BERLIN — Short-term rental company Sonder has been navigating challenges since it went public in January 2022 through a merger with a special-purpose acquisition company. Stock prices have hovered dangerously low in recent months, and the company dealt with the fallout of Silicon Valley Bank, where it held accounts and a credit facility.
But this is only part of the nearly 10-year-old company’s story, said Martin Picard, Sonder's co-founder and global head of real estate. Picard sat down with Hotel News Now for a video interview during the International Hotel Investment Forum.
Today, the company is working toward free cash flow by way of unit growth and operational efficiency, Picard said.
“There’s a whole evolution that’s happened over the last year,” he said. “For the longest time, we were being asked to deliver on very high growth numbers; and now we’re having to recalibrate and balance profitability with being an attractive company from a growth standpoint.”
Sonder is best described as an apartment-hotel company, meaning the company leases, operates and manages units in hotels and apartment buildings, outsources maintenance and housekeeping, and lists units for rent on its own site and Airbnb. Stays are managed through an app and like on Airbnb, guests can choose various configurations and lengths of stay.
This year, it’s all about adding units and revenue and “reducing cash burn,” Picard said.
“We need to add more scale to the system for it to reach profitability … so we want to open as many properties as possible,” he said.
On June 1, Sonder opened The Arcadian near Boston, where it manages 264 rooms — its largest property to date. At the end of the first quarter, the company operated in more than 40 cities in 10 countries, with approximately 18,000 live and contracted units.
Picard said he sees growth opportunities in North America through office conversions, and the company has done several office-to-apartment conversions in New York City.
In Europe, Sonder is focusing on smaller independent hotels with less than 100 keys. And in general, the goal is to expand in cities where it already has a presence, leveraging operational efficiency.
“We want to get leverage out of our cost structure and to do that, we don’t want to be going to … many new countries,” he said. “We really want to build depth in our existing countries.”
Sonder also is marketing more to business travelers than it has before, targeting people who are taking longer trips post-pandemic to fit in several client visits, for example, plus some leisure travel tacked on.
Sonder guests want to control their stay through technology and also experience the location around the property, Picard said.
“The more modern traveler in our view is someone who wants to be more autonomous,” he said.
For the full video interview with Sonder’s Martin Picard, covering topics including the company’s strategy for hotel-type operations, click the video player above.