Short-term rental specialist Sonder will be implementing $50 million in annualized cost reductions ahead of its planned integration with Marriott.
The reduction is one of several actions Sonder is taking to “strengthen its balance sheet and generate significant cost savings,” the company said in a release.
Cost reductions will come from "a combination of headcount reductions, software savings and other efficiencies in conjunction with the Marriott integration,” Sonder said. The company previously cut its corporate workforce by 17% in February 2024, eliminating approximately 106 roles.
Sonder also announced it sold off $18 million shares of its Series A preferred stock on April 11 and amended its note and warrant purchase agreement, reducing outstanding principal balance by 15% and slashing the interest by 50%.
"These events are expected to bring us closer to completing our transformation. The integration with Marriott is expected to enhance the positive RevPAR [revenue per available room] and profitability trends that our portfolio has already experienced over the last several months,” said Francis Davidson, co-founder and CEO of Sonder.
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“With the integration nearing completion, we are capitalizing on these opportunities and right-sizing our organization for the next era of Sonder. With the implementation of substantial cost savings and approximately $18 million of additional capital, we believe that Sonder is well positioned to support long-term value creation.”
The Marriott integration is set to be completed by the end of the second quarter this year, Sonder said. Once complete, all Sonder properties will be available under the “Sonder by Marriott Bonvoy” collection on Marriott's digital channels.
Marriott International is paying Sonder a total of $15 million, with the deal intended to address Sonder's financial losses and negative cash flow. In a delayed quarterly earnings report filed with the United States Securities and Exchange Commission (SEC) in February, Sonder said it had "substantial doubt" about its ability to continue, while also citing that it "expects to continue to incur additional losses in the near future."
In a subsequent filing with the SEC on March 31, Sonder said it was unable to file its annual report for 2024 on time, “without unreasonable effort or expense.” It also stated that it expected to “receive a notice” from Nasdaq due to being no longer in compliance. The company received a similar threat in 2023.