Sonder is OUT!

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Sonder is OUT!

Member since 2021 · 124 posts · 87 votes

The biggest Airbnb player just filed chapter 7 bankruptcy. Nearly 10,000 listing closed their doors overnight. The 2.2 billion dollar behemoth that has been giving so many Airbnb horror stories is gone.

I said this a few times about how Airbnb is after people who are using off-platform and multi platform strategy. Apparently Airbnb’s effort was enough to put the biggest player out of business.

I think a big change is coming to the short term rental industry. Many hosts should really think about their business strategy and understand where Airbnb wants hosts to go.

Let me know what you guys think! It is major news to the industry!

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Ryan MoyerBusiness Member

Property Manager · Orlando Kissimmee Davenport Salt Lake City, Park City · Member since 2019 · 991 posts · 1k+ votes

10mo

BP is primarily a real estate investing forum and arbitrage isn't RE investing so I doubt many here will mourn over this. I'm sure it is much bigger news in facebook arbitrage groups or coaching programs etc.

It's not surprising to me at all that a big arbitrage company went under. Margins are tighter, rates are up, it's a far less enticing business model now. Property owners are hanging on because they're still getting debt paydown, tax advantages, appreciation, etc that arbitragers are missing out on.

Additionally, the best play right now in STR is to invest into the property to operate in the higher end of the market rather than the middle (where saturation is crushing people), and that doesn't really make sense for arbitrage as you don't want to invest into improving a property that you don't own.

On the bright side, it sounds like 10,000 arbitrage landlords just became available for folks running that hustle. But not really what people on this forum are involved in.

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Jules Aton
MD/DC · Member since 2024 · 1k+ posts · 1k+ votes
10mo
Quote from @Laura Winters:

The biggest Airbnb player just filed chapter 7 bankruptcy. Nearly 10,000 listing closed their doors overnight. The 2.2 billion dollar behemoth that has been giving so many Airbnb horror stories is gone.

I said this a few times about how Airbnb is after people who are using off-platform and multi platform strategy. Apparently Airbnb’s effort was enough to put the biggest player out of business.

I think a big change is coming to the short term rental industry. Many hosts should really think about their business strategy and understand where Airbnb wants hosts to go.

Let me know what you guys think! It is major news to the industry!
“I think a big change is coming to the short term rental industry.”
Please elaborate.
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- Laura Winters
  OP
  Member since 2021 · 124 posts · 87 votes
  10mo
  Quote from @Jules Aton:
  
  Quote from @Laura Winters:
  
  The biggest Airbnb player just filed chapter 7 bankruptcy. Nearly 10,000 listing closed their doors overnight. The 2.2 billion dollar behemoth that has been giving so many Airbnb horror stories is gone.
  
  I said this a few times about how Airbnb is after people who are using off-platform and multi platform strategy. Apparently Airbnb’s effort was enough to put the biggest player out of business.
  
  I think a big change is coming to the short term rental industry. Many hosts should really think about their business strategy and understand where Airbnb wants hosts to go.
  
  Let me know what you guys think! It is major news to the industry!
  “I think a big change is coming to the short term rental industry.”
  Please elaborate.
  
  It is too long to write all in here. Marriot will now either look for a new partner or quit from Airbnb. Guests sentiment toward Airbnb will change over time. Now you need to convince landlords how your arbitrage model can work when a 2 billion dollar company failed. Airbnb may kill the rest of the off-platform players. Where these inventories go and how this will impact policy makers… the list doesn’t end but there always has been a big change when the giant of industry dies
  
  1 Reply
- Jon Martin
  Member since 2022 · 1k+ posts · 1k+ votes
  10mo
  Quote from @Laura Winters:
  
  Quote from @Jules Aton:
  
  Quote from @Laura Winters:
  
  The biggest Airbnb player just filed chapter 7 bankruptcy. Nearly 10,000 listing closed their doors overnight. The 2.2 billion dollar behemoth that has been giving so many Airbnb horror stories is gone.
  
  I said this a few times about how Airbnb is after people who are using off-platform and multi platform strategy. Apparently Airbnb’s effort was enough to put the biggest player out of business.
  
