Marriott International Announces Long-Term Licensing Agreement with Sonder, Expected to Add Over 10,500 Rooms to Marriott's Open and Pipeline Portfolio

Rhea-AI Summary

Marriott International (NASDAQ: MAR) has announced a long-term licensing agreement with Sonder Holdings Inc. (NASDAQ: SOND), expected to add over 10,500 rooms to Marriott's portfolio. The agreement will create a new collection called 'Sonder by Marriott Bonvoy', primarily consisting of apartment-style accommodations in urban markets. This addition is set to boost Marriott's full year 2024 net rooms growth to 6-6.5%.

Key points:

• Over 9,000 rooms to be added to Marriott's portfolio by year-end 2024
• Approximately 1,500 rooms to be added to Marriott's pipeline
• Marriott will receive a royalty fee based on a percentage of Sonder's gross room revenues
• Marriott Bonvoy members expected to earn and redeem points at Sonder properties later this year
• Full integration with Marriott's digital channels anticipated in 2025

Positive

• Addition of over 10,500 rooms to Marriott's portfolio and pipeline
• Increase in full year 2024 net rooms growth to 6-6.5%
• Expansion of longer-stay accommodations in key markets
• New revenue stream through royalty fees from Sonder's gross room revenues
• Enhanced offerings for Marriott Bonvoy members with ability to earn and redeem points at Sonder properties

Negative

• None.

Insights

Financial Analyst

This licensing agreement marks a significant strategic move for Marriott, potentially boosting its 2024 net rooms growth to 6-6.5%. The addition of 9,000 rooms by year-end and 1,500 pipeline rooms strengthens Marriott's position in the rapidly growing apartment-style accommodation segment, particularly appealing to younger travelers and longer-stay guests.

The royalty fee structure based on Sonder's gross room revenues provides Marriott with a low-risk revenue stream without the capital expenditure typically associated with property acquisitions. This aligns well with Marriott's asset-light strategy. However, investors should monitor the performance of these properties and their integration into Marriott's systems to gauge the long-term success of this partnership.

Market Research Analyst

Marriott's partnership with Sonder represents a strategic response to evolving travel trends, particularly the growing demand for apartment-style accommodations in urban markets. This move allows Marriott to quickly expand its offerings in this segment, competing more effectively with platforms like Airbnb and other hotel chains venturing into the extended-stay market.

The integration of Sonder properties into the Marriott Bonvoy program is a important aspect, potentially driving increased loyalty and bookings. However, the success of this integration, scheduled for 2025, will be critical to watch. The deal's impact on Marriott's brand perception and customer satisfaction rates will be key metrics to monitor in the coming years.

Tech Expert

Sonder's "digital-first operating model" aligns well with Marriott's ongoing digital transformation efforts. This partnership could accelerate Marriott's adoption of innovative tech-driven hospitality solutions, potentially improving operational efficiency and guest experiences across its portfolio.

The planned integration of Sonder properties into Marriott's digital channels by 2025 is a significant undertaking. Investors should pay attention to the execution of this integration, as it will be important for seamless booking experiences and maximizing the partnership's value. Any delays or technical issues could impact the expected benefits of this agreement.

BETHESDA, Md., Aug. 19, 2024 /PRNewswire/ -- Today, Marriott International, Inc. (NASDAQ: MAR) announced a long-term licensing agreement with Sonder Holdings Inc. (NASDAQ: SOND, "Sonder"), which is expected to add over 9,000 rooms to Marriott's portfolio by year-end and approximately 1,500 rooms to its pipeline. Under this agreement, Sonder's open and pipeline portfolio, which primarily consists of apartment-style accommodations in urban markets, is expected to be added to the Marriott system under a new collection called "Sonder by Marriott Bonvoy."

With over 9,000 rooms expected to be added to its portfolio later this year, Marriott now expects full year 2024 net rooms growth of 6 to 6.5 percent. The Sonder pipeline rooms are anticipated to be added to Marriott's system over the next few years. Under the agreement, Marriott will receive a royalty fee based on a percentage of Sonder gross room revenues.

"We are excited about the addition of Sonder's portfolio to our system, which will expand our portfolio of longer-stay accommodations in key markets around the world," said Tim Grisius, Global Officer, M&A, Business Development and Real Estate, Marriott International. "Marriott has long believed in providing the right product at the right price point for all trip purposes and generations of travelers. With the planned addition of Sonder by Marriott Bonvoy, we will be able to provide guests seeking apartment-style urban accommodations with even more options in the Marriott Bonvoy portfolio."

Founded in 2014, Sonder currently operates apartment-style accommodations and small boutique hotels in urban markets across North America, Europe and the Middle East. Appealing to key demographics, including younger travelers, these assets leverage a digital-first operating model and cater to longer stays.

Beginning later this year, Marriott Bonvoy members are expected to be able to earn and redeem points on stays at approximately 200 Sonder by Marriott Bonvoy properties. Full integration of Sonder properties with Marriott's digital channels, including Marriott.com and the Marriott Bonvoy app, is expected in 2025.

Note On Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of United States federal securities laws, including statements related to expected arrangements between Marriott International, Inc. and Sonder Holding Inc.; the expected addition of properties and rooms to Marriott's system; Marriott's expectations regarding full year 2024 net rooms growth; the expected timing of Marriott Bonvoy earn and redeem availability at Sonder by Marriott Bonvoy properties; the expected timing of Sonder by Marriott Bonvoy properties being fully integrated into Marriott's platforms; the expected appeal of Sonder by Marriott Bonvoy to customers; and similar statements concerning anticipated future events and expectations that are not historical facts. We caution you that these statements are not guarantees of future performance and are subject to numerous evolving risks and uncertainties that we may not be able to accurately predict or assess, including the risk factors that we identify in our U.S. Securities and Exchange Commission filings, including our most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q. Any of these factors could cause actual results to differ materially from the expectations we express or imply in this press release. We make these forward-looking statements as of the date of this press release and undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Marriott International, Inc.

Marriott International, Inc. (Nasdaq: MAR) is based in Bethesda, Maryland, USA, and encompasses a portfolio of approximately 9,000 properties across more than 30 leading brands in 141 countries and territories. Marriott operates and franchises hotels and licenses vacation ownership resorts all around the world. The company offers Marriott Bonvoy®, its highly awarded travel program. For more information, please visit our website at www.marriott.com, and for the latest company news, visit www.marriottnewscenter.com.  In addition, connect with us on Facebook and @MarriottIntl on X and Instagram.

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SOURCE Marriott International, Inc.

FAQ

How many rooms will the Sonder agreement add to Marriott's portfolio by the end of 2024?

The agreement with Sonder is expected to add over 9,000 rooms to Marriott's (MAR) portfolio by the end of 2024.

What is Marriott's projected net rooms growth for 2024 after the Sonder agreement?

Marriott (MAR) now expects full year 2024 net rooms growth of 6 to 6.5 percent after the Sonder agreement.

When will Marriott Bonvoy members be able to earn and redeem points at Sonder properties?

Marriott Bonvoy members are expected to be able to earn and redeem points on stays at Sonder properties later in 2024.

What is the name of the new collection created under the Marriott-Sonder agreement?

The new collection created under the agreement is called 'Sonder by Marriott Bonvoy'.