Sonder moving forward with hotel expansion plans in South Florida

While many in the South Florida hospitality industry are reeling from pandemic-related losses, one company is so encouraged by occupancy rates that it is expanding its portfolio.

San Francisco-based Sonder will begin managing operations at the 50-room Abbey Hotel starting this fall, said Samuel Artmann, the company’s South Florida market leader and general manager. The South Beach hotel at 300 21st St. will be the second South Florida addition this year for the $1.3 billion venture-backed company. The company operates eight other lodgings in Miami and Fort Lauderdale.

Unlike some contracts where hotel managers are paid a percentage fee, Sonder leases hotels from owners and earns profit from room rentals beyond the lease amount. The fee on the Abbey was set last December, before the COVID-19 outbreak.

But Sonder wasn’t deterred. “We are confident that we can go forward because we are confident that we can make the leases and still make this worth it for us,” Artmann said.

Further expansion is likely; Artmann is talking with other hotel operators on Miami Beach. The company raised $170 million in capital during the pandemic to support future expansions.

“We are going to some of the owner-operated hotels that shut down in Miami Beach and talking to the owners who don’t want to reopen again,” Artmann said.

Sonder has been managing 26 apartment units at 17 West at 1698 Alton Rd. since early February. Due to the pandemic, the company closed all of its South Florida locations in March but reopened in June. Since then, occupancy has risen steady, Artmann said; the Alton Road property is now at 85%.

Locals and foreigners are fueling demand. Artmann said. Locals have booked rooms for staycations and for post-surgery recoveries after operations at nearby Mount Sinai Medical Center. Some displaced travelers unable to return home have booked stays, including Argentines.

All stays have one thing in common — guests are staying longer. Most stays last a week instead of the four-day average pre-COVID.

With the rising occupancy rates, Sonder is hiring back furloughed employees and expanding its team, Artmann said.

Artmann credits longer stays and bookings to Sonder’s COVID-savvy set up, including amenity lockers where guests can find toiletries and contact-free check ins.

“This model allowed us to save on staff prior to the pandemic and pass on those savings to guests,” Artmann said. “Now with the pandemic, this plays into our hands.”

For now, a planned 72-hotel suite in Wynwood is on hold, Artmann said. Miami-based BH Investment Group and New York-based Hogg Holdings had planned to start construction prior to the pandemic on One Eleven Wynwood Hotel by Sonder, with completion in 2021. An updated timeline is due in late July.