Marriott International has terminated its licensing agreement with hospitality company Sonder. The decision came after Marriott accused Sonder of threatening guest safety to secure financial support during its wind-down. Sonder officially filed for Chapter 7 liquidation proceedings on Friday.
Key Takeaways
- Marriott ended its licensing agreement with Sonder earlier this month.
- Marriott alleges Sonder threatened to lock out guests if funding was not provided.
- Sonder has filed for Chapter 7 liquidation, winding down operations.
- Thousands of guests faced sudden eviction notices from Sonder properties.
Allegations of Guest Safety Threats
Marriott filed an emergency court motion in Sonder's Chapter 7 bankruptcy case, stating that Sonder attempted to use guest safety as a bargaining chip. According to Marriott's attorneys, Sonder threatened to shut down hotel systems. This action would have left thousands of guests locked out of their rooms.
The alleged threats included leaving guests without access to essential items. These items could include medication, passports, and personal effects. Marriott's legal team emphasized that this would have left guests without a place to sleep.
Key Fact
Marriott International terminated its long-term licensing agreement with Sonder earlier in November, before Sonder's bankruptcy filing.
Marriott's Response and Termination
Marriott stated it had no choice but to terminate the agreement. This action was necessary to protect the safety, security, and welfare of guests. Sonder had informed Marriott it was heading for an "imminent free-fall liquidation" and planned to abandon thousands of guests across three continents.
The termination aimed to facilitate communication with Sonder's guests. These guests would be directly affected by Sonder's sudden liquidation. Marriott's attorneys highlighted the impact on guest safety, security, welfare, and basic dignity.
"Marriott acted to protect the safety, security, and welfare—and, frankly, basic dignity—of thousands of guests abandoned by Sonder."
The Immediate Aftermath for Guests
On November 9, the day before Sonder announced its bankruptcy filing, Marriott informed guests staying at Sonder properties about the termination. Many guests received emails instructing them to vacate their accommodations by 11 a.m. on November 10.
This swift action caused significant confusion and disruption for guests. They were forced to leave their rooms with very little warning. Marriott clarified that it never operated Sonder's properties nor collected payments for stays. However, it intervened due to the serious implications for guests.
Background on Sonder
Sonder, a San Francisco-based company, operated thousands of short-term rental units globally. Its portfolio included apartment-style accommodations and boutique hotels. The company aimed to offer a blend of hotel services and home-like comfort.
Sonder's Chapter 7 Liquidation
Sonder officially filed for Chapter 7 liquidation proceedings on Friday. This type of bankruptcy means the company will sell its assets to pay off creditors. It marks the end of Sonder's operations, particularly its US business.
The filing follows a period of financial distress for the company. The allegations from Marriott paint a stark picture of the firm's final days. Representatives for Sonder have not yet responded to requests for comment regarding Marriott's accusations.
Impact on the Hospitality Sector
This situation highlights the complexities and risks within the short-term rental market. Partnerships between traditional hotel giants and newer hospitality models can face significant challenges, especially during financial instability.
The priority for guest safety and welfare remains paramount. This incident serves as a reminder of the responsibilities companies hold towards their customers, even amidst corporate downturns.
- Thousands of guests were affected across three continents.
- The situation underscores the importance of clear communication in hospitality partnerships.
- The Chapter 7 filing indicates a complete wind-down of Sonder's operations.
The full extent of the fallout for guests and creditors will become clearer as the liquidation process unfolds. This developing story continues to be monitored for further updates.
