Sonder Raises $135M to Turn Airbnb Apartments into Hotels(forbes.com)
forbes.com
Sonder Raises $135M to Turn Airbnb Apartments into Hotels
https://www.forbes.com/sites/bizcarson/2018/08/23/sonder-raises-135-million-to-turn-airbnb-style-apartments-into-a-different-kind-of-hotel/#7384ac54455d
130 comments
Sonder's sales channel was and is primarily airbnb itself which could easily turn it off if they determined them to be a threat. So it's a business highly dependent on future competitive partners (see Airbnb plus). Their company was called Flatbook but the service and reviews were so terrible and so full or irate customers who had been scammed that they had to try and erase it from the internet and reimagine themselves as Sonder. You can still find a few places with flatbook review if you search ex. https://www.google.com/maps/place/Sonder/@45.5198842,-73.587... . Anyhow miles of bad service, scams, and very serious negative reviews. Since they used Airbnb as the primary sales channel on a grand scale they would just wipe property listings once the reviews were negative and replace with new fresh listings. I do believe they have professionalized their service recently however I am surprised they were trusted with a large investment and shows you the poor judgement of VC. Their product message was cloned rather than originated, they have a history of scam level of service, their revenue channel is largely dependent on competition, not to mention their business is neither innovative nor defensible, the product is not great for cities and community. Really SV at its worst.
Might want to mention you work for a competitor before calling it a scam.
https://angel.co/sam-sperling
https://angel.co/sam-sperling
I used to work at Flatbook. It was a chaotic time, but never ever a scam.
Ethics are super important, especially in this era of scandals and exposés. If they think changing their branding strategy alone without addressing the core issue of trust and honesty would get them far, that $135M will dry up real fast..
If the VCs continue to invest in poorly conceived and doomed ventures then they will lose money and eventually fail once they've lost investor confidence. There's evolutionary pressure at play here. VCs are incentivised to take risky investments with potentially high returns; but there is a limit. In a very real way we're exposed to the outliest out the outliers here in SV. It should eventually get better. However, nobody said that evolution, or capitalism for that matter, was efficient; so it may be quite a long time.
It's true that VCs that invest in utter nonsense will eventually be eliminated, but I think most VCs who never invest in a success invest in enough doomed models that survive until IPO, (often with built-in failures like a model of exploitation that requires obscurity.)
The highs and lows of tech average together well enough to satisfy Wall Street and then have huge profits for some that VCs that find and hold good investments, and more VCs that feed off a constant influx of sucker investors.
The highs and lows of tech average together well enough to satisfy Wall Street and then have huge profits for some that VCs that find and hold good investments, and more VCs that feed off a constant influx of sucker investors.
"Compared to your typical Airbnb, no one “lives” in Sonder apartments except for its guests. Each rental comes with a living room space and kitchen so people can cook and relax like they would in their own home. Units range from studios in a heart of a city to sprawling a six-bedroom unit in downtown Montreal."
This is bad news for cities that are already short on housing. You're taking what could have been space for housing and erasing it with larger, lower-density hotel suites. Very luxurious and pleasant for the travelers, sure, but you're ballooning the space taken up by the "hotel" and magnifying the market pressures on everyone else in the process.
What's pretty surprising about this article is the breathless, unquestioned enthusiasm for these kind of ideas. Is this really a sustainable model for urban centers and hotels? Is this how we want to conduct our cities and use our most precious, economically productive spaces?
I'm pro Airbnb--when the room is actually rented out by the renter, everyone including the little guy wins. But this is a very "rich get richer" style of tourism with the fig-leaf of the share economy strapped to its extravagance, right?
This is bad news for cities that are already short on housing. You're taking what could have been space for housing and erasing it with larger, lower-density hotel suites. Very luxurious and pleasant for the travelers, sure, but you're ballooning the space taken up by the "hotel" and magnifying the market pressures on everyone else in the process.
What's pretty surprising about this article is the breathless, unquestioned enthusiasm for these kind of ideas. Is this really a sustainable model for urban centers and hotels? Is this how we want to conduct our cities and use our most precious, economically productive spaces?
I'm pro Airbnb--when the room is actually rented out by the renter, everyone including the little guy wins. But this is a very "rich get richer" style of tourism with the fig-leaf of the share economy strapped to its extravagance, right?
Only people to blame for ballooning housing prices are the politicians who have purposefully implemented restrictive building codes to make sure housing goes as sky high as possible. The reason it is like that is because we are under the impression that if housing keeps increasing then home owners will be able to spend more.
This. Look at how many millions of square feet of real estate have been announced in NYC in the past week alone: https://newyorkyimby.com/
Given that each city effectively has unlimited housing potential, the idea that tourists are driving out locals makes zero sense.
Given that each city effectively has unlimited housing potential, the idea that tourists are driving out locals makes zero sense.
Right. Because NYC is a magical fairytale-land of affordable rents.
Construction does not fix the fact that tourists pay 5-10x what local residents do for the same real estate. If you want to keep that from affecting rents, there's a very effective and inexpensive way to do it: don't let people turn rentals into hotels. Just like New York.
Construction does not fix the fact that tourists pay 5-10x what local residents do for the same real estate. If you want to keep that from affecting rents, there's a very effective and inexpensive way to do it: don't let people turn rentals into hotels. Just like New York.
> Because NYC is a magical fairytale-land of affordable rents.
I mean if you're willing to take the subway to work, you can get a pretty large 2BR for less than $2K / mo. Yes you need a job to be able to afford that, but not a particularly amazing job. Just not unemployed for the entire year every year.
I mean if you're willing to take the subway to work, you can get a pretty large 2BR for less than $2K / mo. Yes you need a job to be able to afford that, but not a particularly amazing job. Just not unemployed for the entire year every year.
I agree that good transit is the key to affordable housing. Those kinds of apartments aren't located in dense neighborhoods: they're in the Bronx, Queens and Brooklyn. Places are well-connected to Manhattan by transit. Places that would be impractical otherwise.
https://streeteasy.com/for-rent/nyc/price:-2000%7Cbeds:2?vie...
https://streeteasy.com/for-rent/nyc/price:-2000%7Cbeds:2?vie...
