The warning signs were there.

Long before guests found themselves abruptly kicked out of their "Sonder by Marriott" stays this month, Sonder, the Airbnb rival, was battling sloppy accounting, a litany of lawsuits, and a stock price so low it was nearly delisted from the Nasdaq.

Bankruptcy filings and SEC records show just how stark the signs were — and raise questions about why Marriott, the world's biggest hotel chain, got into bed with the one-time unicorn.

The San Francisco startup, founded in 2014, leased apartments and hotel rooms in bulk, redesigned them with a minimalist aesthetic, and rented them to travelers. It's the brainchild of Canadian Francis Davidson, who is the ideal of a 2010s founder: VC-backed, college dropout, Forbes 30 Under 30. He offered a "revolutionary" promise: Goodbye, poorly decorated Airbnbs with quirky hosts. Hello, streamlined rentals managed with modern technology.

In August 2024, he unveiled his pièce de résistance: a deal between Sonder and blue-chip Marriott, which was heralded as a way to bring that vision into the future.

"Making this deal happen — along with the multi-party, complex capital raise I orchestrated — was the hardest thing I've ever done," former CEO Davidson wrote in June.

At the time, analysts lauded the deal, noting that it would add 9,000 rooms to Marriott's portfolio — a key figure for the hotel giant's valuation. Sonder said after the deal closed it would reduce costs by as much as $50 million.

Looking back, the Marriott deal was maybe less of a legitimization and more of a Hail Mary. Since going public at a $2 billion valuation in 2021, Sonder had faced layoffs, lawsuits, and a slew of executive departures, including Davidson.

"Marriott, no lie, they saved the company last year with their agreement," Logan Ford, who worked in sales at Sonder before being laid off last week, told Business Insider.

The $76 billion hotel giant didn't come to Sonder's rescue again. In court filings for Sonder's bankruptcy case, Marriott said that after it helped cover about $1.5 million in payroll, Sonder pressed the company for as much as $50 million to pay for shutdown operations. Marriott declined, and shortly afterward, signs appeared on the doors of Sonder properties telling guests to vacate.

Thousands of customers were suddenly left with no place to sleep.

Now, some in the industry are questioning how Marriott missed the warning signs. "I don't know how anyone with any iota of business sense could have thought that this was a good idea," said Alan Reay, president of Atlas Hospitality Group, a California brokerage firm that tracks hotel ownership and financing trends.

"The Marriott partnership is what essentially kept the company afloat for the next year," Ford said — and when it ended, there was nothing left.

A unicorn that survived the pandemic

At the height of COVID-19, Sonder laid off a third of its staff and had been sued for allegedly bailing on leases, a claim that Sonder denied and for which litigation is ongoing.

In 2021, the company, which gained unicorn status two years earlier, announced it was going public via a SPAC at a $2.2 billion valuation. SPACs — or special purpose acquisition companies — offered what many startups saw as a quicker, less scrutinized path to going public than a traditional IPO.

Sonder had survived while competitors like Lyric folded, and was now on its way to becoming an "iconic 21st-century brand," then-CEO Davidson told Business Insider at the time.

"This kind of financial discipline, with a really rapid response to the pandemic, has meant that we've been able to outperform a lot of the competition and be in a relatively strong position," Davidson said.

Its public market debut was lackluster. On its first day of trading, Sonder's stock dipped 8%.

Its downward spiral continued. Shares traded under $1 for much of the following year, leading the Nasdaq to threaten a delisting.

There was another round of layoffs — this time 17% — in 2024, and Sonder was hit with lawsuits accusing it of not paying rent or properly managing its buildings.

One New Orleans hotel that Sonder managed, the 100-year-old Jung Hotel, alleged that the startup had tarnished its reputation. There wasn't enough security, which led the hotel to become a "magnet for violent crime" and a "warzone," the landlord said in the lawsuit. The hotel was also not properly cleaned, with toenails in the bed sheets and blood on the linens, the complaint said.

Sonder disputed the claims, and the lawsuit was settled, as was a 2022 lawsuit Sonder filed against the Jung Hotel's owner at the time.

"SCAM- NOT AN OPERATING HOTEL," one online review read, according to the Jung Hotel's 2023 complaint. "Just another short term rental place poorly taken over by Sonder. You've been warned."

A hotel in San Francisco sued, saying Sonder wasn't paying its rent and owed more than $1.2 million as agreed upon in a lease termination agreement. Sonder denied the claims, and the lawsuit was settled.

