Hospitality start-up Sonder has ambitions beyond short term rentals. The company is making a play in hotels with a vision to operate a hospitality brand that encompasses any accommodation category.
“We think there could be a globally recognized brand that operates hotels and apartments and villas and any accommodation category. And so I think what we’re trying to achieve, our aim is to be the next-generation Marriott or Hilton and not simply be a trend or a short-term rental operator but rather to rethink the entire hospitality business from a consumer perspective but thinking through how tech can reshape its operations,” Sonder CEO Francis Davidson shared at the Skift Short Term Rental Summit last December.
At that time, the company already had around 26 hotels with another 70 currently under negotiation.
In October, Sonder opened V Palm Springs, a hotel in Palm Springs, California, which was its first in a resort market. Sonder at V Palm Springs has 143 hotel rooms and incorporates contactless self-service technology – a 24/7 digital concierge with check-in and check-out from your phone, no front desks, or crowded lobbies – and professional cleaning.
Another recent hotel opening is Sonder at Guerin Lofts located in Montreal’s trendy Plateau Mont-Royal. The 53-unit hotel with fully equipped kitchens is located in a five-story building that formerly housed a textbook publisher. Sonder has two other hotels in Montreal.
Davidson described Sonder’s operating model and why its technology is a game-changer in an industry that needs to extract greater efficiencies.
Sonder is a “tech-enabled hospitality company” and operates as a serviced apartment crossed with a hotel. The idea is to lease a space, kit it out, and then run it as efficiently as possible to squeeze out a profit. Around 60 percent of the time, Sonder takes over the entire building.
“If you start looking at the cost structure of operating a hotel: Deconstruct a hotel, and you’ll see that a really large fraction of those expenses could vanish if you were to build technology into it,” he said.
Davidson said Sonder had used technology to cut down the time and cost it took to kit out a new room.
“That allows us to spend a minimal amount of capital to set up a new property, that’s one of the reasons we’ve been able to grow so rapidly and have so many properties,” he said.
Sonder is currently in 35+ cities around the globe, offering more than 14,000 units.
The company opened its first Latin American location in Mexico City in September with a building that housed 16 short term rental apartments. Short Term Rentalz reported that Sonder plans to invest $80 million over the next five years in Mexico City.
Sonder is also ramping up its European business with further expansions in Dublin. The company saw an average occupancy rate of over 90 percent from August to October in its two Dublin properties since entering the market 12-months prior. The length of stay for its Dublin properties has increased to an average of 30 nights per stay. It is now looking for hotel and aparthotel development opportunities between10 and 200 units in central Dublin.
In July, Sonder raised $170 million Series E funding, which solidified its cash reserves.
photo credit: sonder