I've no idea what you mean when you say "cities have unlimited housing". Should we just bulldoze everything and build skyscrapers, is that your idea of a good city to live?
Not everything, but North American cities need a lot more skyscrapers. Instead most North American cities sprawl.
Density increases innovation. Density decreases travel carbon emissions.
Density increases innovation. Density decreases travel carbon emissions.
I don't know about North America, but replacing everything with skyscrapers is simply not the least bit desirable in the vast majority of city centres in Europe, for example.
A city of skyscrapers would also make a pretty dystopian city, the way I see it.
A city of skyscrapers would also make a pretty dystopian city, the way I see it.
This is just not true, it may be a factor but it's not the "only". What you have in many cases is simple market pressure: kick out the residents and transform nearly every house in the city centre into a hostel/airbnb because renting to tourists rakes you in much more money. Now residents either pay 3x 4x the price they did, or they abandon the city centre for good, leaving it little more than a playground for tourists.
One and a half million new citizens every two weeks, globally.
We need smart solutions to a complex problem.
We need smart solutions to a complex problem.
Aren't something like half of AirBnB rentals not owner-occupied? I had the distinct sense that a lot of landlords had found running an AirBnB more profitable
i have yet to stay in an AirBnB that was the home of the owner or leaseholder.
The cheap end of the spectrum often has the owner renting out a room. After one bad experience I now only rent entire apartments.
Well if you could build more housing this would be less of a problem.
Seriously. If only there were some technology that let us put a larger number of housing units on a given amount of land! https://www.vox.com/cards/affordable-housing-explained/densi... . We could solve all of our affordability problems. https://www.bloomberg.com/view/articles/2018-03-14/californi....
Building skyscrapers is simply not an option for many places, such as many European city centres.
Building more luxury condos doesn't really help anyone if they're just bought up by foreign investors as speculative investments and safe havens.
building more luxury condos means that the rich foreign investors who are looking for speculative investments can stay out of mid-market housing meant for mid-income homeowners, and mid-income homeowners can stay out of low-income housing meant for low-income homeowners.
A concept that really is lost on a lot of people. It doesnt make any economic sense to build and sell something of low value when you could do it at higher value. In a place like SF that is being squeezed
by an influx of high income earners, new luxury housing just makes the old luxury housing less luxurious in comparison. If the market is screaming "we will pay absurd high prices for nice space!" Then by all means, meet that demand and everyone wins. Don't waste precious time energy and land building deliberately crappy subsidized apartments. That's lost profit for the builders, architects, and potential tax revenue too.
I'm not arguing for libertarian planning-- Let's leverage these high prices to build some amazing neighborhoods that can be enjoyed for generations: walkable, mixed-use, sustainable, transit oriented.
I'm not arguing for libertarian planning-- Let's leverage these high prices to build some amazing neighborhoods that can be enjoyed for generations: walkable, mixed-use, sustainable, transit oriented.
I usually use the trusty car comparison here. There's no point in starting a factory that builds 20-year old shitty Saturns. It's more reasonable to build great cars, and trust that the second-hand markets provide the necessary supply of extremely cheap beaters.
In the not-too-distant past, condos used to deprecate. Now their value goes up with each additional year of wear and tear!
In the not-too-distant past, condos used to deprecate. Now their value goes up with each additional year of wear and tear!
>Then by all means, meet that demand and everyone wins. That's lost profit for the builders, architects, and potential tax revenue too.
Yeah, "lost profit", the cardinal evil. Sure, everybody wins, except the poor devils that make less than 100k and can't afford housing anymore. But who cares about them? Profit profit profit!
The truth is public policies should seek to maximise social gain. It's not their fucking job to enter into considerations about some people's profits.
PS: it doesn't make economic sense to waste money doing proper waste management when you can just dump your poison in the river, nevertheless we legislate that businesses must do the former.
Yeah, "lost profit", the cardinal evil. Sure, everybody wins, except the poor devils that make less than 100k and can't afford housing anymore. But who cares about them? Profit profit profit!
The truth is public policies should seek to maximise social gain. It's not their fucking job to enter into considerations about some people's profits.
PS: it doesn't make economic sense to waste money doing proper waste management when you can just dump your poison in the river, nevertheless we legislate that businesses must do the former.
Yes they do, look at any economic report.
Agree. Another solution is to encourage employers to relocate away from expensive cities. We need more tech companies going to Oklahoma or texas where land is cheap.
Or if companies were more receptive to remote working and other flexible working policies, so that people could live where they wanted to.
Land is cheap, network is not.
No one is going to move, because cheap land is not yet cheap enough to offset the opportunity (or perceived opportunity) cost of being in a keystone ecosystem.
No one is going to move, because cheap land is not yet cheap enough to offset the opportunity (or perceived opportunity) cost of being in a keystone ecosystem.
More or better? I think more apartments (condos that you own,not rent) would solve a lot of housing problems. Everyone just has to have a large single family house.
Not even that. City governments so fetishize large, detached, widely-spaced two-story single-family houses that if you try to build anything else on 99.9% of streets, they handcuff you and haul you off to jail.
Alternatively, if you had less people.
Or just ignore regulation.
Just remove the inconveniences and it’s a VC findable business model.
Just remove the inconveniences and it’s a VC findable business model.
> everyone including the little guy wins
I suppose this is true in some parts of the country, but in the areas where real estate is tight, "the little guy" probably doesn't own his home.
I suppose this is true in some parts of the country, but in the areas where real estate is tight, "the little guy" probably doesn't own his home.
Sonder provides long term housing in all of its cities and is expanding into commercial zones with proper hotel licenses. This is actually relieving housing pressure because tourists stay in Sonders that are properly zoned as a hotel instead of tourists taking up residential space that would have been used for longer term residents.
Would we criticize Marriot or Hilton for making a hotel in a commercial zone?
Would we criticize Marriot or Hilton for making a hotel in a commercial zone?