  I think a big change is coming to the short term rental industry. Many hosts should really think about their business strategy and understand where Airbnb wants hosts to go.
  
  Let me know what you guys think! It is major news to the industry!
  “I think a big change is coming to the short term rental industry.”
  Please elaborate.
  
  It is too long to write all in here. Marriot will now either look for a new partner or quit from Airbnb. Guests sentiment toward Airbnb will change over time. Now you need to convince landlords how your arbitrage model can work when a 2 billion dollar company failed. Airbnb may kill the rest of the off-platform players. Where these inventories go and how this will impact policy makers… the list doesn’t end but there always has been a big change when the giant of industry dies
  
  Nobody will care if arbitrage goes away. Vast majority of guests have no idea what arbitrage is. If it takes listings off the platform, that's a good thing for those who are still in business.
  1 Reply
Ryan MoyerBusiness Member
Property Manager · Orlando Kissimmee Davenport Salt Lake City, Park City · Member since 2019 · 991 posts · 1k+ votes
10mo
BP is primarily a real estate investing forum and arbitrage isn't RE investing so I doubt many here will mourn over this. I'm sure it is much bigger news in facebook arbitrage groups or coaching programs etc.
It's not surprising to me at all that a big arbitrage company went under. Margins are tighter, rates are up, it's a far less enticing business model now. Property owners are hanging on because they're still getting debt paydown, tax advantages, appreciation, etc that arbitragers are missing out on.
Additionally, the best play right now in STR is to invest into the property to operate in the higher end of the market rather than the middle (where saturation is crushing people), and that doesn't really make sense for arbitrage as you don't want to invest into improving a property that you don't own.
On the bright side, it sounds like 10,000 arbitrage landlords just became available for folks running that hustle. But not really what people on this forum are involved in.
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- Laura Winters
  OP
  Member since 2021 · 124 posts · 87 votes
  10mo
  Quote from @Ryan Moyer:
  
  BP is primarily a real estate investing forum and arbitrage isn't RE investing so I doubt many here will mourn over this. I'm sure it is much bigger news in facebook arbitrage groups or coaching programs etc.
  It's not surprising to me at all that a big arbitrage company went under. Margins are tighter, rates are up, it's a far less enticing business model now. Property owners are hanging on because they're still getting debt paydown, tax advantages, appreciation, etc that arbitragers are missing out on.
  Additionally, the best play right now in STR is to invest into the property to operate in the higher end of the market rather than the middle (where saturation is crushing people), and that doesn't really make sense for arbitrage as you don't want to invest into improving a property that you don't own.
  On the bright side, it sounds like 10,000 arbitrage landlords just became available for folks running that hustle. But not really what people on this forum are involved in.
  That is a good point about BP! However this will impact on any hosts since Sonder was the main player in hotel + high-rise albitrage. I mean we are talking about the partner of the biggest hotel chain. They were indeed a direct competitor to many high end units as down town high rises are easily 1M+. Many other big name albitrage companies who used houses were gone a long time ago. I expect hosts who are in urban area will see a meaningful boost in bookings.
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John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
10mo
I am so glad that Vrbo brings me 95% of my bookings. Prefer to keep my distance from Airbnb and the Airbnb crowd.
4 Reply
- Collin HaysBusiness Member
  Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
  10mo
  Quote from @John Underwood:
  
  I am so glad that Vrbo brings me 95% of my bookings. Prefer to keep my distance from Airbnb and the Airbnb crowd.
  
  this
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John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
10mo
Well we have seen many Arbitagage players fold up their tents before. Not a good business model if your a real investor.
1 Reply
Michael BaumPro Member
Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
10mo
Meh. They didn't register on my radar at all. I knew who they were but they didn't affect me at all.

