Sonder Earnings: Progress on Long-Term Corporate Travel Bet

25.08.2023 - 14:40 / skift.com / Dennis Schaal / Francis Davidson / Long

Property manager Sonder is positioning itself long-term to take advantage of higher-spending business travelers, and added 200 corporate travel accounts — and a former CWT CEO to its board — during the third quarter.

The company finished the September quarter with 600 business travel accounts, up from 400 at the end of the second quarter, and appointed Michelle Frymire, who served as the boss of travel management company CWT for 13 months through May 2022, to the Sonder board of directors to provide advice on the corporate travel push.

Business travel won’t be a significant part of Sonder’s mix anytime soon as its foray into the sector comes in a muted post-pandemic corporate travel environment, and the company really only began a focus on the sector a little more than a year ago.

Meanwhile, some corporations are newly trimming travel spend because of macroeconomic conditions.

But Sonder hopes in the long-term to reap incremental revenue per available room by adding business travelers to its customer mix. Sonder’s revenue per available room in the third quarter was $158, up 25 percent year over year.

“So the baseline is really low,” Francis Davidson, Sonder co-founder and CEO, told financial analysts during the company’s third quarter earnings call Wednesday, referring to its business travel initiative. “And so to us, as we’re adding these kind of corporate accounts, hopefully, a much more rapid speed than there would be any contraction of overall demand, that could be kind of a net gain for us. So this is how we see the opportunity is that there’s enormous white space for our business to generate corporate travel.”

Sonder lowered its full-year 2022 revenue guidance to more than $455 million, which would be more than a 95 percent increase over 2021. In February, Sonder’s forecast for the year was for revenue growth of 100-110 percent.

Sonder President and Chief Financial Officer Sanjay Banker said the lowered guidance was mostly tied to unfavorable foreign exchange conditions.

“And so bookable nights will be up sequentially for Q4, of course, but not as much as we had been expecting recently,” Banker said. “So when put all that together, without giving explicit guidance around sort of the decomposition, that’s what’s informing our revenue guide. It’s not, to be clear, a macro issue, but really about FX (foreign exchange) and new unit timing.”

Banker is transitioning out of his executive role, and will stay on through the end of the year while a search for a new chief financial officer is under way. He will join the Sonder board.

Sonder’s revenue grew 85 percent year over year to $125 million in the third quarter. The company is doing numerous things, such as reducing its planned pace of new property