The sudden closure of Sonder hotels in November 2025 left travelers stranded and marked the stunning collapse of a company that began as a student side project at McGill University and briefly threatened to disrupt the entire hospitality industry.
From McGill Dorm to Billion-Dollar Valuation
In 2012, philosophy and economics student Francis Davidson was living in Montreal's McGill Ghetto when he decided to sublet his apartment for the summer. Unlike his peers, Davidson approached the task with analytical rigor, building sophisticated pricing models and analyzing market demand.
He called his fledgling business Flatbook, initially managing sublets for fellow McGill students. By 2014, the operation was generating thousands in rental revenue, catching the attention of early investors including Montreal's Tim Tokarsky, who was impressed by Davidson's sophisticated approach.
The concept evolved dramatically after Davidson and co-founder Lucas Pellan experienced a disastrous rental in San Francisco. Finding a key under the mat, half-eaten food in the refrigerator, and dog hair covering the furniture, they retreated to a hotel and conceived their breakthrough idea: a "deconstructed hotel" that combined the reliability of traditional accommodations with the comfort of home living.
The Rapid Ascent and Even Faster Fall
After relocating to San Francisco and rebranding as Sonder, the company attracted significant investment from prominent backers including former baseball star Alex Rodriguez and billionaire Nicholas Pritzker. By 2019, Sonder had achieved unicorn status with a $1 billion valuation.
At its peak, the company operated more than 8,000 units across 30 countries, from San Antonio to Rome, promoting neighborhood-driven design and app-based convenience. Unlike Airbnb's asset-light marketplace model, Sonder pursued lease arbitrage, taking on long-term leases itself—a strategy that proved devastating when economic conditions shifted.
The company went public in early 2022 through a merger with a blank-check company, briefly reaching a $2.3 billion market valuation. However, as investors soured on money-losing tech firms and interest rates climbed, Sonder's value collapsed to approximately $40 million by 2024.
The Final Collapse and Aftermath
Regulatory filings revealed accounting errors in how Sonder valued its operating leases, coupled with rapidly diminishing cash reserves. Despite securing additional financing and cost-cutting measures, the company expressed "substantial doubt" about its ability to continue operations.
In August 2024, Sonder announced what appeared to be a lifeline: a licensing agreement with Marriott International that would integrate Sonder units into Marriott's Bonvoy platform. Davidson, who had stepped down as CEO in June, described orchestrating the deal as "the hardest thing" he'd ever done.
However, the partnership collapsed in November when Marriott terminated the agreement citing "Sonder's default." The next day, Sonder announced bankruptcy filings, immediately shutting down hotels across its network and leaving guests like Jerramy Grover—who had planned a Montreal Canadiens trip—scrambling for alternatives.
The abrupt closure sent shockwaves through Montreal's startup community, with local entrepreneur Aaron Anandji calling it "a massive blow" to the ecosystem's reputation. "When you fly the flag of Montreal globally," Anandji noted, "make sure that if things are winding down, please wind them down cleanly. You're representing an entire ecosystem."
For Davidson, who had become a visible figure in Montreal's startup scene before his involvement waned in recent years, the collapse was particularly painful. "It shouldn't have come to this," he told Business Insider, reflecting on the stunning downfall of a company that once promised to redefine modern hospitality.
