A Unicorn Illuminated: What The Short Term Rental Industry Can Learn From Sonder’s Series D Pitch Deck

From software to platforms to property managers, investors have flooded the short-term rental category, seeking to participate in travelers’ embrace of a hotel alternative. Urban property managers have been especially popular, and here, Sonder stands out for its scale. Just a few weeks ago, Sonder announced its $210M Series D, bringing its total capital raised to nearly $400M and pushing its valuation over $1 billion.

Alongside the fundraising announcement, Sonder published their investor deck, providing a window into their business. The deck also describes an incredibly well-run business. Sonder has been an execution machine. But the document also makes a bull case for other short-term rental PMs. Much of Sonder’s success is attributable to the underlying characteristics of short-term rental category, not a unique approach Sonder developed. The deck also provides PMs with a road map for new initiatives to grow their businesses Many of the tools that drive Sonder’s operations are commercially available to any PM. By analyzing Sonder’s business drivers, other short-term rental PMs can replicate their growth and performance.

Emulating Sonder’s revenue management approach drives revenue per unit.

In just one year, Sonder increased their contribution margin per unit from $6,284 to $9,206 (+46%!).  

While the deck is vague on specific components of revenue growth, revenue management has played a central role. When demand is high, Sonder increases rates, adds minimum stay requirements, and limits distribution through expensive channels. On low demand nights, Sonder shifts to focus on occupancy and drives market share through aggressive price and promotionals. Success in this discipline requires accurate market data to anticipate market conditions and the know-how to adjust to the market. 

For other PMs, revenue management presents a compelling opportunity; Transparent’s 2018 study of European PMs found half of all operators change prices no more than once a month. Yet resources are readily available to help other PMs match Sonder’s approach; market data is available through tools like Transparent’s BI dashboard, applications like Beyond Pricing automate price setting, and revenue management courses teach the discipline.

Addressing inconsistency through better processes and tools solves a primary guest concern. 

Sonder states that its brand rests on two claims – creating an experience that travelers love and delivering that experience consistently.  

The first claim – creating an experience that travelers love – is rooted in the characteristics of the short-term rental category. According to PhoCusWright’s 2017 Study, travelers prioritize value and location as their primary decision factors when selecting an accommodation. As a category, short-term rentals have consistently lower prices and far more location options than hotels, so every short-term rental PM starts with this compelling proposition.  

The second claim – consistent execution – remains a challenge across the category. Travelers still wonder whether they will receive a high quality experience on any given short-term rental stay. A recent consumer study found that “unpredictability” is the most common traveler concern with short-term rentals.  

Sonder’s deck shows a path forward, demonstrating how operational focus and better technology can create consistency. Sonder focused on turnover QA, dispatch management and keyless entry solutions as key areas of investment. These programs reduced guest issues by 50%. While Sonder developed these solutions in-house, commercially available software and solutions enable any PM to replicate Sonder’s approach. For example, Properly’s remote QA service and dispatch management tools are akin to Sonder’s tools, and keyless entry solutions like PointCentral create a consistent arrival experience.  

Increasing cost advantage over hotels through more efficient tools reinforces the value over hotels

Many “consistency” processes and tools have the additional benefit of driving down operating costs, which reinforces short-term rentals cost advantage over hotels. Unlike hotels, short-term rentals do not require a staffed front desk or local hotel operator, daily maid service, or an underutilized kitchen for room service. And short-term rentals’ cost advantage over hotels is only increasing. Unite Here, the aggressive, well-organized hotel union, launched an industry strike six months ago. These strikes won a number of concessions: wage increases, pension commitments, and reduced workload expectations. These concessions make hotel operations less flexible and more expensive.

Sonder’s deck shows the impact of these technologies on operating costs. Process automation and keyless entry hardware manage check-in, guest requests, and operations. Guests interact through messages not calls, and agents can operate more efficiently out of a centralized location. These differences result in an operating model that 75% less expensive than a hotel.

For other short-term rental PMs, commercial alternatives to Sonder’s tools allow for process innovation. Dedicated hardware NoiseAware automates responses to noise management issues. And procurement marketplaces like Envizzo leverage the category’s collective scale to reduce furniture, fixtures, and equipment expenses. Investing in these technologies help PMs to reduce costs, keep prices low, and strengthen the value equation against hotels. 

Covering ever more locations allows PMs to better serve consumer needs  

PhoCusWright’s 2017 Study demonstrated the importance that travelers place on location when selecting an accommodation. And the dispersed nature of short-term rentals means that travelers can stay where they prefer.

Take Sonder’s presence in Philadelphia. While Marriott offers accommodation at four locations clustered in Center City, Sonder units span 92 locations across diverse neighborhoods. Is it any wonder than Marriott has decided to enter the category themselves?

For PMs, the key insight from Sonder’s deck is to find underserved locations. Thanks to a more flexible operating model, PMs can manage inventory in any part of a city, and commercially available tools such as Transparent’s market scoring dashboard can uncover underdeveloped locations. 


Investors clearly see potential in the short-term rental category, as demonstrated by the valuation and multiple they place on Sonder’s business. They believe Sonder is building a durable, long-term franchise. The exciting news for other short-term rental PMs is that much of Sonder’s playbook can be replicated, and in a category with such growth potential, there is room for many winners.