Short-term hospitality provider Sonder called out corporate travel as a "huge opportunity" in its first-quarter earnings call on Wednesday. The company has made recent investments in the space, including deals with the three major global distribution system players as well as a number of travel management companies and consortia.
Executives called out sales and marketing associated with its corporate travel push among a list of significant factors in the company's expense line, which spiked 72 percent compared to the same period last year. Other factors included one-time and ongoing costs associated with going public officially in January, investments in research and development and expansion of the accommodation provider's global headcount to 1,600 to support its growing global portfolio.
The investment in the business travel segment paid off in Q1, with the company more than doubling its corporate travel accounts from over 100 at the end of Q4 2021 to nearly 250 at the end of Q1 2022, according to Sonder co-founder and CEO Francis Davidson.
"We're seeing strong corporate transient growth … particularly with small and medium enterprise companies whose corporate travel has rebounded meaningfully," he said, adding that group bookings also were growing especially for entertainment and sports verticals along with Sonder's corporate housing offering, which supports corporate relocation clients and summer corporate internship programs. "We're still in the very early innings of our corporate travel offering but have confidence that this is a huge opportunity, and we'll continue to gain traction in the coming quarters."
Q1 Highlights
Sonder ended the quarter with more than 7,700 live units in 10 global markets, representing 54 percent growth over the first quarter of 2021. Total live and contracted units in its pipeline grew 48 percent to 19,300.
The company engaged in new pricing strategies in the first quarter designed to drive occupancy. Despite the impact of the Covid-19 omicron variant, which triggered travel hesitancy in January, these efforts resulted in 72 percent occupancy rates for the quarter, up 700 basis points from the same period last year. Average daily rate grew 39 percent to $160 and revenue per available room grew 52 percent to $117.
Sonder continued to invest in technology-driven solutions for operational efficiencies that simultaneously drive margin to the bottom line and value to the customer. Davidson discussed a new "taxonomy in our core operations application" that enhances fulfillment of guest requests and reduces median task completion times. The company also introduced "smart cleaning shuffling" to optimize housekeeping and fulfill early check-in and late check-out requests, while turning units quickly for new guests. Davidson said the new flexibility would drive incremental revenue per available room. The company also continued to roll out mobile keys for iOS phones.
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