Wall Street pressure for growth spurred Marriott to overlook visible risks in Sonder deal, experts say
Wall Street pressure for growth spurred Marriott to overlook visible risks in Sonder deal, experts say
Marriott expected to weather 'short-term blip'
The Sonder The Winfield Apartments Downtown LA was one of the properties in Sonder Holding's portfolio of rentable apartment and hotel units. (CoStar)
https://www.costar.com/article/1006746698/sonders-crash-wont-cause-long-term-problems-for-marriott-analysts-expect
By Bryan Wroten
Years of financial reports and other public filings painted a picture of Sonder Holdings’ cash flow and profitability problems.
So why did Marriott International in August 2024 sign a 20-year license agreement with a company clearly experiencing financial challenges? The agreement allowed Sonder to list its apartment and hotel units on Marriott’s various Bonvoy booking platforms and gave Sonder $15 million in key money for milestones met. A little more than a year later, Sonder abruptly ceased operations, leaving guests in the lurch and Marriott holding the bag.
Of course, hindsight is 20/20, and anyone can be a Monday-morning quarterback, but there were warning signs, analysts said.
When reached for comment, Marriott shared that when signing the deal, the global hotel company was happy to have the opportunity to add Sonder's units to its booking channels for guests. It did its due diligence, including running through multiple scenarios. It also took into consideration the impact of Sonder’s capital restructuring in 2024; the $146 million in additional liquidity from that restructuring was a condition of Marriott’s agreement with Sonder.
A company that is experiencing repeated net losses each quarter, missing U.S. Securities and Exchange commission filing deadlines and having to rework annual reports because of admitted accounting errors are indications of a company struggling with its internal controls and accounting systems, said Jim Butler, founding partner at Jeffer Mangels Butler & Mitchell and founder and chairman of its Global Hospitality Group.
“There could be a number of explanations for it, but it is often a sign of trouble when you don't have financial control over your company,” he said. “It should be a major warning signal.”
At the end of the day, hotel industry analysts said the fallout from Sonder’s closing shop and bankruptcy won’t have lasting effects on Marriott financially or even reputationally.
“It's unfortunate for Marriott,” said Michael Bellisario, senior research analyst at Baird Capital. “It's a short-term blip, not a big financial impact. And plus or minus 90 days from now, even probably even less than that, we probably won't be talking much about it from a stock and financial and earnings perspective.”
There’s a public relations and headline risk, but Marriott will continue to move forward and find other partners and grow, he said. There’s a short-term hit to the stock, but people realize it’s a blip and not a thesis-changing event.
“This is not a structural problem or challenge of Marriott’s,” he said. “This is a Sonder-specific issue, and people are looking at it and looking forward.”
The first trading day after Marriott announced Nov. 9, a Sunday, it was terminating its agreement with Sonder, Marriott's stock closed that $290.47, down slightly from $291.16 on Nov. 7. As of press time, Marriott's stock is trading at $307.87 per share.
Must-hit growth targets
That Sonder would file for bankruptcy wasn’t that big of a surprise, Bellisario said. It had roughly $1 billion in lease-related expenses, negative free cash flow and the stock was trading at about $1 per share when the Marriott license agreement was announced. Though the stock price went up after the announcement, performance was poor since then. Sonder also wasn’t paying Marriott its fees as outlined in the agreement and instead restructured that into debt owed to Marriott.
Even so, it’s likely Marriott saw an opportunity to open up new offerings for its guests not already available through Marriott’s existing brands, he said.
“Maybe the pro-forma made sense if they had a little bit longer to execute or the economy was maybe better,” he said. “But it’s about growing units, growing their brands, giving their Bonvoy members more options in terms of types of accommodations and markets to book in. This got them more dots on a map at the time.”
Marriott, like all publicly traded hotel brands, are under a lot of pressure from Wall Street, investors and others to continue their rooms growth, said C. Patrick Scholes, managing director of lodging and leisure equity research at Truist Securities. Domestically, the construction environment continues to face challenges, so brands have had to expand their horizons to find opportunities to grow beyond building new rooms from the ground up.
That means looking at partnerships or acquisitions they might not have considered five to 10 years ago, he said. Companies like Marriott have to push the envelope a little to do this.
“Sonder was one of them, and it didn’t work out,” he said. “In the greater, global Marriott scheme of things, it’s pretty tiny.”
The brands put out multi-year targets for compounding rooms growth, and the denominator every year gets higher, and they still have to hit that percentage, he said.
“The phrase I’ve heard in the past on this is, ‘You’ve got to dig for quarters in the couch,’ and hopefully you find them,” he said. “It takes a little bit more creativity to do so than it would have in the past where most of your growth was pure organic construction development.”
There’s a higher risk when working with smaller startup companies to achieve growth, and there will always be deals and partnerships that don’t work out, Scholes said. To hit their growth targets, however, brands need to be fairly aggressive in their approach.