Most Americans have spare bedrooms for when guests visit. You could have your guests stay at a hotel but typically that will be really far from your home which sucks for everybody. Having Sonder or Airbnb style short term rentals distributed throughout cities could allow people to live in smaller apartments, eliminating bedrooms that sit unused most nights creating more space for everybody.
To be clear I'm not talking about the model of renting out your spare bedroom on Airbnb because nobody actually wants to do that. I'm talking about full time airbnb studios / 1BR's obviating the need for guest bedrooms.
To be clear I'm not talking about the model of renting out your spare bedroom on Airbnb because nobody actually wants to do that. I'm talking about full time airbnb studios / 1BR's obviating the need for guest bedrooms.
> To be clear I'm not talking about the model of renting out your spare bedroom on Airbnb because nobody actually wants to do that.
Demonstrably false - there are many thousands of such rooms available on AirBnb:
https://www.airbnb.com/s/homes?refinement_paths%5B%5D=%2Fhom...
I often prefer to stay in this configuration, especially in a city where I don't know the local language. This way you have a host and a cozy, lived-in place to stay instead of some sterile suite that makes you feel like you never left your own city.
Demonstrably false - there are many thousands of such rooms available on AirBnb:
https://www.airbnb.com/s/homes?refinement_paths%5B%5D=%2Fhom...
I often prefer to stay in this configuration, especially in a city where I don't know the local language. This way you have a host and a cozy, lived-in place to stay instead of some sterile suite that makes you feel like you never left your own city.
> Most Americans have spare bedrooms for when guests visit.
I'd venture that most Americans living in the dense urban environments the OP was talking absolutely do not have a spare room kicking around for guests. Certainly, living in NYC, I don't and neither does anyone I know.
I'd venture that most Americans living in the dense urban environments the OP was talking absolutely do not have a spare room kicking around for guests. Certainly, living in NYC, I don't and neither does anyone I know.
I'd venture that this statement also fails in general, not just urban environment. Seems like a very privileged perspective.
It's very common in suburban homes to have both an unused guest bedroom and an unused dining room solely for the two times a year the owner entertains. Since this wasn't really logical in the first place I doubt more short-term rentals would make much difference.
I think it depends a lot on how old you are.
My parents have 3 spare rooms, because my siblings and I have moved out and they haven't downsized to a smaller house.
But I wouldn't expect a young family to have a spare room. When I was younger and we needed a spare room, I was always relegated to the couch to make room for guests.
My parents have 3 spare rooms, because my siblings and I have moved out and they haven't downsized to a smaller house.
But I wouldn't expect a young family to have a spare room. When I was younger and we needed a spare room, I was always relegated to the couch to make room for guests.
I don't expect it's super common to have a dedicated guest bedroom in a house unless it's, as you say, a kid's room who has moved out. On the other hand, quite a few homeowners have a room they use as a part-time office, for hobbies, etc. that has a sofabed in it. That's more or less the case with me. I have a "spare" room that I use for various things but I can make up a bed if I have guests.
That's remarkably optimistic. But people also have guest bedrooms so that family members can stay with them, not away from them. And so that they can have part-time home offices. And simply to increase the overall value of their home investment.
I think expecting the presence of Sonder in the market to efficiently trade space with houses by obviating the need for guest rooms seems like a fundamental misunderstanding of how the housing market works, particularly why people buy houses larger than what they need or utilize.
I think expecting the presence of Sonder in the market to efficiently trade space with houses by obviating the need for guest rooms seems like a fundamental misunderstanding of how the housing market works, particularly why people buy houses larger than what they need or utilize.
This already exists in apartment buildings. Typically a few suites near the ground floor are reserved for rent by tenants for their guests.
> Most Americans have spare bedrooms for when guests visit.
No, they don't. Some Americans do, but it's a minority; most that have a room that loosely serves this purpose have another non-bedroom function for the room that is not significantly impaired by occasional use as a guest bedroom, and a large number, probably a majority, have no guest bedroom at all, putting guests up on a couch (possibly convertible, but maybe not) or temporary cot, etc. in a common room (or displacing a resident, likely a child, to such an arrangement to free up a bed) when hosting overnight guests.
No, they don't. Some Americans do, but it's a minority; most that have a room that loosely serves this purpose have another non-bedroom function for the room that is not significantly impaired by occasional use as a guest bedroom, and a large number, probably a majority, have no guest bedroom at all, putting guests up on a couch (possibly convertible, but maybe not) or temporary cot, etc. in a common room (or displacing a resident, likely a child, to such an arrangement to free up a bed) when hosting overnight guests.
I've never had a spare bedroom for guests. I've known people who did. I saw them as unusually well off.
I would like to know where you get this idea that a majority of Americans have such. Is this merely anecdotal observation or is there a study you can cite?
I would like to know where you get this idea that a majority of Americans have such. Is this merely anecdotal observation or is there a study you can cite?
OK but who’s going to convert all the larger units the small ones
> Compared to your typical Airbnb
Are there still Airbnb flats that are owner-occupied? Every one I've stayed in seems to be operated as a full-time holiday rental.
> the fig-leaf of the share economy
There's never been any sharing in the so-called sharing economy. It's just about outsourcing labor costs and ducking regulations to make money.
Are there still Airbnb flats that are owner-occupied? Every one I've stayed in seems to be operated as a full-time holiday rental.
> the fig-leaf of the share economy
There's never been any sharing in the so-called sharing economy. It's just about outsourcing labor costs and ducking regulations to make money.
>> six-bedroom unit in downtown Montreal
Maybe it's selective bias but I think of all north American metropolises Montreal would be particularly difficult to implement hotels in residential areas. Renters here have very strong rights, albeit backed by an understaffed authority. Tourism provides a substantial bulk to the local economy but it's not nearly enough that the local population will accept having fly-by-night partiers in otherwise quiet neighbourhoods. The article says downtown but I strongly suspect they mean neighbourhoods adjacent to downtown which have long been home to local workers and students, key to providing vibrancy and life which attracts the tourists to begin with (and the festivals).
