Sonder Holdings Inc. has more than doubled its footprint in Florida.
Last month, the San Francisco-based short-term rental company announced it had launched four new properties in the state, bringing its number of units in Florida to 930 across hotel, resort and multiunit serviced apartments.
In addition to expanding in the Sunshine State, the company is also expanding its corporate travel business, elevating its merchandising strategy and revamping the art direction and design of its accommodations.
It’s a positive turnaround for the hospitality company, which has experienced its share of setbacks in recent years. Earlier this year, an April SEC filing noted the company was at risk of being delisted from the NASDAQ. In summer 2022, the company laid off 21% of its corporate employees as part of a restructuring intended to increase its cash flow. And in 2020, the company laid off or furloughed 400 employees amid the COVID-19 pandemic, despite its $1 billion-plus valuation (it later re-hired some of those who were let go).
Sonder, which launched in 2014 and went public via special purpose acquisition company, or SPAC, in 2022, is a tech-forward hospitality company that centers a mobile app — guests can do everything from check in to ask for restaurant recommendations from their phone, streamlining operations for property managers.
Now, the company is continuing to work on improving its free cash flow while boosting growth in markets such as Florida.
“We’re focussed on achieving sustainable cash flow positivity as soon as possible, and are making great progress reducing cash burn while maintaining an exciting rate of growth,” Khalil Anjarwalla, area general manager at Sonder, told Hotel Dive.
In the first quarter of 2023, Sonder improved free cash flow by $21 million year over year — "far better than the average" $15 million reduction it saw in the three quarters since it honed its focus on cash flow positivity, Sonder Co-Founder and CEO Francis Davidson said in a letter to shareholders.
And while Anjarwalla noted that rising interest rates remain a challenge, he said the company is still pursuing its ongoing mission to “revolutionize hospitality.”
Leaning on hotels
Hotels are a major part of Sonder’s growth plan.
Sonder recently detailed two upcoming openings: The Deco, a 180-key hotel spanning multiple art deco buildings in Miami’s South Beach, and Colonnade, an office building being converted into 95 serviced apartments in Miami’s financial district.
The openings will come on the heels of two active, recently launched Sonder properties: Found Miami Beach, a 76-key hotel near the Miami Beach Convention Center, and Cirrus, a 149-key property near Disney World. With the exception of Colonnade, the properties were existing hotels that were integrated into Sonder’s portfolio.
All of these join Sonder’s eight pre-existing properties in Florida, including 17WEST in South Beach, Riverwalk in Fort Lauderdale and Vista Cay in Orlando. In Florida, Sonder now has properties in Miami, Hollywood, Fort Lauderdale, Orlando and Kissimmee.
“We’re seeking further expansion opportunities in Florida, including in Tampa, St. Pete, Sarasota, Clearwater Beach, Naples, Jacksonville, the Florida Keys, and the Palm Beaches,” said Peter Debs, Sonder’s senior director of real estate, in a company statement. “We’re particularly interested in existing hotel takeovers and large multifamily developments with construction already underway.”
The company will also continue seeking out hotel partners across global markets, with Anjarwalla noting, “We favor properties that are in prime locations for leisure and business travel.”
In June, that meant opening The Arcadia — the largest hotel in Sonder’s portfolio, a 264-key property in Greater Boston.
“Properties which already align with Sonder’s brand can be quickly and efficiently integrated into Sonder’s portfolio,” said Jenna Jacobson, regional director of real estate at Sonder, at the time of The Arcadia’s opening. “This enables property owners to start benefiting from Sonder’s operational expertise, brand and distribution, revenue management technology, and RevPAR initiatives to maximize NOI.”
Other potential properties include everything from pre-existing hotels to ground-up developments. Sonder also works with property owners to convert office spaces into lodging — as was the case with Colonnade in Miami. “We offer a variety of lease structures to suit owners’ needs and circumstances,” Anjarwalla said.
A promising market
In 2022, Florida received 137.6 million visitors, up 5% from 2019 and up 12.9% from 2021, according to the governor’s office.
Meanwhile, the U.S. Travel Association has forecasted that U.S. domestic leisure travel will remain strong, and that the number of business travelers and international visitors will continue to grow. Sonder sees potential.
“The Sunshine State attracts visitors in all of these categories and more, making it an ideal place for our continued expansion,” Anjarwalla said. “We’re also seeing the rise of bi-leisure travel, the combining of work and personal travel into a single trip.”
But Sonder’s growth plans go beyond openings.
“Design is a core part of our brand, and we’re rolling out an elevated merchandising strategy to better showcase the unique look and feel of our properties,” Anjarwalla shared. The merchandising strategy includes reimagined art direction and photography for listings, and has resulted in an uplift in conversion over 10%, according to Anjarwalla.
When it comes to business travelers, Anjarwalla said the company attracts younger business travelers in particular, who appreciate Sonder’s tech-forward service. As for blending business and leisure on a trip, Anjarwalla said there’s no better market than Florida.
“Who wouldn’t want to attend a meeting in Miami or a convention in Orlando, before unwinding with friends or family at the beach or one of the theme parks?” he said.