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Sonder Slashes Workforce by More Than 20 Percent, Including Top Tech Exec

  • Skift Take
    The hospitality brand has had to take action to reassure investors it’s not over-stretching itself, because they’ll now be expecting much higher revenues as travel roars back.

    Next-generation hospitality company Sonder has restructured its operations, cutting 21 percent of corporate roles and seven percent of frontline roles, including its chief technology officer.

    The moves comes after rapid expansion ahead of its public debut earlier this year. The company started trading publicly in January after merging with a special purpose acquisition company merger. Shares have plunged more than 80 percent so far this year.

    Overall Sonder wants to cut cash costs by $85 million on an annualized basis. To achieve that, it will ease back on planned signings, and drive growth primarily by opening already contracted units.

    The company expects to incur $3.5 million to $5.5 million in one-off restructuring costs.

    The San Francisco-based startup outlined the layoffs as part of a new plan in an SEC filing that prioritizes reaching positive quarterly free cash flow within 2023, without additional fundraising.

    It also wants to improve growth quality by increasing its “high threshold for incremental signings targeting 100 percent capital light” — this is where the real estate partner covers the upfront pre-opening costs and capital expenditure of onboarding the unit.

    It will also focus on RevPAR — or revenue per available room, a key industry metric — initiatives to improve cash flow. Speaking at Skift Future of Lodging Forum last month, senior vice president of revenue Shruti Challa said Sonder aimed to leverage technology to drive down costs, and ramp up RevPAR.

    “Even with just a small markdown, you can drive occupancy more effectively,” she said. “If you have higher occupancy, you can get bookings earlier.”

    However, chief technology officer Satyen Pandya has now stepped down, Sonder said in another SEC filing. He will now serve in an advisory role to the company “to ensure an orderly transition.”

    Cutting staff and reducing the overheads associated with new property openings will ease expenditure, but the tech-focused brand may have over-invested in a complex digital strategy that involves omni-channel distribution and online marketing that targeted Gen Z and millennial guests.

    Sonder posted an $83 million loss for this year’s first quarter, and last month announced it was expanding its sales team to attract groups and win over more corporations with negotiated rates.

    Photo Credit: Sonder co-founder and CEO Francis Davidson at Skift Global Forum 2021.
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