Maybe it's selective bias but I think of all north American metropolises Montreal would be particularly difficult to implement hotels in residential areas. Renters here have very strong rights, albeit backed by an understaffed authority. Tourism provides a substantial bulk to the local economy but it's not nearly enough that the local population will accept having fly-by-night partiers in otherwise quiet neighbourhoods. The article says downtown but I strongly suspect they mean neighbourhoods adjacent to downtown which have long been home to local workers and students, key to providing vibrancy and life which attracts the tourists to begin with (and the festivals).
What is the difference between Sonder and a hotel chain buying a piece of property and building a multi-tenant luxury hotel?
Sonder properties tend to be one-off apartments, not entire buildings.
Right, but from a supply perspective, how does Sonder hurt things more than a hotel?
Hotels are not in competition with long term residents for various reasons- zoning, unsuitable building types, etc etc. It is extremely uncommon for a hotel to buy an entire apartment building and turn it into a hotel because it's extremely difficult to do so.
By contrast, Sonder can buy individual apartments very easy. The whole selling point is that they are apartments, so there's no need to renovate etc.
By contrast, Sonder can buy individual apartments very easy. The whole selling point is that they are apartments, so there's no need to renovate etc.
Hmm, do you have a source for more info? I think I stayed in a boutique hotel like that in NYC. I mean sure, it's probably a complete remodel. But it's still taking an entire apartment building off the market.
What it comes down to: everyone needs a place to live. Everyone takes up space. All housing space is valuable. But somehow many people think they can live somewhere without being a cause of the housing shortage.
The only way to not be part of the problem is to move away.
What it comes down to: everyone needs a place to live. Everyone takes up space. All housing space is valuable. But somehow many people think they can live somewhere without being a cause of the housing shortage.
The only way to not be part of the problem is to move away.
Actually, this is arguing for Sonder's strength compared to typical Airbnbs.
Sonder is expanding with hotel licensing and from a zoning perspective is like a hotel. And yes, the units are being renovated to Sonder's standards. If you stay in a Sonder and ask about the history of the building it may be very surprising.
Sonder is expanding with hotel licensing and from a zoning perspective is like a hotel. And yes, the units are being renovated to Sonder's standards. If you stay in a Sonder and ask about the history of the building it may be very surprising.
>use our most precious, economically productive spaces?
If that space is more economically productive doing something else, then it will be easy to outbid Sonder.
If that space is more economically productive doing something else, then it will be easy to outbid Sonder.
The free market is not in-and-of-itself a goal to be pursued. Society has aims, and often, the clearest way to achieve them is through the free market with distortions strategically applied. This isn't SimCity, where it makes sense to zone your entire city center as industrial/commercial in order to grow the tax base: the city exists to serve the needs primarily of those who live there.
Otherwise, why not zone the entire city as a hotel?
Otherwise, why not zone the entire city as a hotel?
I'm totally with you on the market needing "corrected" incentives in some cases to get us what we want/need as a society. A example to me are the broken ISP market because of physical constraints. Another different category of cases are issues were the prisoner's dilemma applies where we have negative externalities like pollution. I don't see how that's the case here.
I believe industrial needs to be its own, separated zone because of the pollution. Commercial and residential can be happily mixed though and if the market is telling us to build a giant apartment building somewhere because people want to live there and pay for it then why would you second guess that?
Turning an entire city into hotels would of course never happen because there is no demand for that. Why not allow building of hotels everywhere though?
The purpose of zoning is to segregate property bidders into classes by purpose, or willingness to pay. Otherwise, you have someone whose purpose with the property is to generate $100k/mo, bidding on the same property as someone whose purpose is simply to live with no intention to generate profit. It serves society to set aside a zone of property wherein people with residential purpose only can bid on the same property.
Likewise, it serves society to have bidders who are offering a long-term lease at a monthly price for an apartment to not have to compete against a stream of tourists who are spending out of their leisure budget. If a city needs new hotels, it can zone and permit the construction of them. The answer isn't to force renters to enter bidding wars against vacationers to discover the "true" price.
Likewise, it serves society to have bidders who are offering a long-term lease at a monthly price for an apartment to not have to compete against a stream of tourists who are spending out of their leisure budget. If a city needs new hotels, it can zone and permit the construction of them. The answer isn't to force renters to enter bidding wars against vacationers to discover the "true" price.
At least in the US, most housing zoning failures aren’t residential vs. other uses, they’re about protecting certain types of residential housing (generally detached single family houses) at the expense of other residential housing. Here’s more: https://www.nytimes.com/2018/08/21/upshot/home-ownership-nim...
If someone thinks they can generate 100k/month I absolutely want that individual to win the auction on that property.
That is a lot of extra tax revenue which would be generated and able to be spent on the population.
That is a lot of extra tax revenue which would be generated and able to be spent on the population.
I agree, in a single instance it sounds like the obvious thing to do. But it's not obvious that the cumulative effect of putting commercial and residential bidders against each other at a city scale will lead to desirable outcomes for society. In fact, what's obvious is that it won't.
It's not obvious at all that it won't. There is only that much demand for commercial space.
You know, a lot has been written about the effect of cryptocurrency mining on GPU prices.
If you were a gamer entering the market in 2018, you would've seen prices several hundred dollars in excess of what your counterpart from six months earlier paid. Games hadn't gotten, say, 50% better. Performance hadn't either. You and your peer are going to have roughly identical experiences. The cost of your gaming experience is going up due to reasons uncorrelated with the value delivered to you.
The point is that pure market forces are volatile and unpredictable, in the extreme. It's up to you if you want to make the case that housing, being a commodity essential to the proper functioning of a society (unlike gaming), doesn't require at least some protection from pure demand forces. IMO most people would find it obvious that this would be undesirable.
If you were a gamer entering the market in 2018, you would've seen prices several hundred dollars in excess of what your counterpart from six months earlier paid. Games hadn't gotten, say, 50% better. Performance hadn't either. You and your peer are going to have roughly identical experiences. The cost of your gaming experience is going up due to reasons uncorrelated with the value delivered to you.
