Skift Take
Hotel-style accommodations brand Sonder has hit on a plausible business that uses technology to wring out inefficiencies from key processes. But several questions still hover around its model, as investment money gushes into the segment.
Step into Sonder's latest outpost in Philadelphia's museum district and you could be forgiven for believing you were in a hip, almost boutique, hotel. One of the units, a studio apartment, has a four-poster bed and a kitchen stocked with cooking equipment and stainless-steel appliances.
But Sonder isn't a hotel; it's a serviced apartment licensed to run as a hotel. Serviced apartments aren't new, of course. But Sonder is using technology to give the concept a fresh spin. Investors have invested $135 million in the San Francisco-based company since its founding in 2012. The startup runs currently bookable units in 13 U.S. cities plus London, Montréal, and Rome.
In the next year, Sonder expects to book about $250 million in revenue, said an investor pitch deck obtained by Skift. In 2018, Sonder's daily rate averaged $201, across cities. The average daily rate ranged from $100 a night in Montreal to $300 a night in London and worked out to $129 per bedroom.
Last year, Sonder kept its units occupied about 77 percent of the time, on average. That meant that its revenue per available unit averaged $155, the deck said.
The company has served 260,000 guests. Last year, the average length of stay was four days. A third of guests stayed for business, while a fourth traveled as families, the deck said.
A Tech Company
Francis Davidson-Tanguay, Sonder's 26-year-old founder and CEO, talked in an interview about his company as if it were a tech firm rather than a hospitality brand.
"A huge part of us having a competitive edge over a typical hotel is that we rethink and automate many processes," said Davidson.
"The fact that hotels still have a person typing in who knows what when you're checking in at a hotel is a complete joke," Davidson said. "On everything from mobile keys to smart locks and housekeeping management, it's really laughable how far behind the hotel industry is from a tech perspective."
Davidson employs 50 engineers — and plans to double that headcount this year — out of about 300 full-time employees and another 300 contractors. The engineers streamline several processes from property selection to guest interaction.
"We view technology as the key input for each one of the functions of our business," Davidson said. "It underpins how we acquire real estate, design and furnish our units, and handle day-to-day operations, and distribute our rates and inventory."
Last year, Sonder built a machine-like process to design a
