Sonder, the company that billed itself as a high-end alternative to Airbnb and was once the largest short-term rental operator in New Orleans, abruptly shut down earlier this week, canceling bookings across the country and evicting guests from their properties.
The move to shutter on Monday came hours after Marriott ended its licensing agreement with Sonder, saying the company had defaulted on the terms of their deal. The 2024 agreement gave Sonder the right to use the Marriott Bonvoy brand and enabled Sonder guests to book rooms on Marriott’s platform.
New Orleans once had more than 700 short-term rentals operated by Sonder, but the number has dwindled to around 200 in recent years and an exact count wasn’t immediately available.
Still, several smaller short-term rental properties — including The Schaeffer on North Rampart Street, The Gallier Apartments on Carondelet Street and The Louie on South Rampart Street — had anywhere from three to three dozen Sonder units and were impacted by the shutdown.
A notice across the top of the websites of those properties on Tuesday read: “We regret to inform you that Marriott’s agreement with Sonder Holdings has ended and Sonder is no longer part of the Marriott Bonvoy portfolio.”
Co-owners of three different properties, reached by phone Tuesday, declined to comment for attribution, citing potential lawsuits with Sonder, which said that it plans to file for Chapter 7 bankruptcy and go out of business.
One of the hotel owners, who spoke on the condition of anonymity, said their building had guests at the time of the shutdown as well as employees, and that the employees were being laid off while guests were told to leave their rentals.
“We are devastated to reach a point where a liquidation is the only viable path forward,” said Janice Sears, Sonder’s interim CEO, in a prepared statement on Monday, blaming a delayed integration with Marriott’s technology, higher costs and falling revenues. “We are left with no choice other than to proceed with an immediate wind-down of our operations and liquidation of our assets.”
Last ditch effort
The developments follow years of financial trouble for Sonder, which burst onto the hospitality scene a decade ago during the rise of the short-term rental phenomenon. In 2019, the San Francisco-based company was valued at more than $1 billion. In 2022, it went public.
But the company’s initial public offering came as the travel sector was still recovering from a pandemic-era slump and cities around the country were beginning to push back against the proliferation of short-term rentals in their neighborhoods. It struggled to become profitable and, by 2024, was on the verge of financial collapse.
The deal it signed with Marriott last fall was seen, by many, as a last-ditch effort to save the company. At the time, Sonder operated 9,000 units worldwide, including 220 in New Orleans. The majority of those were in the Jung Hotel on Canal Street, then owned by the estate of the late Joe Jaeger. Those units closed earlier this year, when the hotel changed hands.
The Jung Hotel as it appears today in New Orleans. Alvin ‘Shipwreck’ Kelly sat atop its rooftop flagpole for 80 hours in 1928.
Still, the company was still active in New Orleans, according to one small hotel owner. Another, whose property had more than 25 Sonder units, said they knew the company was struggling but were hopeful last year the Marriott deal would turn things around.
The owner could not say how many guests were staying in the property at the time or where they went.
As for the half dozen of so employees that worked at the hotel, the owner couldn’t say what will happen to them.
New Orleans and Co., the city’s tourism marketing agency, did not immediately respond to a request for comment on the closure.