The point is that pure market forces are volatile and unpredictable, in the extreme. It's up to you if you want to make the case that housing, being a commodity essential to the proper functioning of a society (unlike gaming), doesn't require at least some protection from pure demand forces. IMO most people would find it obvious that this would be undesirable.
> Otherwise, why not zone the entire city as a hotel?
Why not? All of midtown Manhattan, at least. If superwealthy and tourists will pay an exorbitant rates, might as well soak them for all the taxes they're worth and spend that money subsidizing transport and housing in the rest of the city for locals.
Why not? All of midtown Manhattan, at least. If superwealthy and tourists will pay an exorbitant rates, might as well soak them for all the taxes they're worth and spend that money subsidizing transport and housing in the rest of the city for locals.
Tourists/visitors might are more valuable to the city than regular citizen. The amount of money you spend per day while traveling is way higher than your daily spending at home. Thus it makes sense to create as many hotel spaces as demand dictates.
It will be easy for single families to outbid a multi-million dollar corporation for these homes? What sort of buying power do you expect these families to have, relative to this enterprise?
The enterprise has more buying power but will also want to turn their investment into a profit. So whatever they do with that land ultimately needs to pay off. For it to pay off it needs to create enough extra value by being in that location.
Could it also be the case that investments driven by speculation and market manipulation would obscure the actual ROI (a lá Uber)?
Long-term the intuition is "this must be profitable at some point", so the market participants are acting irrational in the short-term. No one can compete with irrational actors, especially ones with an insane amount of capital to burn like we see today.
Long-term the intuition is "this must be profitable at some point", so the market participants are acting irrational in the short-term. No one can compete with irrational actors, especially ones with an insane amount of capital to burn like we see today.
If you think the market is irrational, bet against it. Just claiming to know better but not putting your money where your mouth is and not having skin in the game is a anti pattern that's advisable in this case.
I stayed at this location last January - https://www.sonder.com/destinations/chicago/Handsome-2BR-nea...
It photographed really well which is why I stayed there, but the bedding was terrible. The worst of any Airbnb experience and it’s part of why I generally choose hotels for short stays now.
This rental had cheap pillows, linens that felt like sand paper, and the comforter was bare sandwiched between a large sheet. Towels were tiny and cheap motel quality. I was really disappointed. Hopefully their other locations are better than this one. I personally wouldn’t go back.
I filled in their after-stay survey and never heard a response.
It photographed really well which is why I stayed there, but the bedding was terrible. The worst of any Airbnb experience and it’s part of why I generally choose hotels for short stays now.
This rental had cheap pillows, linens that felt like sand paper, and the comforter was bare sandwiched between a large sheet. Towels were tiny and cheap motel quality. I was really disappointed. Hopefully their other locations are better than this one. I personally wouldn’t go back.
I filled in their after-stay survey and never heard a response.
I'm struggling with the angle here.
A. The secret to AirBNB is that everybody had extra space, and Gig Economy allow you to get value out of your extra space.
B. When you are in the Gig Economy, you have two things that you need to do:
1. Have the extra space 2. Manage the extra space
Sonder initially focused on #2, and this worked out well. Bring professionalism to the management interface turns out to be very good deal because a lot of people with #1 is not good at #2.
My problem with the next step on their is that they are leaving the core of the gig economy.
Buying the facility and coming up with unique rooms with different paintings is simply getting into the hotel business. The fundamental driving force of the AirBNB business model is the use of an asset that is otherwise unused, and sparing somebody from needing to invest CapEx in building rooms. This is a massive lever to get into the hotel business, which is what AirBNB really is.
Obviously, I'm totally ignoring the moral choice of if having somebody else consuming and reselling beds is good or bad for cities. I'm simply on the point that hotels are a going business that is pretty competitive, with a series of operators at all levels. It's not clear to me how Sonder business model is superior to the standard hotel model once they are forced to spend CapEx for rooms, because having unique hotel facilities or rooms does not appear to me to drive a competitive advantage.
Secondly, if having unique rooms turns out to be brilliant competitive advantage, and I'm totally wrong on this point, I don't see how this drives a real moat (as Buffet would state) that is defensible. I would think that the entrenched hotel operators should be able to pivot and counter the threat.
A. The secret to AirBNB is that everybody had extra space, and Gig Economy allow you to get value out of your extra space.
B. When you are in the Gig Economy, you have two things that you need to do:
1. Have the extra space 2. Manage the extra space
Sonder initially focused on #2, and this worked out well. Bring professionalism to the management interface turns out to be very good deal because a lot of people with #1 is not good at #2.
My problem with the next step on their is that they are leaving the core of the gig economy.
Buying the facility and coming up with unique rooms with different paintings is simply getting into the hotel business. The fundamental driving force of the AirBNB business model is the use of an asset that is otherwise unused, and sparing somebody from needing to invest CapEx in building rooms. This is a massive lever to get into the hotel business, which is what AirBNB really is.
Obviously, I'm totally ignoring the moral choice of if having somebody else consuming and reselling beds is good or bad for cities. I'm simply on the point that hotels are a going business that is pretty competitive, with a series of operators at all levels. It's not clear to me how Sonder business model is superior to the standard hotel model once they are forced to spend CapEx for rooms, because having unique hotel facilities or rooms does not appear to me to drive a competitive advantage.
Secondly, if having unique rooms turns out to be brilliant competitive advantage, and I'm totally wrong on this point, I don't see how this drives a real moat (as Buffet would state) that is defensible. I would think that the entrenched hotel operators should be able to pivot and counter the threat.
Isn't this really a kind of regulatory arbitrage? Hotels totally could buy up condominiums all over cities and then manage them centrally, but they're not allowed to do that. Airbnb gets away with it by distributing the liability and claiming plausible deniability; they're the Napster of hotel zoning.
Isn't Sonder just trying to slip in under the radar, the confusing ostensible aegis of people renting out their rooms temporarily, to do what Marriott can't do?
