With the continued professionalization of vacation rentals and hotels increasingly entering the home space, the rules of hospitality are changing as brands navigate further away from traditional segment traits. One company at the forefront of this industry evolution is the hotel-style accommodation brand, Sonder, which is taking a tech-focused approach to creating a new type of stay. We spoke to Shruti Challa, VP of Revenue at Sonder, to discover how the brand’s model is bridging the gap between accommodation types – alleviating process inefficiencies and saving operational costs along the way.
Click.: How would you describe the Sonder model to someone who hasn’t heard of the brand before?
Challa: Sonder is reimagining hospitality by leveraging technology to create a magical stay experience while improving operational efficiency. In the past, we’ve positioned Sonder as the best parts of home and hotel, taking the consistency, safety, and service standard of a hotel, and combining it with the price point, local feel, and space of a vacation rental. But we’ve really graduated away from that and are instead trying to create an entirely new hospitality experience. In the industry, there’s this delineation between vacation rentals and hotels that we don’t really believe in. We want to disassociate our stays from being either a vacation rental experience or a hotel experience and just focus on creating the best stay possible.
Click.: What does this next-generation stay experience look like?
Challa: Getting the fundamentals right is table-stakes – space, design, reliability, amenities, and service all play into this. Beyond that, it’s utilizing technology to enable us to operate differently than a traditional hotel. For us, that means putting power back into the hands of the guest and building an experience that is truly personalized to them.
Taking customer service as an example, there’s this perspective that there needs to be someone physically on the property to feel like guests are being taken care of. Just having someone on staff doesn’t actually solve a reliable guest experience. We believe that you can make someone feel taken care of with technology. Rather than a guest waiting in line to get their key from a front desk, we implemented easy access key codes. If the guest needs an issue addressed, we manage that via a 24/7 mobile concierge who they can easily text message and receive a response from within 30 seconds.
Click.: How does Sonder currently utilize technology to maximize operational efficiencies while cutting costs?
Challa: We have applied technology to many of the external and internal functions of a hotel from housekeeping management to property selection. This allows us to keep a lean operation, so we can then pass those savings onto the customer. With this approach, we’ve cut operational costs by 70% compared to a standard hotel, and that’s why we’re also 20% less expensive than a traditional 4-star property.
In my world, it is fairly unusual that a hotel would build their entire revenue management and distribution tech stack from scratch – for example, typical hotels require several revenue managers on site. We have built our own revenue management platform with bespoke metrics and models that allow us to run the whole operation centrally and for a fraction of the cost.
On the guest experience side of things, we solve many of the pain points through technology. For example, instead of calling the front desk to request a late check-out, you can just do this via the mobile app.
Because of these types of innovations, we are able to grow quickly. Investing the savings into expansion, savings to the customer, and one day a truly unique guest experience.
Click.: Sonder is aiming to be the largest hospitality brand in the world by 2025. How will it get there?
Challa: First and foremost, we need to build a killer guest experience. One of our core goals for next year is not only to maintain a high net promoter score—currently above 70, which is very high compared to industry standards—but also a high review score on places like Booking.com. Until now, we have focused more on how to maintain hotel standards with technology rather than reinventing the experience. We are only at the tip of the iceberg with what we can develop.
The second thing is ensuring we continue to build supply and grow as rapidly as we did last year. In order to be the biggest hospitality brand, you actually need to have a global footprint. We have to, of course, do this in a responsible way.
So, I would say building a beautiful guest experience and being prolific in inventory are our two biggest levers to becoming the next-generation hotel experience.
- Aiming to be the largest hospitality brand in the world by 2025, Sonder is bridging the gap between hotels and vacation rentals
- The brand is taking a tech-focused approach to creating a new type of stay, utilizing technology to enable it to operate differently than a traditional hotel while building on the vacation rental experience
- Applying technology to many of the external and internal functions of a hotel - from housekeeping management to property selection - has allowed Sonder to cut operational costs by 70% compared to a standard hotel
- This approach has enabled the brand to grow quickly by investing the savings into expansion