Marriott International has ended its licensing agreement with apartment-hotel brand company Sonder Holdings, citing Sonder's "default."
In a news release, Marriott said the licensing agreement “is no longer in effect due to Sonder’s default.” Though it did not provide further information, multiple news releases and U.S. Securities and Exchange Commission filings by Sonder indicate financial troubles. On Oct. 21, Sonder filed an 8-K stating the Nasdaq Stock Market sent it a notice of delisting or failure to satisfy listing rule or standard because it did not maintain a minimum market value of publicly held shares of $15 million for the preceding 30 consecutive business days. It has until April 20, 2026, to regain compliance.
On Nov. 5, Sonder filed an 8-K stating its board of directors decided to postpone the 2025 annual meeting of stockholders scheduled for Nov. 6.
Marriott has removed all of Sonder’s properties from Marriott’s booking channels, according to the news release. Marriott’s third-quarter earnings release shows that as of Sept. 30, Sonder had 140 properties with 7,688 rooms available through Marriott’s system. In a separate release, Marriott said the removal of these rooms means the company expects net rooms growth for 2025 to approach 4.5%.
“There are no changes to the rest of the outlook metrics that Marriott provided on Nov. 4, 2025,” it said, referring to its third-quarter earnings release.
Marriott said it is contacting guests who booked Sonder rooms directly through Marriott’s channels to address their reservation and booking needs. It advised guests who booked through a third-party online travel agency to contact the OTA about their stays. It has also provided an FAQ page for guests to answer questions about Sonder reservations.
Sonder did not respond to a request for more comment by press time.
The 20-year licensing agreement between Marriott and Sonder was announced in August 2024. At the time, Sonder had more than 200 apartment-style accommodations, mostly in gateway cities across North America, Europe and the Middle East. It also had more than 1,500 rooms in its pipeline.
Sonder had gone public just a few years before in January 2022 through a merger with a special-purpose acquisition company. In a video interview with CoStar News Hotels at the 2023 International Hotel Investment Forum, Sonder co-founder Martin Picard said the company was then working toward free cash flow through unit growth and operational efficiency.
“There’s a whole evolution that’s happened over the last year,” Picard 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.”
In a note to investors, Michael Bellisario, senior research analyst at Baird Capital, said the news is negative and the public market doesn't like deletions in any form. Given the licensing agreement had a multi-year fee ramp, Baird estimates the run-rate earnings impact in 2026 will be between $10 million to $15 million.
"Net, net — we expect investors (once again) to refocus on the 'quality' of net unit growth, which has been increasingly topical over the last 18 to 24 months (for Marriott and the broader sector)," he said.
Bellisario also noted that since the agreement is ending due to Sonder's default, he expects Marriott to try to recoup the unamortized portion of the $15 million it provided to Sonder as key money for milestones met.
Among other upsets at Sonder, both its CEO and chief financial officer left this year.
Sonder has also repeatedly filed its quarterly earnings reports late. The company most recently filed its second-quarter 2025 release on Oct. 14. Sonder reported revenue of $147.1 million, an 11% year-over-year decrease, and a net loss of $44.5 million, a 236% year-over-year decrease.
There are several news stories and online posts about guests dealing with the fallout from the license agreement ending. Business Insider spoke with a few guests who are now dealing with canceled reservations, including those who have had to find new accommodations in the middle of their stay.
"I didn't believe it when I saw the email, I had to check that this wasn't a phishing attempt or something. Then I saw the articles and posts on X," David Klingbeil, an NYU course instructor, told Business Insider, about finding out he had to leave halfway through his two-week stay at the Sonder Flatiron in New York.
When asked about guests' being upset over their stay cancelations, Marriott referred back to its initial statement, saying "Marriott’s immediate priority is supporting guests currently staying at Sonder properties and those with upcoming reservations" and that it was contacting those who booked directly through Marriott's channels.