Sonder Embraces Hotel Initiative in Response to Q2 Rate Decreases

Short-term accommodation provider Sonder’s second-quarter revenue per available room and average daily rate decreased year over year, while occupancy remained “strong” amid the company’s recent entrance into the hotel collection space, Sonder co-founder and CEO Francis Davidson said during an earnings call.

“RevPAR declined 2 percent compared to the second quarter of 2022,” Davidson said. While the company saw “moderate pressure on ADRs for our apartment products during the quarter,” the “opposite is true for hotels, where ADRs increased year over year,” he said.

Sonder introduced its hotel collection, Powered by Sonder, last month. Sonder executives expressed optimism around the potential growth opportunities of the hotel initiative and its Q2 rate performance.

“Over the last year, our mix has shifted eight points from apartments to hotels, lessening the impact of pricing pressure from the short-term rental apartment market in Q2,” Davidson said. “Year-over-year, RevPARs for our hotel properties were up mid-single-digit percentage points, while RevPAR for our apartment-style properties were down a similar amount—highlighting this issue.”

Q2 Results

In Q2, Sonder’s RevPAR was $164, down 2 percent year over year, but up from $134 the quarter prior. In a similar trend, Sonder’s Q2 ADR reached $200, down 1 percent year over year but up from $167 the prior quarter. Occupancy remained “strong,” according to Sonder executives, at 82 percent in Q2, identical year over year.

By region, Sonder’s North American properties reported a 4.5 percent year-over-year decline in RevPAR, while the Europe, Middle East and Africa region reported a 7 percent increase. Davidson attributed these results to “macro factors,” such as more Americans traveling internationally, as well as the company’s sales growing “slower than expected due to some turnover on our sales team.” That turnover was also represented by Sonder reducing “our corporate workforce approximately 30 percent on a net basis since going public in early 2022,” Davidson said.

Sonder also experienced “slow starts in a few of our recent North America property openings, particularly for properties that relied heavily on B2B demand before we took over their operations,” Davidson said.

“It typically takes some time for new properties to ramp to system-wide average economics, but even so a few of our new larger properties have not met our expectations.”

In the second quarter, Sonder’s live units grew 32 percent year over year to 11,100.

Sonder’s Q2 revenue was $157 million, up 30 percent year over year.

Angelique Platas www.businesstravelnews.com