Carol Tsai was just returning to her room at the Sonder Hotel after a long day of sightseeing in London when she read an email from her accommodation company telling her she needed to leave immediately.
“I was literally scared,” said Tsai, who stayed at the hotel for several days and paid for the entire stay.
“The first thing I said [was]“Where should I go now?”
Guests at Sonder hotels from New York to France say they were suddenly asked to leave their hotels after the company defaulted on payment obligations, prompting global chain Marriott to end the licensing agreement it had with Sonder.
Sonder, which operated about 9,000 short-term rental units and boutique hotels in more than 40 cities around the world, including Toronto, Vancouver and Montreal, where it was founded, announced Monday that it plans to wind down its operations and liquidate immediately.
“We are devastated that we have reached a point where liquidation is the only viable path forward,” Janice Sears, interim CEO of Sonder, said in a statement.
In 2024, Marriott and Sonder announced a licensing agreement that will place Sonder properties on Marriott's platforms. But on Sunday Marriott said this deal was made due to Saunder's “default”.
Amina Balde said the situation was frustrating for both staff and guests alike.
Balde, who worked the front desk at Sonder's Apollon office in Old Montreal for two years, says she and her colleagues began seeing headlines about financial troubles just days before Marriott pulled the plug on the deal.
She said her boss received a call on Sunday from her superiors telling her that Sonder had gone bankrupt and that they would effectively lose their jobs, hours before she received any information from the company in writing – and around the same time, guests began arriving at the front desk asking about the news.
“We're like, what? Is this a joke?” – Balde said. “We were all completely shocked.”
Balde says guests were upset, but mostly understood when they realized employees had just found out about the closure, too.
In a statement Monday, Sears said the company is “deeply grateful” to its employees for their dedication over the years.
“Through his passion and efforts, Saunder has spent the last decade redefining the hospitality industry by delivering remarkable and affordable guest experiences,” Sears said.
Financial restrictions in Sonder
Sonder was founded in Montreal in 2012, before moving its headquarters to the United States. The company positioned itself as a cross between a traditional hotel and a short-term rental company like Airbnb, combining the comfort of apartment-like spaces with the security of hotel-like bookings.
Saunder reportedly raised $84 million by 2018 and was worth over 1 billion dollars by 2019. The Quebec government also promised the company a $30 million investment to help with promised a $182 million expansionalthough the government told CBC News in a statement Wednesday that the loan was never repaid and the offer was cancelled.
When Sonder first struck a deal with Marriott in 2024, he expected the partnership to help them expand their reach to new customers and provide “significant revenue opportunities.”
Ultimately, the company said it faced “severe financial constraints,” in part due to difficulties aligning its reservation systems with Marriott's, which led to unexpected expenses and a “dramatic decline in revenue” that made bankruptcy the only option.
Short-term rental owners in Ontario's cottage country say new regulations and licensing fees in several municipalities will unfairly hurt smaller operators. For some, complying with the new rules isn't worth it, so they're taking their cottages off rental sites like Airbnb.
Wayne Smith, director of the Institute of Hotel and Tourism Management at the University of Toronto, says hiring a company like Marriott can have its benefits, but can also be very expensive.
“If you're a small company and you're giving up a pretty significant percentage of your overall revenue to be part of it, it's difficult to maintain profitability,” Smith said.
Trying to make room between giants like Airbnb and traditional hotels is also a “very difficult” business, he adds.
The guest wants a refund at least
Marriott says its immediate priority is to support guests who were staying at Sonder or who had an upcoming reservation at one of their hotels.
The company is currently contacting guests who booked a stay with Sonder directly through the Marriott platform, and encourages guests who booked through a third party to contact that organization.
CBC News asked Marriott what compensation and rebooking assistance options it offers guests, but did not respond in time for publication.
Tsai said she tried to contact customer service shortly after she was told she would have to leave the hotel, but she gave up waiting when another customer told her they were waiting several hours only to be told they should book another hotel.
Tsai, who came from Thailand, says she was able to book another hotel, albeit at her own expense and further from the city. She says she hasn't tried to contact the company again, but adds that it's the first thing she'll do when she gets home.
She wants a full refund for the lost days and also has the company make up the difference between her original booking and her new, much more expensive hotel.
“[Giving] getting my money back for the night I didn’t stay, I think that’s the bare minimum,” Tsai said.
Smith, from the Institute of Hotel and Tourism Management, says any guests who don't already have a place to stay should try calling other hotels in the area rather than just searching online – as it's possible other companies might see this as a chance to attract new customers by offering a lower price.