Isn't Sonder just trying to slip in under the radar, the confusing ostensible aegis of people renting out their rooms temporarily, to do what Marriott can't do?
That's another angle I wasn't thinking of.
I'm no expert, but the Blackstone group and some REITS already focus single houses and renting them out. The REIT market is well understood, thus having a easy line of investors. If this is simply a way of getting past local rulings, I would guess that somebody in the aforementioned rental market buying single homes might explore short term hotel type operations instead, although it is unclear to me the leap from longer term rentals to overnight stays.
I'm no expert, but the Blackstone group and some REITS already focus single houses and renting them out. The REIT market is well understood, thus having a easy line of investors. If this is simply a way of getting past local rulings, I would guess that somebody in the aforementioned rental market buying single homes might explore short term hotel type operations instead, although it is unclear to me the leap from longer term rentals to overnight stays.
> The fundamental driving force of the AirBNB business model is the use of an asset that is otherwise unused.
Two things makes me suspect their model is basically just an end run around hotel regulation, and not gig economy.
1. All of the airbnb's I've stayed in over the last year were dedicated airbnb spaces.
2. I know a couple people who rent 2 apartments, live in one, and primarily support themselves off airbnbing the other.
Two things makes me suspect their model is basically just an end run around hotel regulation, and not gig economy.
1. All of the airbnb's I've stayed in over the last year were dedicated airbnb spaces.
2. I know a couple people who rent 2 apartments, live in one, and primarily support themselves off airbnbing the other.
Worth pointing out that "getting value out of extra space", in the long-term, only benefits property owners, as rents will simply rise to consume the generated surplus. Worst case being that if you want to live in a nice part of town, not only do you have to earn good money, but you have to become a part-time hospitality provider.
Surprised Airbnb doesn’t just do this themselves, though I suspect it might just be a matter of time?
Agree the one thing I really don’t like about Airbnb and why I still prefer hotels is the inconsistency of the experience from check-in to check-out. If I’m in a new unfamiliar city all I want to do is minimize the unknowns as much as possible and everything about Airbnb from key hand off to cleanliness to whether the listing is even real is a big question mark until you’re actually there.
Agree the one thing I really don’t like about Airbnb and why I still prefer hotels is the inconsistency of the experience from check-in to check-out. If I’m in a new unfamiliar city all I want to do is minimize the unknowns as much as possible and everything about Airbnb from key hand off to cleanliness to whether the listing is even real is a big question mark until you’re actually there.
>Surprised Airbnb doesn’t just do this themselves, though I suspect it might just be a matter of time?
Airbnb has gotten a lot of pushback for commoditizing spaces that would have likely been used as long-term rental properties. They very meticulously craft their brand and community relationships so as to avoid negative repercussions from operating in a city.
This is an attempt to directly capitalize on the prime, long-term rental stock drained by Airbnb's presence without damaging the Airbnb brand.
Airbnb has gotten a lot of pushback for commoditizing spaces that would have likely been used as long-term rental properties. They very meticulously craft their brand and community relationships so as to avoid negative repercussions from operating in a city.
This is an attempt to directly capitalize on the prime, long-term rental stock drained by Airbnb's presence without damaging the Airbnb brand.
They are doing it - see AirBnB Plus:
https://www.airbnb.com/plus
https://www.airbnb.com/plus
This would seem to negatively impact the rental market for long-term tenants, no?
Only if supply is artificially constrained.
I have no idea why this is being downvoted. It's correct: https://www.bloomberg.com/view/articles/2018-03-14/californi....
The real question is why we started artificially constraining supply so severely in the '70s: https://jakeseliger.com/2015/12/27/why-did-cities-freeze-in-....
The real question is why we started artificially constraining supply so severely in the '70s: https://jakeseliger.com/2015/12/27/why-did-cities-freeze-in-....
I disagree. Even loosely factoring in parameters such as construction costs and timelines, permitting, current construction activity, and overall housing stock elasticity, you find a correlation with hotel/short-term housing and regional sale prices and availability.
In markets where supply is not artificially constrained nobody demonizes or really cares about short term rentals. It’s only in markets where housing is constrained where suddenly Airbnb is to blame for all our problems.
"Comfortable beds, nice linens, soft towels, and well-chosen amenities and essentials."
Clean linens alone has me interested. That is by far the biggest headache for me when comparing an AirBnB to a hotel. Can I trust that the host actually cleaned the bed sheets?
Clean linens alone has me interested. That is by far the biggest headache for me when comparing an AirBnB to a hotel. Can I trust that the host actually cleaned the bed sheets?
You can't trust that a hotel did either.
The first thing we do when we get to an AirBNB is wash the linens. I'd never rent a place without a washer and dryer for this reason.
I heard about Sonder last year and have been surprised how under-the-radar they are. It's a great concept, and the pricing sure beats the cost of a high-end airbnb, which to me is their main competition.
We've had too many dodgy, misrepresented airbnb experiences and my wife has sworn them off. Looking forward to using Sonder when we're in the cities they serve!
We've had too many dodgy, misrepresented airbnb experiences and my wife has sworn them off. Looking forward to using Sonder when we're in the cities they serve!
"Compared to your typical Airbnb, no one “lives” in Sonder apartments except for its guests." So just like Airbnb then....
Interesting. First disrupting hotels with holiday rentals (airbnb) which is now disrupted again by a hotel.
Sonder is also a made-up word that means "the realization that each random passerby is living a life as vivid and complex as your own." Originally from the Dictionary of Obscure Sorrows, which has a lot more beautiful neologism definitions like this you might enjoy.
I felt deep sonder thinking about the all the people who looked up this word along with me." [1] And in German Sonder means special and in Dutch Zonder (with a Z) means without.
[1] https://www.urbandictionary.com/define.php?term=sonder
[1] https://www.urbandictionary.com/define.php?term=sonder
Actually, the founder is french Canadian. "Sonder" is just french for "wondering" with a bit of an inquisitive connotation.