The company's accounting also had problems. In 2024, Sonder revealed in an SEC filing that its financial records since its debut as a publicly traded company could not be trusted after being reviewed by an auditor.

The stock fell 38%, and Sonder said in filings that it was asking lenders not to call in loans or otherwise punish the company for the errors.

Despite that, Marriott took a chance. Six months after its announcement of two years of unreliable financial reporting, Sonder announced its deal with Marriott. All of Sonder's properties would now fall under the "Sonder by Marriott Bonvoy" branding.

"When we did the deal back in August 2024, everyone around the table was aligned that plugging into Marriott's distribution should increase revenues for Sonder," Davidson told Business Insider this week. "The fact that in the end there was seemingly a decline comes as a great surprise, I think, for all parties involved."

Sonder declined to comment on the record.

Sonder's rooms allowed Marriott to boost its "net unit growth," or the number of rooms it can rent, a key metric followed closely by investors and Wall Street analysts. The Sonder deal allowed it to add 9,000 units to its portfolio, it said when it announced the deal.

For Sonder, it provided desperately needed cash. Marriott would pay Sonder $15 million in "key money" as part of the deal.

Some in the hotel industry said they were surprised at the deal. Reay of Atlas Hospitality Group said it "absolutely made no sense."

"Whoever did the due diligence, whoever did the underwriting on this, if they're still at Marriott, I'd be surprised," he said, comparing Sonder to a WeWork-style implosion waiting to happen.

Robert Rauch, a hotel consultant and Marriott franchisee, said the company's confidence in its own brand perhaps clouded its judgment. He called Marriott "a great company" that is "vertically integrated better than any company I've seen," but said its deal with Sonder was "a bad risk."

A Marriott spokesperson declined to comment.

Multiple people with familiar with Sonder's said the Marriott deal sustained the company.

"The Marriott agreement a year ago is actually what kept us from bankruptcy," Ford, the sales employee, said.

Even still, Sonder was in a precarious position.

"Management has concluded that there is substantial doubt, which is not alleviated, about the Company's ability to continue as a going concern for at least one year," it wrote in a November 2024 filing. One year after the filing, Sonder was out of business.

Final days of Sonder

By this November, Sonder was drowning in debt, nearly out of cash, and out of options, according to legal filings.

Sonder had been negotiating for emergency financing and a potential buyer to take over its assets in bankruptcy, but the bidder abruptly pulled out on November 2, the filings said.

Three days later, Marriott agreed to provide Sonder with about $1.5 million in funding to cover one week of US payroll, the hotel chain said in filings in Sonder's bankruptcy case, calling it a short-term move to help keep thousands of guests housed.

The "ink was barely dry" when Sonder, on November 6, sent Marriott a $50 million proposal for Marriott to cover the costs of winding down Sonder, according to bankruptcy filings. The hotel giant said it rejected that plan, along with two other revised proposals for $28 million and $14 million.

Marriott accused Sonder of trying to "leverage guest safety as a bargaining chip" in order to get money out of it.

Sonder threatened that "unless Marriott financed its wind-down, it would shut down hotel systems and leave thousands of guests locked out of their rooms mid-stay," Marriott alleged in bankruptcy papers.

On November 7, Marriott terminated its 20-year license agreement after Sonder told Marriott it faced an "imminent free-fall liquidation." Marriott said in court filings that this allowed it to take over guest support and begin rebooking travelers.

The move left guests scrambling, forcing many to leave their stays with little warning.

Marriott said Sonder notified customers that it would no longer honor their reservations and advised them to contact Marriott regardless of whether they had booked stays outside Marriott's platforms. Sonder, which reported having over 1,400 employees at the end of 2024, also laid off all staff the same day without severance.

On November 10, Sonder announced its Chapter 7 bankruptcy plans.

In its press statement, Sonder blamed financial strain, technical problems integrating with Marriott's booking systems, and a sharp drop in bookings from Marriott's Bonvoy program. Marriott, in turn, said the collapse stemmed from Sonder's own mismanagement.

"Sonder collected tens of millions of dollars in advance payments for reservations it now admits it will never honor, spent weeks on a failed restructuring without any contingency plan, and failed to reserve sufficient liquidity to support an orderly wind-down," Marriott said in a bankruptcy filing.

The company, Marriott claimed, used guests' advance payments and deposits to bankroll its own operating expenses.

Amid the fallout, Marriott tried to distance itself from Sonder.

