputation. Even before the collapse, some travelers had reported inconsistent customer service or cleaning standards at certain Sonder locations, as the company navigated scaling challenges. Marriott's partnership initially lent Sonder credibility, but Marriott's swift exit and the ensuing chaos shattered traveler confidence not only in Sonder but perhaps in similar alternatives. For a business built partly on the promise of reliability (compared to a random home-share), this reputational damage was fatal. The fiasco also left Marriott with a black eye, as loyal Bonvoy members publicly vented about being left in the lurch and questioned Marriott's due diligence in teaming up with Sonder². The trust erosion on both the consumer and corporate sides underlines how deeply a service failure can cut in hospitality.

In combination, these factors created a perfect storm that Sonder could not survive. The Marriott deal's collapse was the catalyst, but underlying weaknesses in Sonder's economics and execution set the stage for that fatal blow. Importantly, these issues were not unique to Sonder - they reflect broader challenges in the apartment-hotel and short-term rental segment, which we will explore in context.

Immediate Impact on Travelers and Advisors

In the near term, Sonder's shutdown was a crisis for travelers with bookings and the travel advisors managing those trips. The abrupt cancellation of thousands of reservations left individuals and families scrambling, often in cities during busy periods when hotel availability was tight. Travelers who had counted on Sonder's apartment-style accommodations - perhaps for a family reunion, work assignment, or vacation requiring a kitchen and multiple bedrooms - suddenly had to find last-minute hotel rooms or other rentals. Many incurred significant extra costs. For example, one Marriott elite member on a 17-day NYC stay reported spending "several thousand dollars more" to rebook lodging after being told to vacate his paid Sonder apartment with less than 24 hours' notice².

Stories surfaced of guests returning to properties to find their belongings hastily packed up by staff and left in hallways, or front-desk attendants confused about the situation and unable to help². This level of disruption mid-trip is almost unheard of in modern hospitality and has understandably infuriated those affected.

Travel advisors have been working overtime to assist clients caught in the mess. Advisors with VIP or corporate clients in Sonder properties had to quickly secure alternate accommodations, tapping their networks with hotels to find rooms on short notice. In markets where Sonder had a heavy presence - such as San Francisco, Miami, London, or Dubai - the sudden removal of inventory tightened the local supply of large suites and apartments. As a result, advisors noted an uptick in hotel rates for remaining options, since a chunk of lodging supply vanished overnight.

Advisors not only rebooked stays but also had to help clients navigate refund processes. Depending on how a Sonder stay was booked, the refund responsibility varies: Marriott has stated it will fully refund any bookings made via Marriott channels¹, whereas those who booked Sonder via an online travel agency (OTA) or directly through Sonder must seek refunds from those sources or dispute charges through credit cards. This has created confusion, as some travelers initially got the runaround between Marriott, Sonder, and OTAs regarding who would issue refunds or cover additional expenses.

The loss of confidence is another palpable impact. Travelers who might have been open to trying an apartment-style stay through a third-party operator could now think twice. Trust - a cornerstone of travel bookings - has been shaken. Marriott's own reputation took a minor hit among its loyalty members, some of whom publicly questioned why the hotel giant didn't handle the situation more gracefully (for instance, by proactively rebooking guests before kicking them out).

Marriott did say its "immediate priority" was assisting guests booked through its system and reaching out to help them rebook². However, by the time that communication reached many guests, the clock was already ticking or their stay had been cut short. This episode may cause advisors and travelers to be more cautious about blending alternative accommodations with chain loyalty programs until there are assurances such scenarios won't repeat.

Industry Implications: Rethinking the Apartment-Hotel Model

Beyond the acute chaos, Sonder's failure sends a broader signal to the travel and hospitality industry about the apartment-hotel business model. Stakeholders from hotel executives to venture capitalists and city regulators are parsing what this collapse means for the future of serviced apartments and alternative accommodations. Several key implications stand out:

Future Outlook: The Apartment-Hotel Concept After Sonder

In the wake of Sonder's implosion, many in the industry are asking: what is the future of the apartment-hotel or serviced apartment concept? Is it fundamentally flawed, or will it evolve and persist as traveler preferences shift toward more space and flexibility? The consensus among experts is that the concept itself remains sound - demand for apartment-style stays is strong and likely growing - but the execution and business strategies will adjust.

Travelers, especially younger professionals, families, and long-stay guests, have shown they appreciate the combination of space and convenience that serviced apartments provide. This is evident in the continued high occupancy of traditional extended-stay hotels (like Marriott's Residence Inn or Accor's Adagio aparthotels) and the success of Airbnb in capturing longer stay bookings. That fundamental demand isn't going away. If anything, remote work and "bleisure" (business-leisure) travel trends mean more people are taking extended trips where having a kitchen and living area is a perk. So, apartment hotels will remain a key lodging category. The real question is who will dominate this space and under what models.

We're likely to see a few developments going forward:

Established Brands Entering the Space: Major hotel chains will increase their presence in the serviced apartment realm. Their approaches will range from launching new brands to acquiring or franchising existing apartment-style operators.
Hybrid Operating Models: We expect more hybrid models: management contracts, franchising of the concept, and revenue-sharing deals that mirror how traditional hotels are run.
Tech and Service Balance: Companies will likely invest more in on-the-ground staff and support to avoid service lapses, balancing digital conveniences with hospitality fundamentals.
Consumer Education and Transparency: Providers and booking platforms may be more explicit about what a stay entails to manage expectations and build trust.
Continued Innovation: New entrants might explore variations on the theme - for instance, offering memberships or subscriptions for frequent users of apartment hotels or tailoring offerings to specific niches.

From a travel advisor's perspective, the collapse of a company like Sonder reinforces the value of due diligence and perhaps the enduring appeal of established hotels for critical bookings. That said, advisors know that clients sometimes truly need the features apartment hotels offer. The silver lining is that advisors who navigate these complexities effectively can demonstrate their worth to clients in an era where booking a generic hotel is easy for anyone to do online.

Final Thoughts

Sonder's dramatic collapse is a defining moment for the evolving landscape of apartment hotels and alternative accommodations. It serves as a stark reminder that while travelers' desires for space, authenticity, and flexibility have opened new avenues in lodging, delivering on those promises sustainably is no easy feat. The fallout has caused real pain for travelers and challenges for the industry - from displaced guests and scrambled trip plans to reputational knocks and financial losses. Yet it also provides lessons that will shape the future of hospitality innovation.

In the end, travelers still want what Sonder was offering: a "better way to stay" that combines the comforts of home with the assurances of a hotel. The way to achieve that may be through more robust partnerships, smarter business models, and a recommitment to hospitality basics alongside tech advances. Apartment hotels as a concept aren't going away; if anything, they will come back stronger under new stewards who heed the warning signs. For travel professionals, Sonder's rise and fall underscores the importance of vigilance and adaptability. By learning from this episode - understanding the risks, adjusting strategies, and keeping traveler experience at the forefront - the industry can ensure that the next chapter of apartment-style accommodations fulfills its promise to guests without the turmoil we've witnessed.