In Germany, in particular, I can't see the company catching on with that name: https://en.wikipedia.org/wiki/Sonderbehandlung
This might be a far shot, but any landlords here who have leased to Sonder? I read through their About Page and Lease page but still am not clear on exactly what they look for, or what the catch is.
Also, crazy how under the radar they have been, really curious to see how they built up traction over these years without any mainstream buzz
Also, crazy how under the radar they have been, really curious to see how they built up traction over these years without any mainstream buzz
This was so confusing to me at first because last year I stayed in a Sonder that I booked through AirBnB.
Off topic, but people who use Airbnb over hotels, what is the primary motivation to do so - besides cost?
One of the experiences of traveling for me is the hotel experience where I can just let go of all my worries and let the hotel handle everything from clean laundry to changing the sheets.
One of the experiences of traveling for me is the hotel experience where I can just let go of all my worries and let the hotel handle everything from clean laundry to changing the sheets.
I've been using Airbnb for maybe 7 years. The cost has been never a reason, and often might rent places on Airbnb that are more expensive.
My main reason is that with Airbnb, you can rent a fully functional apartment or a house, not a badly functioning/uninspiring room with no amenities, no places to chill, all the furniture is weird and everything looks fake. Then you need remind telling people to not to clean your room everyday at 8am, and hear people slamming doors from 6am to 10am. When I travel I like to have a little downtime at the house, shop local groceries and cook some meals at the house.
The second reason is that you find amazing and variety places in the world. Some of my favorite ones has been a modern loft on a hillside in overlooking the lake Atitlan and surrounding volcanoes in Guatemala, A-frame cottage in the forest of Mendocino Coast, and a penthouse loft with 360deg view, filled with vinyl records in Berlin.
I never stayed in a hotel that I found have enjoyed that much, or been that impressed by it. They are all the same and so bland, even the most high end or expensive ones.
(Disclaimer, I currently work at Airbnb.)
My main reason is that with Airbnb, you can rent a fully functional apartment or a house, not a badly functioning/uninspiring room with no amenities, no places to chill, all the furniture is weird and everything looks fake. Then you need remind telling people to not to clean your room everyday at 8am, and hear people slamming doors from 6am to 10am. When I travel I like to have a little downtime at the house, shop local groceries and cook some meals at the house.
The second reason is that you find amazing and variety places in the world. Some of my favorite ones has been a modern loft on a hillside in overlooking the lake Atitlan and surrounding volcanoes in Guatemala, A-frame cottage in the forest of Mendocino Coast, and a penthouse loft with 360deg view, filled with vinyl records in Berlin.
I never stayed in a hotel that I found have enjoyed that much, or been that impressed by it. They are all the same and so bland, even the most high end or expensive ones.
(Disclaimer, I currently work at Airbnb.)
I reckon that it mostly comes down to how you travel. If you're a "slow traveler", you probably like to explore a city extensively over several days. In which case, a home-like atmosphere would be nice to have.
I visited Tel Megiddo and Tel Hazor by asking my airbnb hosts to drive me there. One of them did for free, the other for a pittance. Given that I do not drive and these places are not really accessible without a car, this was quite a win. Also, there are no hotels nearby.
The place argument repeats elsewhere. I have been visiting friends in Europe who didn't have guest rooms and I was able to able find airbnbs nearby while there were no hotels. I was able to get an airbnb close to a train station in Milan where no hotels exist (admittedly this is a cost issue -- obviously I could've went elsewhere in Milan to get a hotel for significantly more).
Quality/place. I went to Bratislava for a concert and the only hotels in walking distance had terrible, terrible reviews, I know what a socialist hotel can be, I had the bad luck to be born in Hungary and could only fix the problem when I was 31 (now I am Canadian, yay). I was able to get a nice airbnb within spitting distance of the venue.
There's the kitchen problem. I love going out for dinner and often there is food I could bring to my temporary home -- only if it had a microwave. People with various food sensitivities find it easier to cook.
It happened more than once that a hotel maid found it acceptable to put my teddy bear on top of the freshly made bed. I heard some find this cute. But for me, a stranger touched the teddy bear I am sleeping with for thirty years. No.
Don't dismiss price so easily. Three times, five times savings happens all the time when I go to the head office in Bellevue. Or I could stay in a motel but I am too old for that crap.
There might be more but these come to mind easily.
Ps. Wifi! How could I forget that.
The place argument repeats elsewhere. I have been visiting friends in Europe who didn't have guest rooms and I was able to able find airbnbs nearby while there were no hotels. I was able to get an airbnb close to a train station in Milan where no hotels exist (admittedly this is a cost issue -- obviously I could've went elsewhere in Milan to get a hotel for significantly more).
Quality/place. I went to Bratislava for a concert and the only hotels in walking distance had terrible, terrible reviews, I know what a socialist hotel can be, I had the bad luck to be born in Hungary and could only fix the problem when I was 31 (now I am Canadian, yay). I was able to get a nice airbnb within spitting distance of the venue.
There's the kitchen problem. I love going out for dinner and often there is food I could bring to my temporary home -- only if it had a microwave. People with various food sensitivities find it easier to cook.
It happened more than once that a hotel maid found it acceptable to put my teddy bear on top of the freshly made bed. I heard some find this cute. But for me, a stranger touched the teddy bear I am sleeping with for thirty years. No.
Don't dismiss price so easily. Three times, five times savings happens all the time when I go to the head office in Bellevue. Or I could stay in a motel but I am too old for that crap.
There might be more but these come to mind easily.
Ps. Wifi! How could I forget that.
I like having the place to myself. Entirely. No staff coming in, all facilities I need right there. Washing machine, cooking facilities, all that. I value the increased privacy and the convenience of being able to do laundry and cooking myself as I wish.
I used to find short-stay serviced apartments for this; the kind of place where the service is once a week or so I could put up with. Now, there's AirBnB as well.
I used to find short-stay serviced apartments for this; the kind of place where the service is once a week or so I could put up with. Now, there's AirBnB as well.
