Sonder announces bankruptcy plans; guests are asked to..

Short-term rental company Sonder announced plans to file for bankruptcy on Monday.

This news comes a day after Marriott announced the abrupt termination of the licensing agreement between the two companies.

Some Sonder guests said they were asked to vacate their hotel rooms in less than 24 hours.

Short-term rental company Sonder said on Monday that it plans to file for bankruptcy. This comes a day after Marriott International said the licensing agreement between the two companies had expired.

The agreement, signed in August 2024, allows Sonder hotels to be booked through Marriott's Bonvoy website and was considered a lifeline for the San Francisco-based company, which struggled financially during the COVID-19 pandemic and after going public through a SPAC merger in 2022.

In a statement published on Sunday, Marriott said the 20-year licensing agreement is "no longer in effect," and cited Sonder's "default" as the reason.

In its statement on Monday, Sonder said it made "extensive efforts" to improve the company's financial situation following Marriott's announcement, but to no avail.

"Given these unsuccessful efforts and [Sonder's] financial condition, the board of directors made the difficult decision to cease operations and immediately liquidate the U.S. business under court supervision," the statement said.

Sonder's interim chief executive officer, Janice Sears, said technical integration problems with Marriott's Bonvoy website had led to "excessive, unexpected integration costs and a significant decline in revenue."

Sears added, "We are deeply disappointed to have reached a position where liquidation is the only viable path forward."

The one-time unicorn, valued at $1.9 billion at its IPO, said it plans to initiate bankruptcy proceedings overseas as well.

The company, which operates in 40 cities worldwide, was described as a mix of Airbnb and hotels, offering long-term stays in tech-enabled properties popular with remote workers. The company operated many hotels through long-term leases, resulting in an "asset-heavy" strategy that many in the hospitality sector now avoid.

'People were running'

Guests at the Sonder Hotel that CNBC spoke to said they were taken aback by the news, with some even saying they had been ordered to vacate their hotel rooms less than 24 hours earlier.

One traveler, Connie Yang, told CNBC that she had already paid for her stay at the Sonder Battery Park in New York from November 7 to November 17.

On Sunday, November 9, she received an email stating that she had to vacate the hotel by 9 a.m. the next day.

"The reason given was that the licensing agreement between Sonder and Marriott had ended," she said. "The entire building was asked to be evacuated."

"My neighbor is helping her husband with cancer therapy, and she's already covered the monthly expenses," she added. "It's beyond comprehension."

She also reported that some Sonder employees were crying because "they didn't know anything."

She said, "Some Sonder employees rushed to leave the building before it closed on Monday morning."

Other travelers have posted stories on social media about the Sonder closure, including attempts to seek assistance from Marriott's customer service.

Yang said he also contacted Marriott. "I called Marriott and spoke with a supervisor, who said they weren't allowed to offer us better rates... nor were they going to find rooms for us," he said. "We were all left to scramble."

Marriott did not immediately respond to CNBC's request for comment.

A company statement on Sunday said Marriott's "immediate priority is to help guests staying at Sonder properties and those with upcoming bookings," and added that Marriott would contact guests "who booked directly through Marriott channels."

Yang, who booked his stay through Booking.com, said a representative from the platform "assured me I would receive a refund."

Finally, he said he found alternative accommodations on his own—a Hilton.