All this does is reinforce the fact that arbitrage is not the best strategy.
Like @John Underwood said, this isn't the first large player to close up shop.
2 Reply
Justin Miller
Interior Decorator · Nationwide · Member since 2017 · 44 posts · 35 votes
10mo
Arbitrage was never a way to build real wealth in real estate. The real wealth in real estate comes from owning the underlying asset over a long period of time, having your guests pay down your mortgage, and watching the property appreciate while you cash flow along the way!
Arbitrage as a model has never worked in the long run, so I'm not surprised here at all.
3 Reply
- Laura Winters
  OP
  Member since 2021 · 124 posts · 87 votes
  10mo
  Quote from @Justin Miller:
  
  Arbitrage was never a way to build real wealth in real estate. The real wealth in real estate comes from owning the underlying asset over a long period of time, having your guests pay down your mortgage, and watching the property appreciate while you cash flow along the way!
  Arbitrage as a model has never worked in the long run, so I'm not surprised here at all.
  I mean it is just a different business model and it works. That is why they were evaluated at 2.2B when they went public. I highly doubt anyone can accomplish 2.2B by waiting for the guest to pay off their mortgage. It is just a different game.
  1 Reply
Carolyn Fuller
Cambridge, MA · Member since 2015 · 651 posts · 736 votes
10mo
It’s great news for me personally because Sonder operated a boutique hotel a block from my 2 units. They were my major competitor. On the other hand a friend owns their building and I suspect this is not good for him.
0 Reply
- Laura Winters
  OP
  Member since 2021 · 124 posts · 87 votes
  10mo
  Quote from @Carolyn Fuller:
  
  It’s great news for me personally because Sonder operated a boutique hotel a block from my 2 units. They were my major competitor. On the other hand a friend owns their building and I suspect this is not good for him.
  Why don't you manage for your friend then?! Sounds like a great opportunity
  0 Reply
- Carolyn Fuller
  Cambridge, MA · Member since 2015 · 651 posts · 736 votes
  10mo
  Quote from @Laura Winters:
  
  Quote from @Carolyn Fuller:
  
  It’s great news for me personally because Sonder operated a boutique hotel a block from my 2 units. They were my major competitor. On the other hand a friend owns their building and I suspect this is not good for him.
  Why don't you manage for your friend then?! Sounds like a great opportunity
  Another friend asked the same question tonight! Not a chance! I am retired. 2 units is all I want to manage. We are selling a 3rd unit.
  1 Reply
James Carlson
Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
10mo
Airbnb arbitrage hasn't been a winning strategy here in Colorado for years. Rents are too high. STR supply has pushed down revenues. Margins just don't make a lot of sense. And I'm sure that's true for everywhere in the States.
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Trent Reeve
Atlanta · Member since 2022 · 710 posts · 641 votes
10mo
still early on my RE investing journey. Have no idea who/what Sonder is. so apparently they dont really affect me
1 Reply
Account Closed
Investor · FL · Member since 2016 · 332 posts · 388 votes
10mo
This isn't that big of deal to most markets. Sonder had 10,000 worldwide locations and most concentrated in larger cities. In Florida they are only in Orlando and Miami. In Tennessee they are only in Nashville. They are only a small portion of the available inventory in these cities.
As for arbitrage being dead or dying off I doubt it. It is just hard to scale and pay executive salaries with that strategy. It is a slim margins game and most in that game should see it only as a stepping stone to build cash to enter another real estate strategy (STR/LTR/MFR)! or hospitality business.
2 Reply
Andrew SteffensBusiness Member
Tampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
10mo
Not only is it arbitrage which is generally not a sound strategy IMHO but they were also in small units. I manage a few 1/2 bedrooms but they were really competing not only with other STR's but also with hotels.
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Allen Bosbyshell
Investor · Member since 2020 · 14 posts · 5 votes
10mo
Important moment for the STR industry. I wouldn't necessarily call Sonder "arbitrage" but they definitely were riding the "anti-hotel" sentiment that Airbnb originally leaned on. It was an interesting experiment in branding and management, but most of the big players that succeed there have more vertical integration.

