Guests were given just hours to pack as part of the abrupt demise of the hotel chain Sonder Holdings Inc. this past week, leaving thousands stranded at the Marriott-backed short-term rental provider.

That’s the type of notice you might get when a hurricane is inbound, but in this case the storm was financial and appears to have been brewing for some time.

It hit full force when the world’s largest hotel chain pulled its licence agreement with Sonder, now based in San Francisco but once a hot Montreal start-up, sending the company toward

bankruptcy proceedings

.

Marriott hasn’t said much beyond noting Sonder was in default. What’s clearer is that the 2024 licensing deal, which let Sonder customers book through Marriott and collect Bonvoy points, had essentially been a financial life raft.

It kept the company afloat after a rapid expansion that saw Sonder grow to 9,000 rooms in 40 cities. Sonder went public through a SPAC transaction in 2022, when it was able to sign leases with better terms because the pandemic had hit the hotel sector hard.

The company grew fast and while some of its peers did not survive, Sonder was forced to renegotiate leases as cash flow could not keep up with expansion. The Marriott deal was seen as injection of cash with new revenue helping to cover their leases.

Monique Rosszell, senior managing partner of the travel consultancy firm HVS Global Hospitality Services said the Sonder model was based on leasing units long-term, which they arbitraged against higher

short-term rental rates

.

The upside went to Sonder, but the downside became its problem. The Blue Jays are not in World Series every night and Taylor Swift is not always playing, leaving you with a lot of Sundays to fill at lower rates.

If this sounds familiar, it’s because WeWork tried something similar with office space and met a similar outcome.

“My understanding is the issue here was cash flow; they just grew too fast,” Rosszell told me.

The problem is that whatever balance-sheet tragedy befell the company, it is of little consolation to the tourist wandering around downtown Toronto — where Sonder had three locations — who suddenly finds themselves homeless.

Marriott offered “support,” but only if the booking was made through its own channels. Third-party reservations? Good luck.

Here’s where I admit my bias: I’m a fan of hotels. I prefer not to use third-party travel sites. I appreciate knowing that if something goes wrong at 1 a.m., there’s an actual person at the front desk whose sole job is to resolve my issue.

One of my sons found this out the hard way. On a recent vacation, he video-called from Philadelphia, showing me his Sonder unit, which was spectacular. There were sparkling washer and dryer machines and a brand-new kitchen. It was all well-designed.

What he found less than satisfactory was being locked out of the unit after midnight, unable to contact anyone to let him in, except for the operator, who assured him that his code to enter worked, even when it didn’t. Thankfully, some drunken fellow Sonder guests eventually let him in, as there was no concierge or front desk in sight.

I went back to hotels a few years ago after a trip to Amsterdam, where I rented what was advertised as a private room with a private bathroom, except the bathroom was shared with a yoga studio.

“Only a few hours a day,” I was assured. Try telling that to the parade of confused, un-Zen yogis knocking on my door after the studio was forced to shut down for a week, courtesy of my complaint.

Sonder succeeded in carving out a niche as an alternative between hotels and

Airbnb Inc.

“It was just perfect. It had executive suites furnished, stylish, and in good locations, available on a longer basis. It was a home away from home,” as Rosszell put it.

Younger travellers appreciated the stylish finishes and washer-dryer combos, luxuries often lacking in traditional hotels. That niche now looks less like a market opportunity and more like a risk category.

Travel agents were left picking up the pieces last week. Chris Lynes, managing director for Flight Centre Travel Group Canada, said he’d never seen anything like Sonder’s six-hour eviction notices.

Eight of his clients were staying in Sonder units at the time; an additional 100 had future reservations. Rebooking wasn’t impossible, just expensive and inconvenient.

“Try to find a hotel that has the same room and confirm a Sonder-style accommodation for two weeks? That’s not easy,” Lynes told me. “They could be moving a couple of times.”

It’s a stark reminder that the flexible world of alternative accommodations comes with significantly less stability than the hotel industry it aims to disrupt.

Martin Firestone, president of Travel Secure Insurance Inc., said consumers can protect themselves with products such as travel disruption and trip cancellation insurance, which are often packaged together.

Firestone said that lying on an application will immediately void a policy, and warned insurance companies will conduct their own research.

For trip cancellation, if you get sick, your policy will pay out; however, it will not pay out if you have a pre-existing condition that you didn’t disclose. If you have to cancel because someone died, that person better not have been in palliative care.

His rule of thumb: “If you call me to buy, you should have no expectation of using it” because that pretty much means you had some issue that will make the policy void.

Trip interruption comes with caveats as well. It can’t cover issues like the U.S. government shutdown affecting your plane ticket, not unless you booked way in advance.

Firestone said that all the insurance companies had cancelled coverage for trip interruption as of Sept. 30, the day before the shutdown. Book your trip and insurance now, before any potential Jan. 30 shutdown.

“But if you can’t get to that cruise ship because you missed your flight (and you bought the insurance in advance), you should be covered,” he said. “If your hotel is covered by volcanic ash, you are covered.”

Policies are for the truly unexpected, not for situations that have become “known causes,” he said.

With global instability on the rise, these products are becoming increasingly popular, especially for big, once-in-a-lifetime trips where the risk of losing $25,000 outweighs a $2,500 premium.

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Lynes offers a simple recommendation: stick with reputable agencies and reputable platforms. But even he admits that advice has its limits. “I would have said reputable chains, but I would call Marriott that, and it happened with them.”

He’s not wrong. If Marriott-backed Sonder can fall apart overnight, anything can.

Still, I’ll put my money on Marriott and maybe an insurance policy before I’d trust a door code and a customer-service number to get me back inside at midnight.

Perhaps that’s the lesson of the Sonder saga. Travel is complicated, and a little redundancy isn’t paranoia: it’s good planning.

• Email: gmarr@postmedia.com