US: Next-generation lodging firm Sonder has announced a restructuring across its organisation, which will trigger the laying off of 21 per cent of its corporate team and seven per cent of its frontline staff.
Despite company executives saying that they remained optimistic and confident about the future of travel and sustained long-term growth, Sonder says that it is prioritising increasing its cash flow and opening units on which it has already exchanged contracts in countries where it has an existing presence, including France, Spain, the UK, Canada and Mexico.
It is believed that affected employees were informed of their imminent redundancies last week, and the company has insisted that it will provide “severance, benefits continuation and other support to assist departing employees with transitioning to new roles”.
The majority of the frontline staff to have been laid off are reported to have been those working in Sonder contact centres and in positions related to opening up new units, according to co-founder and CEO, Francis Davidson.
Sonder co-founder and CEO, Francis Davidson, attributed the restructuring decision to reacting to the shift in the financial markets: “The market dynamics have shifted clearly from a growth-oriented market to one that prioritises cash flow positivity.”
Sanjay Banker, president and CFO of Sonder, said: “Nothing we’re announcing today has anything to do with our enthusiasm for the travel market going into the next couple quarters,” Sonder president and CFO Sanjay Banker said.
However, a company filing with the US Securities and Exchange Commission suggests that chief technology officer Satyen Pandya left his role on 8 June.
Earlier this year in January, Sonder went public on the Nasdaq Global Select Market via a merger with special purpose acquisition company [SPAC] Gores Metropoulos II, although its value had been downgraded to $1.925 billion from the initial $2.2 billion expected valuation.
At the time, Sonder raised approximately $310 million in PIPE [private investment in public equity] capital from leading investors. As the business combination closed, the hospitality startup was able to draw on $165 million in a principal amount of Delayed Draw Notes to fund operations and support new and existing growth initiatives, and up to $450 million in cash was heading for the trust account of Gores Metropoulos II.
At the early height of the pandemic, the lodging provider cut 22 per cent of its workforce and furloughed an additional 11 per cent of its staff, before it secured $170 million in Series E funding that June to emerge more effectively from the pandemic and downturn in bookings.
Following the latest news, Sonder revealed that it had 7,700 bookable live units and a further 11,600 signed units under contract to open at the end of March, although the company hinted that it would not look to expand into new markets where it does not currently operate for the foreseeable future.
Sonder executives continued to express their confidence about the return of business and leisure travel demand, and it expects to increase its revenue per available room, second quarter and full year revenue when it next announces its quarterly results.
