Skift Take

Sonder is cutting its overhead while it works with external advisors to figure out how to handle underperforming units.

Short-term rental and hotel operator Sonder announced that it would lay off 106 corporate employees, or 17% of that workforce, as it moved to reduce overhead costs and deal with underperforming properties.

The layoffs, which the company announced publicly Tuesday, will be completed by March 31, Sonder said.

In a financial filing, Sonder said it would incur costs related to the layoffs but that they would lead to $11 million in annual savings.

“Total costs and cash expenditures for the reduction in force are estimated at $2 million to $3 million, substantially all of which are related to employee severance and benefits costs and will be recognized in the first quarter of 2024,” Sonder said. “The Company expects to pay the majority of these reduction in force amounts in the first quarter of 2024.”

In the company’s third-quarter earnings call in November, co-founder and CEO Francis Davidson said the company was working with external advisors to right-size its portfolio given the burden of underperforming leases, some of which have negative profit margins.

Sonder’s Previous Layoff Rounds

In March 2023, Sonder laid off about 100 corporate employees or around 14% of its corporate workforce.

In June 2022, Sonder fired some 21% of corporate roles and 7% of frontline roles, including Sonder’s chief technology officer.

Sonder was founded in 2014 and has never been profitable. The San Francisco-based company is trying to get to a point where it can generate positive free cash flow.

Sonder has yet to schedule its fourth quarter and full-year 2023 earnings announcement.


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Tags: layoffs, leases, sonder

Photo credit: Sonder CEO Francis Davidson on stage with Skift Director of Research Seth Borko at the Skift Short-Term Rental Summit on June 7, 2023. Ryan Bourque

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