And that strategy likely isn't going anywhere, especially in this environment, Scholes said.
Not to speak for Marriott, he said, but there’s a lot of pressure from investors and Wall Street, so “I don’t know if they can necessarily let the foot off the pedal here.”
The SPAC route
Sonder went public through a merger with Gores Metropoulos II, a special purpose acquisition company, known as a SPAC, instead of an initial public offering, which takes longer and has more requirements.
SPACs were an interesting vehicle for several hospitality companies to go public a few years ago, Bellisario said. The format allowed companies going that route to provide rosy performance and growth projections at a time when people were eager to travel post-pandemic.
“The company that goes public via an IPO during the most challenging market has to be the best company in terms of track record performance and future outlook,” he said. “When the economy was white-hot and people were very excited about opening, the floodgates were wide open and anything could go through.”
The pandemic crushed travel, and there was a big growth-in-recovery story to tell, he said. The SPAC model allowed companies to go public with this in mind.
“There was a little less scrutiny on the track record, the financials and everything at that point in time for SPACs,” he said.
Butler pointed out that the process of going public "creates a discipline" on the company, which has to audit financials for a required period before IPO, do internal due diligence and address liability insurance, among other things.
There’s no single motivation for going public, Butler said. Some companies do it to raise new capital by tapping into new markets. It can be a form of estate planning for investors who have had a company for decades and are looking at their succession options. It also creates a currency to use for employee awards and stock bonuses and options. Companies can also use it for acquisitions, helping reduce the amount of cash necessary in a deal. Being a public company also enhances a company’s image and reputation.
Tech company IPOs usually are driven by a desire for new and fresh capital, he said. Often private investors from the first rounds of funding will decide they don’t want to put in any more money and want to get out or reduce their investment. An IPO price is usually at a multiple of the pre-IPO price, so eventual return is much more than what they put in.
An initial rush of cash presents a challenge to the discipline that company has developed, he said. SPACs in particular may have issues initially as the SPAC process doesn’t necessarily bring in new cash unless there is cash in the SPAC when the merger closes as it’s simply a merger with an entity that’s already public.
When announcing the SPAC merger in April 2021, Sonder said it expected a pro-forma enterprise value of $2.2 billion and more than $700 million of net cash at closing. Sonder completed the merger with Gores Metropoulos II on Jan. 18, 2022, and it had approximately $310 million in private investment in public entity capital and planned on drawing on $165 million in principal amount of delayed draw notes.
“I realize that SPACs are almost a cool thing these days and have a great deal of interest, but I still think they're fraught,” Butler said.
Luxury hotel developers say Caribbean is primed for branded residences, personalized experiences
Providing residential options key for leveraging capital, experts say
Pamela Vasquez, senior director of development, Latin America & Caribbean, at Hilton, said as long as there's a demand for branded residences, there will be development for them. (Spencer Chaney/HVS)
https://www.costar.com/article/1106346015/luxury-hotel-developers-say-caribbean-is-primed-for-branded-residences-personalized-experiences
WILLEMSTAD, Curaçao — For the most part, luxury hoteliers in the Caribbean region won't be talking about new developments without mentioning residential opportunities in the same breath.
According to panelists at the 2025 Caribbean Hotel Investment Conference & Operations Summit discussing luxury mixed-use trends in the region, providing branded residences is a win-win scenario for owners who can see a faster return on investment with buyers coming in on the rental units. Additionally, those units get to be used as rental inventory, another perk of the arrangement.
"For mixed-use developments with residential, most of our projects are going to have that component," said Carlos Crovato, head of development, lifestyle at Hyatt Hotels Corp. "The market is asking for them and owners are very much interested in getting ... a faster return of their investment."
Crovato said the pandemic led to travelers seeking out this type of opportunity and the demand has not slowed down.
Pamela Vasquez, senior director of development, Latin America & Caribbean, at Hilton, said demand in the CALA region has grown 14%, and that's only going to continue.
"As long as there's demand for residential, there's going to be residential product," she said.
A rising need to leverage capital
In the luxury space, being able to use branded residences as leverage in the development process has been extremely important, said Hugo Mirabal, director, feasibility and development, at Marriott International. Mirabal said nine of the 10 projects he's working on will include branded residences.
Offering branded residences is more than just a bonus at this point, said Vijesh Patel, director of development at Six Senses. Patel said he's developing deals that are $3 million-plus a key, so leveraging that capital is critical.
"I think capital is difficult, so I think branded residences is a requirement, not an ominous cherry on top, especially in the ultra-luxury world with construction costs and labor costs at the highest they've ever been," he said. "I mean, you're not only just subsidizing your development costs — that's the only way people are going to get their returns quite honestly."
Another demand driver for branded residences is more space for multiple generations traveling together — a big trend for the region, Vasquez said.
