Lead: Francis Davidson, who co-founded San Francisco-based short-term rental operator Sonder in 2014, says he is shocked after the company announced plans to liquidate its U.S. arm and pursue insolvency abroad. Davidson had described executing a 20-year licensing agreement with Marriott in August 2024 as the most difficult challenge of his career, and he left the CEO role in June 2025 amid what he called positive momentum. The partnership unraveled when Marriott terminated the license on Sunday citing ‘Sonder’s default,’ a move that left guests displaced and precipitated Sonder’s decision to seek Chapter 7 liquidation in the United States. The rapid sequence from a high-profile alliance to bankruptcy has reverberated across the travel sector and among affected customers and partners.
Key Takeaways
- Sonder signed a 20-year licensing pact with Marriott in August 2024 that rebranded properties as Sonder by Marriott Bonvoy and sent Sonder shares up more than 125% on announcement.
- Founder Francis Davidson, who co-created Sonder in 2014, said executing the Marriott deal and related capital raises was ‘the hardest thing’ he had done; he left as CEO in June 2025.
- Marriott terminated the licensing agreement on Sunday, citing ‘Sonder’s default,’ triggering guest displacements and service disruptions at properties booked through Marriott channels.
- On Monday, Sonder said it planned to file for Chapter 7 bankruptcy to liquidate its U.S. business and would initiate insolvency proceedings in other countries where it operates.
- By 2019 Sonder had grown from zero to $143 million in revenue, claimed a $1.1 billion valuation, and reported signing nearly 10,000 units in that year alone.
- Sonder attributed its collapse to severe financial strain, including prolonged challenges integrating systems and booking arrangements with Marriott International.
Background
Sonder began in 2014 as a college-founded startup that aimed to combine hotellike consistency with apartment-style rentals. In its first five years the company experienced rapid growth, reporting $143 million in revenue by 2019 and asserting a valuation of roughly $1.1 billion. The firm signed nearly 10,000 units in 2019 and had anticipated substantial additional revenue as those units opened.
The COVID-19 pandemic sharply contracted travel demand in 2020, delivering a sudden drop in revenue and higher operating burn for many hospitality startups, Sonder included. Management credits subsequent efforts with stabilizing the business and returning momentum by 2024, a trajectory that set the stage for the strategic licensing deal with Marriott.
The August 2024 licensing agreement was framed as transformative: it allowed Marriott Bonvoy members to book Sonder properties directly through Marriott’s platforms and created a long-term distribution relationship. Executing the integration required linking reservation systems, brand standards, and capital arrangements across multiple parties — a complexity management later described as protracted and costly.
Main Event
In June 2025, after the technical integration with Marriott had been completed, Davidson stepped down as CEO and reflected publicly that closing the Marriott partnership and arranging multi-party capital were the most difficult tasks of his tenure. At that time management signaled optimism about the company’s forward momentum.
The relationship collapsed in November 2025 when Marriott announced it was terminating the 20-year license on the grounds of Sonder’s default. Marriott’s public notice triggered immediate operational consequences: guests who had booked through Marriott channels reported being asked to vacate properties, being overcharged, or finding customer-service responses slow or absent.
Sonder responded by announcing plans to file for Chapter 7 bankruptcy in the United States and to begin insolvency procedures in other jurisdictions where it operates. The company stated it faced ‘severe financial constraints’ stemming in part from prolonged difficulties integrating systems and booking arrangements with Marriott.
The sequence — from a celebrated partnership to a terminated license and then liquidation notices — unfolded within days, leaving partners, employees, guests, and investors scrambling for clarity about refunds, reservations, and ongoing liabilities.
Analysis & Implications
The failure of this strategic alliance underscores the operational risks inherent in deep integrations between tech-forward hospitality platforms and legacy hotel distribution systems. When booking channels, property management software, and revenue-collection flows must be synchronized across two large organizations, even modest technical or contractual friction can cascade into material financial stress.
For Marriott, the termination reduces exposure to an embattled partner but also raises reputational risks tied to guests who booked through Marriott Bonvoy and were inconvenienced. Large hotel groups that pursue licensing or platform partnerships will likely revisit contractual protections, onboarding timelines, and escrow or indemnity provisions to contain such spillovers.
Investors and creditors will look closely at the capital structure and what went wrong during the post-pandemic rebound. Sonder’s previous $1.1 billion valuation and rapid earlier growth will be reassessed in light of integration execution problems and liquidity shortfalls. The episode may cool investor appetite for high-leverage rollups of short-term rental units that rely on complex external partnerships to scale distribution.
At the consumer level, guests and corporate bookers will demand clearer remedies and faster communication when booking across hybrid platforms. Regulators and consumer-protection advocates may scrutinize how booking platforms disclose who holds liability for reservations, refunds, and evictions when third-party partners are involved.
Comparison & Data
| Metric | 2019 (pre-pandemic) | Post-deal 2024–2025 |
|---|---|---|
| Reported revenue | $143M | Variable, severe contraction during pandemic |
| Valuation | $1.1B | Former private-market peak |
| Units signed (2019) | ~10,000 | Thousands managed globally at time of collapse |
| Share reaction to Marriott deal | N/A | Surged >125% on announcement (Aug 2024) |
This table places Sonder’s best-known pre-pandemic metrics next to the brief rebound and market response driven by the Marriott partnership. The company cited persistent operational integration problems and capital strain after 2020 that ultimately undermined its ability to sustain the expanded distribution arrangement.
Reactions & Quotes
Francis Davidson expressed personal shock and distress at the swift turn of events, saying his emotional investment in the company made the collapse especially painful. His comments reflect a founder grappling with both the strategic choice to partner with a major global brand and the operational realities that followed.
‘I’ve poured my heart and soul into building this company,’
Francis Davidson
Marriott framed its decision as a contractual enforcement step after alleging defaults by Sonder, emphasizing the need to protect its loyalty program members and booking integrity. The company’s statement used firm language to explain the termination, a standard posture when large platforms cut ties over suspected contractual breaches.
‘Sonder’s default,’
Marriott International (statement excerpt)
Customers and frontline staff described confusion and service gaps as bookings shifted or were canceled. These firsthand reports have prompted calls for clearer recourse pathways and faster refund handling when platform partners fail to meet obligations.
‘Guests reported being asked to leave with little warning and having trouble reaching support,’
Multiple affected guests (reported accounts)
Unconfirmed
- Whether undisclosed financial covenants or missed milestone payments specifically triggered Marriott’s finding of ‘default’ remains not publicly confirmed.
- The exact number of guests who were displaced or the total value of unresolved refunds and charges has not been fully published.
- Reports of ongoing negotiations with potential acquirers or last-minute financing offers have not been independently verified.
Bottom Line
Sonder’s rapid fall from a once high-growth startup with a marquee Marriott partnership to a company pursuing Chapter 7 liquidation highlights the fragility of scaled hospitality models that hinge on complex third-party integrations. Operational execution, contract design, and liquidity buffers matter as much as growth metrics when partnerships become central to distribution and revenue.
For industry participants, the episode will prompt closer scrutiny of integration timelines, contractual remedies, and consumer protections. For affected guests, employees, and creditors, the immediate priorities are clarity on refunds, relocation assistance, and creditor claims as insolvency procedures proceed.
Sources
- Business Insider (news report)