Billion-dollar travel startup tries to upend hotel industry

An Airbnb-style travel startup that's aiming to shake up the hotel industry could go public in as little as 18 months, its CEO and founder told FOX Business’ Maria Bartiromo.

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"At the right time — absolutely — I think an IPO is the path for this company," Francis Davidson, the CEO of Sonder, said. "If I had to guess, I would say in the 18- 36-month time horizon."

Sonder offers apartment-style, short-term stays with hotel-like services. The company is often described as a Airbnb competitor, but Davidson sees the typical hotel industry as his competition. Like WeWork, Sonder leases its spaces and then rents them out. Davidson said he and his company have worked hard to ensure that the problems that caused WeWork's IPO to collapse last month are not present at his company.

"We've been very careful to make sure that we weren't valued from the start as a software ... company. Our valuation multiples have been reasonable throughout our lifecycle ... The revenue that we generate to our valuation is really pretty high compared to other technology-supported companies."

- Francis Davidson, Sonder CEO

Sonder raised $225 million in July, which raised its valuation to $1.1 billion — making it a unicorn, or a billion-dollar brand, according to Forbes. The investment came from an unnamed member of the family who built the Hyatt hotel chain. But entrepreneur and former New York Yankees star Alex Rodriguez is also an investor.

Davidson said he plans to use the capital primarily for expansion purposes.

“We've figured out a business model that really works well,” he said.  “We have hundreds of thousands of guests that have loved their stay with us and basically we want to replicate that formula across more markets, go deeper in the markets in which we are.”

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Sonders is able to offer much bigger hotel rooms, in interesting neighborhoods, with modern service at an attractive price point and is available in 26 cities in six countries, Davidson said. And he does not want Sonder's rooms and apartments to look like bland hotels.

“I think if you were to picture your perfect hotel you'd probably want it to be extremely well-designed,” Davidson said Thursday.

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