"It's important to understand, and I think it's important for the public to understand, that there was a license agreement, and, quite frankly, nothing more between Marriott and Sonder," an attorney for Marriott told a Delaware bankruptcy judge this week.

Sonder managed and operated its thousands of apartment-style and boutique hotel short-term rental units around the globe — not Marriott, the lawyer emphasized.

For Marriott, the end of the deal was a black eye as news stories and social media were flooded with stories of travellers left without options and being given conflicting advice.

For Sonder, it was the end of the line.

• The NTSB says the UPS plane crash in Louisville was caused by metal fatigue in the engine hardware.
• The crash killed 14 people and led to the grounding of the MD-11 fleet by the FAA.
• Metal fatigue-related plane crashes are rare but have occurred in previous airline incidents.

A federal investigation into the crash of a UPS cargo jet that killed 14 people in Louisville, Kentucky, earlier this month found that the engine of the plane came off its wing because of metal fatigue and hardware stress.

A preliminary accident report published by the National Transportation Safety Board on Thursday showed frame-by-frame images of the General Electric-made engine completely coming off and then smashing into the body of the Honolulu-bound plane as the aircraft took off. It also included photos of the wreckage being studied in the NTSB lab.

The probe "found evidence of fatigue cracks in addition to areas of overstress failure" in a part that attached the McDonnell Douglas MD-11 freighter's left engine to the wing, the report said.

The three crew members on the plane and 11 people on the ground were killed, the report said. Another 23 people on the ground were injured. The plane crash left a trail of destruction in an industrial area near Louisville's Muhammad Ali International Airport, satellite images in the report showed.

The report added that the plane initially climbed to about 30 feet above ground and cleared a fence at the end of a runway before its main landing gear hit the roof of a UPS warehouse at the edge of the airport. The plane then hit a storage yard and two other buildings, including a petroleum recycling facility, and was mostly consumed by fire.

Metal fatigue crashes

The MD-11 involved was a 34-year-old tri-engine widebody jet that was first delivered to Thai Airways in 1991, before being acquired by UPS in 2006. Boeing merged with McDonnell Douglas in 1997.

The Federal Aviation Administration grounded the MD11 fleet, which UPS and FedEx use, in the wake of the crash.

Plane crashes caused by metal fatigue are rare, but similar accidents have occurred before.

Thursday's report referenced a similar but much deadlier crash in 1979. American Airlines flight 191, a McDonnell-Douglas DC-10-10 aircraft, crashed into an open field at the end of a runway at Chicago-O'Hare International Airport.

During takeoff, the left engine on the left wing separated from the airplane and fell onto the runway. The airplane was destroyed in the crash and subsequent fire, and 273 people, including two people on the ground, were killed.

More recently, in 2018, Southwest Airlines Flight 1380 experienced an uncontained engine failure in the left engine after departing from New York's LaGuardia Airport en route to Dallas. The incident killed a window seat passenger.

In 2016, a Southwest flight blew an engine as it flew from New Orleans to Orlando, and shrapnel tore a five-by-16-inch hole just above the wing. The plane landed safely. The NTSB said a fan blade had broken off because of metal fatigue.

In Thursday's report, the NTSB said its investigation of UPS flight 2976 is ongoing.

• Transportation Secretary Sean Duffy says people need to be more civilized while flying.
• That means dressing better and being nicer at the airport over the holiday season, Duffy said.
• Getting to the airport in a "good mood" will make the experience better for fliers and staff alike, he said.

Transportation Secretary Sean Duffy says he wants to improve holiday travel, and people can help by dressing up and being courteous.

Duffy spoke to Fox Business on Wednesday about the importance of good behavior.

"Donald Trump talks about the golden age of transportation, the golden age of America. But the golden age in transportation truly begins with you, the traveler," Duffy said.

"If you just watch social media, you have brawls at the baggage claim, you have passengers berating gate agents," Duffy said. "We have unruly passengers on airplanes. People dress up like they're going to bed when they fly."

Duffy added that some people are "having a hard time" fitting heavy luggage into the overhead bins. Checked bag fees start at $35 for most major US airlines, which motivates some travelers to maximize their carry-on capacity.

"And so we want to push people, as we come into a really busy travel season: Help people out, be in a good mood, dress up, bring civility back to travel," he said.

Airlines' clothing policies vary. Earlier this year, Spirit Airlines updated its rules for travelers' clothing, saying passengers could be barred from boarding if they are "inadequately clothed," including if they are barefoot.

