Sonder, a hospitality startup that leases new apartment buildings from landlords and rents out rooms to travelers, now has some interesting new friends in its corner: investment firms backed by the former CEO of Hyatt and the former CFO of Airbnb.
Sonder, which now has a $1 billion valuation after a $210 million investment from those new friends, has been getting buzz in Silicon Valley as a hybrid between Airbnb and hotels. We reported in April the company was about to close the deal, which also includes the likes of Fidelity Investments.
Its relationship with Airbnb is complicated. Laurence Tosi, the ex-CFO who clashed at times with other leaders at Airbnb, is now on Sonder’s board. The bulk of Sonder’s booking revenue last year—42%—came from Airbnb, according to a pitch deck seen by The Information.
It wants to wean itself off Airbnb, however. It told investors it is aiming to drive the majority of bookings through its own site in the next few years. For its part, Airbnb is watching companies in this space closely: It invested earlier this year in Lyric and Oyo, which compete in some ways with Sonder.
Sonder’s business model also looks a bit like WeWork, just for apartments rather than office space. It signs long-term leases from landlords and rents space out on a short-term basis. But it doesn’t want to lose money like WeWork: The company told investors it will be profitable before interest, taxes, depreciation and amortization, by the end of 2020. This year it expects to generate about $200 million in revenue, losing about $50 million on an EBITDA basis.