Airbnb rival Sonder files for bankruptcy, giving guests minutes or hours to vacate. What to do it this happens to you

An abrupt announcement that Airbnb rival Sonder is filing for bankruptcy had a startling effect on the company’s short-term rental guests in November.

Some guests were given just 15 minutes to vacate their rooms, with most others given just a day’s notice, CNN reported (1).

Must Read

• Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how

• Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and 3 simple steps to fix it ASAP

• Warren Buffett used 8 solid, repeatable money rules to turn $9,800 into a $150B fortune. Start using them today to get rich (and stay rich)

The move sparked a furor on social media, with many affected travelers posting about their experiences and saying that Marriott, the company’s licensing partner, backtracked on its promise to provide full refunds directly from the company.

For example, Damien Jay, a clinical transplant coordinator, posted on Threads about his experience:

“Today I got an email telling me to vacate my paid room by 9AM Monday because your licensing agreement ended — with NO relocation, NO compensation, NO support.

Your message literally says access to my room may be “restricted” if I don’t leave. I booked in good faith, paid in full, and I’m mid-assignment handling life-and-death organ recovery cases. This disruption isn’t just inconvenient — it’s dangerous” (2).

On Nov. 10, Sonder interim CEO Janice Sears announced the “difficult decision” to halt their operations immediately. She said technical integration problems with Marriott’s Bonvoy website caused “significant, unanticipated integration costs, as well as a sharp decline in revenue,” leading the company to lose operating runway.

“We are devastated to reach a point where a liquidation is the only viable path forward,” Sears said (3).

Many travelers may wonder if they have any legal recourse in this situation. Below, we break down the options, and what you can do to protect yourself from a similar issue on your next vacation.

Mixed messages from Marriott

As of Sunday, Nov. 9, Marriott abruptly ended its licensing agreement with Sonder Holdings, leading the company to file for Chapter 7 bankruptcy the next day.

In spite of the company’s original statement that Marriott would refund affected travelers promptly, the company appears to be backing out of its promise to help, affected travelers told Business Insider (3).

On Nov. 9, Marriott communicated to customers who had booked a Sonder property through their channels that they would get a full refund. Just two days later, the hotel operator instructed those guests to instead contact their credit card companies to submit a refund request — the same instruction still on its FAQ page (4).

Speaking to Business Insider, Craig Murphy, a 59-year-old health insurance broker, said, "This appears to be yet another example of Marriott avoiding direct responsibility for the mishap."

Consumer protection laws for travelers

Fabio Fernandes, head of communications at consumer watchdog Consumer Choice Center, told Business Insider how guests can proceed in hopes of getting refunds. He said all affected Sonder customers should follow the company’s suggestion and immediately file a request (known as a chargeback) with their credit card companies, instead of waiting for compensation during the bankruptcy process, which could take years.

"If a stay was canceled or never delivered, the fastest, most reliable path is a credit-card dispute for 'services not provided.' Do it now, keep your paperwork, and escalate if your bank drags its feet," Fernandes said (5).

When you file a chargeback, your bank is required to respond within 30 days and resolve the issue no later than 90 days after the filing (6).

There are also consumer protections for travelers. Hotels have a duty of care to their guests, and must ensure their facilities are properly habitable.

Read More: No time to lower your crippling car insurance rate? Here’s how to do it within minutes — you could end up paying $29/month without a single phone call

In the case of a last-minute cancellation on the part of the hotel operator, it’s industry standard to offer some kind of compensation, like refunds or vouchers for future stays. In extenuating circumstances that are not in the control of the hotel, like severe weather, they may still offer some compensation, but they are under less liability to do so (7).

For customers impacted by Sonder’s abrupt bankruptcy filing, they may need to escalate complaints to the Consumer Financial Protection Bureau or a financial ombudsman if their credit card companies are unable to process the chargeback.

How to avoid headaches with your hotel company

Business Insider reports that some Sonder customers have been successful in securing refunds through customer service channels.

Here are a few tips for travelers who want to avoid the same kind of headaches that Sonder’s customers went through:

• Always pay for your reservation by credit card, to ensure you can dispute the charge later if needed,

• Know who the merchant of record is before you book, and opt to pay when you check in rather than prepay if possible. It may be easier to resolve problems if you book through the provider directly, rather than any third-party service.

• Review your travelers insurance for "supplier failure" coverage — this could come in clutch if something goes wrong (8).

You May Also Like

• Even in a choppy market, young millionaires are betting big on these asset classes — and older Americans should take note

• Robert Kiyosaki says this 1 asset will surge 400% in a year — and he begs investors not to miss its ‘explosion’

• I’m almost 50 years old and have nothing saved for retirement. What do I do? Don’t panic. Here are 6 easy ways to catch up (and fast)

• Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich — and ‘anyone’ can do it

Article Sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

CNN (1); Threads user _damienj (2); CNBC (3); Marriott (4); Business Insider (5); FTC (6); Erika (7); Business Insider (8)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.