The US is hurtling toward a peak travel season as people rush to get home for Thanksgiving. After the government shutdown, airlines have been cleared to ramp flights up to their pre-shutdown frequency.

Duffy's comments also come at a time when in-flight incidents are reaching a new high.

According to November 19 statistics from the DOT, the FAA has seen a 400% increase in "in-flight outbursts" since 2019, which the department defines as "ranging from disruptive behavior to outright violence."

• Jay Leno says the "toughest part" of his wife's dementia is that she relives her mom's death every day.
• "And it was, not just crying, I mean, you're learning for the first time," Leno said.
• Despite the challenges, Leno says he still finds joy in spending time with his wife each day.

Jay Leno says his wife, Mavis, experiences a heartbreaking moment every day due to her dementia diagnosis.

"I mean, probably the toughest part was, every day she'd wake up and realize someone had called today to tell her her mother had passed away," Leno told Hoda Kotb in a Today interview on Thursday.

"And her mother died every day for, like, three years. And it was, not just crying, I mean, you're learning for the first time. Each time was — and that was really tricky," the former late-night host said.

The couple met in the '70s and married in 1980. In April 2024, Leno was granted conservatorship over his wife's estate following her diagnosis. They have no children together.

Leno says his wife will sometimes "point to something and say something that doesn't quite make sense."

"And I'll go, 'No, it's good, honey. It's all right.' I sense she wants to be reassured that everything's OK," Leno said.

He added that not much else has changed, and he still enjoys her company.

"Before she had this, I would always go home after 'The Tonight Show,' cook dinner for her, and we'd watch TV. The only difference is now you just can't really talk about a lot of things," Leno said.

He acknowledged that she may one day forget about him, but that "hasn't happened yet." Despite the challenges, he continues to find joy in spending time with her each day.

"You know, when I'm carrying her — carry, like, to the bathroom — we do this and I call it Jay and Mavis at the prom, you know, in high school," he said. "So, we're just, like, back and forth, and she thinks that's funny."

Leno said his wife still expresses her love for him.

"And when she looks at me and smiles, and says she loves me, I mean, I melt," he said.

During an April appearance on the "In Depth with Graham Bensinger" podcast, Leno talked about the challenges of caregiving.

"When you have to feed someone and change them and carry them to the bathroom and do all that kind of stuff every day," Leno said. "It's a challenge. And it's not that I enjoy doing it, but I guess I enjoy doing it."

In early November, Leno told People that he's "lucky" to be able to care for his wife.

"It's not work, because people come up, and say they feel so sorry. I understand the sympathy, because I know a lot of people are going through it, but it's OK," Leno said.

• Tesla has cleared a regulatory hurdle at the DMV in Nevada.
• This means Tesla can deploy an autonomous car, but it still needs commercial approval before rollout.
• Elon Musk wants to expand ride-hailing into up to 10 metropolitan areas by the end of 2025.

Tesla just got one step closer to deploying its robotaxis commercially in Nevada.

Tesla completed the self-certification process for the robotaxi in Nevada, a DMV representative told Business Insider.

This step means the company can deploy an autonomous car on Nevada roads, but it still needs approval from the Nevada Transportation Authority to operate commercially. The NTA has not responded to requests for comment from Business Insider.

Clearing self-certification in Nevada comes as CEO Elon Musk aims to expand ride-hailing in up to 10 metropolitan areas by the end of the year, with a fleet of more than 1,000 vehicles.

"We expect to be operating in Nevada and Florida and Arizona by the end of the year," Musk said on an October earnings call.

Tesla's robotaxis are operating commercially in San Francisco and Austin. The company is hiring in cities such as Las Vegas, Dallas, Houston, Tampa, and Orlando, as it ramps up the robotaxi deployment process.

On Monday, Tesla received approval from the Arizona Department of Transportation to operate ride-hailing services in the state. It also submitted a "self-certification" to test its robotaxis in the state with safety drivers, a spokesperson for the department told Business Insider.

Meanwhile, in California, a robotaxi war is breaking out. Uber, Tesla, and Waymo are fighting to shape robotaxi regulations in the state.

Waymo, which operates self-driving taxis in San Francisco and Los Angeles, said in November that companies offering autonomous ride-hailing services should submit quarterly reports about the rides. Tesla opposed this suggestion.

This week, Amazon launched its Zoox robotaxi service in San Francisco, offering select members of the public free rides.

Tesla's stock price dropped about 2% on Thursday. It's up more than 15% in the past year.