S
onder, the short-term rental company that sounded the alarm about its future last week, is trying to avoid trouble by negotiating with landlords and seeking partners. The San Francisco-based company is facing significant challenges due to its unprofitable business model and large lease obligations, similar to WeWork's current situation.

    To mitigate these risks, Sonder has been renegotiating leases for apartment units and hotel rooms it operates as furnished short-term rentals. This involves cutting down rents or exiting properties altogether. In the past 11 months, Sonder has reduced rent on or left around 4,300 units across 105 buildings, expecting to improve annual cash flow by more than $40 million.

    Sonder has also shifted its strategy to "capital light" deals, where landlords are responsible for initial capital improvements. The company raised $146 million in additional liquidity last August and partnered with Marriott to make 9,000 units available on the latter's platforms by year-end. As part of this deal, Marriott will provide Sonder with $15 million by March 2025.

    Despite these efforts, Sonder lost $296 million last year, a significant increase from its loss in 2022. The company laid off 17% of its workforce earlier this year to save around $11 million annually. Since going public via a SPAC merger in 2022, valued at $1.9 billion, Sonder's shares have plummeted to $4.58, down almost 40% in the last year and up 41% year-to-date.