I’m currently staying at an Airbnb in London. For breakfast, I walked to the nearby neighborhood market and bought veggies and eggs, then came “home” and made breakfast. After that, I took the trash out, threw on some clean clothes from the dryer I had loaded the night before, stepped outside and now I’m walking through Hyde Park on my way to a coffee shop, where I plan to spend most of my afternoon. Later this evening I’ll be hosting a few friends at “home” where we will drink whisky and play card games in the living room and catch up on life.
Most hotels, in stark contrast, provide a very sterile environment that is completely isolated from the city’s culture and lifestyle.
Most hotels, in stark contrast, provide a very sterile environment that is completely isolated from the city’s culture and lifestyle.
My opinion of Airbnb has dropped dramatically, but I have used them in the past due to cost and added amenities over a hotel room.
With small children, staying in a hotel room for any length of time is really difficult. Setting up a potable crib, washing bottles, feeding simple meals, etc are a pain in a small, often dingy, hotel room. Having a separate sleeping space for children, so you don't have to go to bed at 7:30 also makes travel much more enjoyable. A decent hotel with a true suite and kitchenette is generally very expensive.
I've also used Airbnb to book apartments for family visiting me in the city. Again, for an extended stay I'd rather they have the space and amenities that would cost a fortune to match at a hotel in the city.
With small children, staying in a hotel room for any length of time is really difficult. Setting up a potable crib, washing bottles, feeding simple meals, etc are a pain in a small, often dingy, hotel room. Having a separate sleeping space for children, so you don't have to go to bed at 7:30 also makes travel much more enjoyable. A decent hotel with a true suite and kitchenette is generally very expensive.
I've also used Airbnb to book apartments for family visiting me in the city. Again, for an extended stay I'd rather they have the space and amenities that would cost a fortune to match at a hotel in the city.
With 3 kids, having a kitchen to use. That's about 90% of my reasoning for preferring AirBNB.
The other 10% is two bathrooms and cost.
The other 10% is two bathrooms and cost.
I spend a good bit of time in Bangkok and AirBnb is excellent - there's an (over)abundance of luxury condos available for $25 per night.
> what is the primary motivation
After a while, all hotels kind of blend into each other. With AirBnB it feels more like assimilating than visiting - you're living where the locals live. Plus each place you stay at comes with its own personality.
Plus while hotels are often confined to a particular part of town, I can get an AirBnb is some obscure part of the city to use as a launchpad for exploring.
> what is the primary motivation
After a while, all hotels kind of blend into each other. With AirBnB it feels more like assimilating than visiting - you're living where the locals live. Plus each place you stay at comes with its own personality.
Plus while hotels are often confined to a particular part of town, I can get an AirBnb is some obscure part of the city to use as a launchpad for exploring.
The same reason you don't visit a city and eat only at McDonalds: you want the local experience.
Last week I stayed at an airbnb in Copenhagen shared with the owner which gave me tips about restaurants and nice places to visit. You don't get that at hotels, only flyers advertising whoever payed the hotel.
Last week I stayed at an airbnb in Copenhagen shared with the owner which gave me tips about restaurants and nice places to visit. You don't get that at hotels, only flyers advertising whoever payed the hotel.
The primary value in hotels is the pampering, the primary value in airbnb is the superior amount of physical space you get
Why can't the US just start serviced apartments like they do in Australia and Asia?
Apartment type buildings w/ laundry + kitchens stuck in a hotel like building w/ front desk to check you in.
That's gotta be a way better use of city resources.
Apartment type buildings w/ laundry + kitchens stuck in a hotel like building w/ front desk to check you in.
That's gotta be a way better use of city resources.
The US already has hotels that specialise in apartment-type experiences. A couple I've stayed in for >1 week stays: Residence Inn in Seattle, and Staybridge Suites in Sunnyvale.
The main difference between them and pure serviced apartments is that they have a breakfast room, and rates usually include breakfast.
The main difference between them and pure serviced apartments is that they have a breakfast room, and rates usually include breakfast.
They also usually have daily maid service. I often favor this category of hotel, especially in cities, because I prefer a refrigerator, sofa, and some more space over more typical hotel amenities that I often don't use (bar, full-service restaurant, etc.) Serviced apartments in Europe are often a better deal than conventional hotels too. I suspect I don't value conventional hotel amenities as much as the average person does. On the other hand, especially for business travel, I do value having a staffed front desk and reliable check-in, bag storage, etc.
There are some hotels in my area that have apartments on the upper level that get service from the hotel.
This is what other people are doing already but on a larger scale with VC backing.
[deleted]
The logical stable point is that all city centers will be in effect hotels or homes of the very rich who can afford to bid against the expected return of those units.
Interesting... I suppose their game plan is to get bought by Airbnb for providing them with a convenient add-on service that could boost their revenue.
I am not sure if they will ever be acquired by AirBnb, the main difference is that they either own the apartments but most likely They have signed long term leases on the apartments, this is a completely different model than Airbnb.
They're much more closer to WeWork' Business model. This is typically a vertical where WeWork could make acquisitions.
The space is quite competitive, and a company like https://www.staylyric.com/ is doing pretty much the same thing.
They're much more closer to WeWork' Business model. This is typically a vertical where WeWork could make acquisitions.
The space is quite competitive, and a company like https://www.staylyric.com/ is doing pretty much the same thing.
or by Marriott or Hilton to compete with Airbnb.
How does Sonder qualify the spaces they purchase? If they aren't careful, aren't they really just one big target for lawsuits?
In India there's a massive unicorn by the name of Oyo rooms which has been doing the same
As you can imagine, Sonder is hiring like crazy as we are positioned to grow at blitz scale.
Check out our open positions here and feel free to DM me if you have any questions:
https://jobs.lever.co/sonder?lever-via=KHoOVtOKv0
Check out our open positions here and feel free to DM me if you have any questions:
https://jobs.lever.co/sonder?lever-via=KHoOVtOKv0
We've not built enough of all kinds of buildings for 20 or 30 years. We're seeing it hit housing affordability now, and Airbnb is a reaction on the commercial side. It's the fault of junk city councils and HOAs that oppose all development no matter what.