Wednesday, October 2nd, 2019 October2nd2019

Sell for More News: Sonder…an alternative to Airbnb?

Published on October 2nd, 2019

Sell for More News is a weekly blog series with interesting information from the world of commercial real estate.

 

Airbnb, for the most part, is considered a small host rentals “platform”.  It acts as the middle man between the property owner and guest in exchange for a cut.  It’s a wildly successful business that has changed the course of the lodging industry forever.

That said, Airbnb doesn’t own or control property of its own.  That’s what makes this competitor different.  Sonder is  leasing floors in commercial and residential buildings and renting them out to business travelers and vacationers for short-term stays…essentially offering serviced apartments which run like licensed boutique hotels.

This new model attempts to meet demand from business travelers and vacationers who want a consistent and reliable experience without the hotel-like feel.

Sonder has served more than 300,000 guests to date.  It doesn’t see itself as an Airbnb competitor because it’s not a vacation rentals platform.  Instead, the company is creating locally curated alternative accommodations for a forgotten demographic.

It defines this forgotten demographic as business travelers and vacationers who don’t fit in with the large hotels or Airbnb small host business models.  They prefer to travel in large groups or with their families but want a consistent and predictable experience.

In reality, I think it’s more clear to say that they hope to provide a seamless experience without the unpredictability which comes with home-shares.

So far the formula seems to be working for Sonder, which generated more than $250 million in revenue last year and has achieved a valuation of $1 billion, according to the Wall Street Journal and Forbes.

“At our core, we are a technology-enabled hospitality company,” said its CEO.

Sonder’s guests manage their entire experience over the phone. Everything from accessing the property to automatically connecting to Wi-Fi with the push of a button or requesting late checkouts and even 24-hour concierge service is managed via smartphone.  It’s essentially a lobby on your phone.

The company also uses tech to manage back-end processes such as zoning regulations for real estate acquisition, distributing rates and managing inventory and supply chain logistics, which include distributing furnishings and items it sources via its own warehouses.

Part of the company’s strategy has been to pursue hotel licensing from the get-go, which means Sonder pays both hotel and occupancy taxes like any other hotel.

Sonder signs multi-year master leases as the anchor or sole tenant in existing and development projects, enabling landlords to increase net operating income, accelerate lease-ups and reduce cash flow risk.

Sonder has a stringent background check and fraud prevention system, and local offices in every operational city with a 24/7 building support staff and a strict no-party policy to safeguard landlord properties.

And this is no small company.  Currently, the company manages over $2.3 billion of outstanding projects spanning commercially-zoned mixed-use, residential, serviced apartment, apart-hotel, and hotel assets across 5,000 spaces in 16 cities and four countries.

I don’t expect to see a real competitor to the Airbnb platform.  But I do expect to see more competitors, like Sonder, who want a slice of the accommodations business on their own terms.

 


Estimate how much your property is worth, for free, before you list it for sale.  Plus get the step-by-step blueprint to sell your property for the highest price the market will pay (click here)


How to get an unfair advantage.  Click here to join Sell for More Club today.


Pop the champagne.  Our clients celebrate when their sale closes…and we supply the champagne.  Click here to schedule a no pressure call to get started.


About Beau Beach, CCIM

Beau is a tenacious Commercial Real Estate Broker, author and adoring father of four. His clients appreciate his no-nonsense demeanor and his legendary work ethic.

Beau leads Beachwood which is a commercial real estate broker for sellers in the Nashville, Milwaukee, South Florida and Chicago markets.

He’s the author of the books The 3 Reasons: Why Most Commercial Properties Don’t Sell and True Wealth: What Every Seller Should Know About 1031 Exchanges.

Beau can be reached at 800-721-3287, click to schedule a call or Beau@BeachwoodSells.com