For individual operators though... smaller, flexible businesses can thrive where giants fail. Agile hosts who control their own systems, manage costs carefully, and cultivate repeat guests aren’t doomed to the same fate.
Sonder's bankruptcy isn't just about one company failing. It's a case study in platform economics, scalability risk, and the importance of strategic independence. Everyone in STR is taking notes.
1 Reply
Todd Goedeke
Contractor · Sheboygan, WI · Member since 2016 · 917 posts · 266 votes
10mo
@Ryan Moyer BP already lists the Short Term Vacation Rental business as a RE play. It is not. The short term vacation rental business is a hospitality business based on cash flow. It’s not
Long term Rentals and underlying RE are far different than running a business.
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Ashish AcharyaBusiness Member
CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
10mo
@Laura Winters,
This is actually pretty big news for the short-term rental industry! I agree with Allen above, everyone in STR should be learning from this and taking notes. With platforms like Airbnb raising fees and tightening policies, it's smart to be ready to pivot to other platforms and always have a backup plan in place.
From a tax perspective, the bankruptcy of a major short-term rental operator like Sonder doesn’t directly change how hosts report their rental income, but it’s a good reminder to be diligent with your own books. Whether you’re running Airbnb rentals or short-term rentals independently, you’ll still need to report rental income, deduct allowable expenses, and claim depreciation on your properties.

If your listings are affected by platforms shutting down, you’ll also want to track any losses, canceled bookings, or write-offs carefully, as these can impact your taxable income. This could also be a good time to consult a CPA to make sure your rental business is structured efficiently and you’re taking advantage of all possible deductions.

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Tyler Divin

Property Manager · Chattanooga, TN · Member since 2018 · 178 posts · 134 votes

10mo

Airbnb arbitrage has never made sense to me. Priorities are misaligned in so many ways because the operator doesn't own the property, and the property owner doesn't care how much revenue the operator generates; they want the rent paid on time each month. I suspect many of the negative experiences with short-term rentals stem from arbitrage properties.

I used to work with a guy in 2021/22 who bought an arbitrage course from a social media guru. He would slip out of work early to make cold calls to landlords all over the country. He came in one day talking about spending his life's savings on furniture, renting a U-Haul to drive to Texas, and furnishing 12 apartments for arbitrage that he would manage from Nashville. I told him I thought it was a really bad idea. He was let go from work not too long after that because he was arriving late, leaving early, and underwriting arbitrage deals all day. His goal was to get X number of doors and then travel the world while his virtual assistants ran his properties. In my mind, this is what a lot of 'Airbnb Arbitrage' looks like, and a perfect example of... the guy getting rich is the guy selling the courses.

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David HolcombeBusiness Member

Real Estate Agent · Atlanta, GA · Member since 2016 · 35 posts · 25 votes

10mo

I worked at Sonder in 2021. Their business had lots of things going against it, anti-STR legislation was popping up everywhere, rents were rising fast, AirBnB revenue was down. And once they got to be a billion dollar company, they wanted to take down 200 units + at a time. Their business model seemed to work better when it was 20-50 unit deals they were chasing. I've worked for 3 different real estate/tech forward startups like this that all had huge crashes. The kiss of death for each of those was raising a lot of expensive private equity and combining expensive debt, forced high growth, and bad real estate decisions that come with forced high growth. It was often the late-stage deals that sunk the ship. Their underwriting was more conservative in the early days. Don't forget the basics!!

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Andrew Street

Member since 2019 · 1k+ posts · 292 votes

10mo

Wow, that’s huge news! It really shows how volatile the short-term rental market can be, even for major players. I imagine this will have a big impact on hosts and travelers alike. Curious to hear how others here are planning to adapt or pivot in response, any lessons learned from this for those of us managing listings?

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Russ Kikkert

Rental Property Investor · Milwaukee, WI · Member since 2021 · 5 posts · 0 votes

10mo

I think that AirBnB noticed that Sondor was the enemy within. They specifically enacted changes to their superhost benefits within the algorithm as Sondor just moved listings from spot to spot chasing their host accounts that had that status and could boost a poor listing. Thus we got guest favorite. They also actively tried to pull guests away from airbnb after the initial booking for all subsequent bookings. This is why we have changes with how airbnb shared email and phone numbers to hosts.

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