"I think generational travelers are going to continue, where you have families traveling together, that's going to continue as a trend," Vasquez said. "That's going to require these homes of three bedrooms where you have grandparents and kids and everybody together. So I see that in the next 10 years continuing to grow."
Standing out in luxury
Hotel developers in the Caribbean are aware that wealth is shifting among the generations of travelers, and attracting younger consumers is vital to planning for the future. The panelists agreed that hotels need to be able to show that they have soul, are connected to the community and factor in sustainability in order to stand out.
Hoteliers can approach each of those goals individually, or all together. Mirabal gave the example of the recently opened W Punta Cana in the Dominican Republic where he said the development team worked around the site to preserve the existing environment and avoided putting in too much grass or concrete.
"It's building a community, and that's something that the younger generation appreciates more and more," Mirabal said.
Entering into an ecosystem collaboratively is something younger travelers expect out of their hotels.
"If (these travelers) understand that a project — branded or not branded — destroyed or was antagonistic to the community and to the space, they would not go there," Crovato said. "They would choose another place where the brand or the hotel in hand with the developer improved the community."
Vasquez pointed out that not entering into a community collaboratively could result in delays of months or even years by local organizations opposing the new construction.
And while some may call eco-friendly sustainability "fluff," Patel said it's important to remember it drives profit. Sourcing locally cuts down on shipping costs and using sustainable building methods makes a more resilient property.
"We have to understand that now, especially in this region, you have to build the properties that are climate change-proof," Crovato said. "We know that hurricanes are bigger, they're faster, they pass categories from one to five in a day, and then they reach you very quickly. So we need to start thinking about how to not only be sustainable, but also be prepared for against the destruction."
These efforts also translate into providing authentic experiences that reflect the destination and also contribute to being able to tell a story to guests.
The biggest new trend affecting experiences, Patel said, is personalization, and hoteliers need to invest in bringing that to their portfolio.
"I think the guest experience is going to be hyper-personalized, and I think every brand can capitalize on that," he said. "The Caribbean is honestly going to be one of the best places in the world to hyper-personalize that experience, because each island is so unique."
A National Park Has Closed All Its Hotels
Shutterstock / Iacomino FRiMAGES
https://www.fodors.com/world/north-america/usa/arizona/grand-canyon-national-park/experiences/news/a-national-park-has-closed-all-its-hotels
There have been significant breaks in the waterline on the South Rim of the Grand Canyon National Park.
Are you planning a national park trip this holiday season? Be aware that Grand Canyon National Park has closed all hotels on the South Rim due to damage to the Transcanyon Waterline, its primary water supply. Beginning December 6, all overnight accommodations will be halted, and only dry camping will be allowed, the National Park Service announced.
Closed hotels include Bright Angel Lodge, Maswik Lodge, Yavapai Lodge, El Tovar, and Trailer Village. Hotels outside the park remain open.
The North Rim is closed for the winter, so all hotels inside the park are currently inaccessible.
Park officials have not confirmed when the hotels will be operational again, but hope to finish repairs as early as next week. Xanterra, which operates El Tovar, Maswik Lodge, and Bright Angel Lodge, notified guests about the closure and apologized for the inconvenience. “Deposit refunds will be issued within 7 to 10 business days. If your lodging reservation includes nights beyond December 8, we will adjust your arrival date to December 9 for the remainder of your stay,” it said in an email as perSF Gate.
The Grand Canyon National Park faced another setback this year when a wildfire decimated the Grand Canyon Lodge on the North Rim. The North Rim brings in 10% of the park’s annual visitors and is more isolated.
The Transcanyon Waterline is a 12.5-mile pipeline that supplies water from the canyon, according to the NPS. Built in the 1960s, the pipeline has exceeded its lifespan and experiences frequent breaks. Since November, it has been a recurring issue. Currently, no water is being pumped to the South Rim due to significant damage.
The park has been undergoing construction since 2023, with completion expected by 2027. This $208 million upgrade will help the park sustain five million visitors per year and 2,500 residents.
Hikers and day-trippers can still access the South Rim, and essential services such as the post office and clinic will remain open. However, hikers are advised to carry enough water or bring water treatment methods.
Conservation measures are in place for South Rim residents. They are asked to reduce water usage by turning off the tap while brushing teeth or shaving, limiting shower time, flushing toilets less frequently, and reporting leaks.
Last month, it was announced that 11 of the most popular national parks will charge international tourists an extra $100 for entry, including the Grand Canyon and Yellowstone, to fund maintenance and modernization. Annual passes for non-residents will also cost more next year. U.S. residents will continue to pay $80 for annual passes and enjoy fee-free days.
The change comes as international tourism to the U.S. declines. Canada, a major market, has seen fewer visitors to the U.S. for 10 months straight, attributed to political tensions and economic and immigration policies. Overall, international tourists are spending 3.2% less in the U.S.
For Gen Z, travel as important as career, according to Global Hotel Alliance survey
https://hotelsmag.com/news/gha-travel-trends-2026/
Global Hotel Alliance (GHA) has released insights on how travel is expected to evolve in 2026, based on data from its GHA DISCOVERY loyalty programme, which now counts over 34 million members worldwide. The survey highlights a shift toward more personal, meaningful and deliberate travel.
For 2026, travelers are placing greater emphasis on personal expression. Sixty-five percent of travelers agree that travel expresses their identity, while nearly 90% either agree or remain neutral. Among Gen Z, half say travel matters more than career milestones, showing how global experiences have become new measures of achievement. This trend is particularly strong in Germany, the US, Thailand, the UAE and India.
Leisure travel will outpace business travel, with travelers planning an average of six personal trips versus four for work. Nearly half expect their leisure travel to increase, while only 12% plan to travel more for business. Gen Z and Millennials are leading this shift, while Boomers are opting for fewer but longer restorative breaks. More than 40% anticipate traveling internationally for personal trips, led by China, Thailand and India.
Exploration will be a key focus, with 62% preferring new destinations over revisiting old favourites. For those returning, the aim is a deeper experience. The desire for discovery is strongest among Gen Z and travelers from India, the UAE and China. Safety and comfort are priorities for 57% of travelers, followed by cultural curiosity at 41% and wellness at 38%, with curiosity driving Gen Z decisions.
Travelers are seeking slower and more conscious trips, with 60% preferring small cities and rural escapes over large urban centres. Forty-two percent want unplanned and restful itineraries, while 36% favor action-packed sightseeing. Members in Malaysia and the UK show the strongest preference for laid-back trips, while those in China and the US are more likely to visit key landmarks.
Selective spending is increasing, with 79% planning to pay for quality upgrades rather than splurge freely. Luxury is increasingly defined by personalised service, gourmet dining and flexibility, even as 78% still associate it with five-star or boutique hotels. Eighty-six percent say hotel quality is the one aspect of travel they will not compromise on.
Travel loyalty is evolving into lifestyle-based benefits. Forty-four percent of members rank room upgrades, early check-in and late check-out as the most valued perks. Seventy-three percent would consider purchasing a travel subscription for continuous lifestyle benefits, with timesaving, exclusive access and recognition cited as key elements of a rewarding stay.
Technology adoption continues, with 60% of travellers globally using AI tools to plan trips. Usage is highest among Gen Z at 79 percent and lowest among Boomers at 31%. Contactless payments, digital hotel keys and biometric boarding are among the most valued innovations. Forty-two percent prefer booking through hotel loyalty apps or brand websites rather than third-party platforms.
Asia remains the most desired travel region, led by Japan, named by 14% of travelers and topping wish lists for members in Thailand, Malaysia, the UAE, Singapore and Australia. China ranks second at 7% and Thailand third at 6%, together representing almost one-third of dream trips. Friends and family remain the top source of trip inspiration at 36%, followed by Instagram at 34%. YouTube is most influential in Japan and Thailand, while TikTok leads in China.
“Our 2026 study paints a picture of a traveller who’s more thoughtful and values-driven than ever,” said Kristi Gole, EVP of Strategy at Global Hotel Alliance. “They are travelling less for work, more for meaning, and choosing experiences that reflect who they are. What’s particularly exciting is how loyalty has evolved; for GHA DISCOVERY members, it’s about lifestyle, recognition, and belonging wherever they go.”
DUHC&S | Strategic Hospitality Consulting & Advisory
We transform hospitality and tourism businesses through strategic solutions, operational efficiency, and comprehensive renovation. With over 40 years of experience working with brands like Hilton, Hyatt, Sheraton, and Sonesta, we enhance asset value and profitability through:
*Operational excellence and brand standards (GSI +90%)
*Market penetration and commercial strategies
*Key partnerships and disruptive innovation
*Hotel openings and repositioning
Proven results :
✅ 48% GOP |
✅ +120% asset valuation growth
✅ Successful projects across 6 Latin American countries
🔹 Let's connect :
📩 Email: diurugeles@gmail.com
https://viajes-noticias-duhospitality.blogspot.com
https://viajes-duhospitality.blogspot.com
https://travel-duhospitality.blogspot.com
🎥 YouTube: https://www.youtube.com/@DUHC&S
Disclaimer
DUHC&S shares this information for educational and informational purposes only. The news articles reproduced here are sourced from public and recognized media outlets. We are not the original authors of this content but rather distributors of it. All credits go to the original sources cited in each article. If you are the legitimate owner of any material and wish to have it modified or removed, please contact us immediately at diurugeles@gmail.com, and we will address your request promptly.
Comments
Post a Comment