Should Sonder prioritize expanding its property portfolio in new cities or focus on increasing occupancy rates in existing locations?

Introduction

The trade-off question at hand is whether Sonder should prioritize expanding its property portfolio in new cities or focus on increasing occupancy rates in existing locations. This scenario involves balancing growth through market expansion against optimizing current operations. I'll analyze this trade-off by examining key business factors, metrics, and potential outcomes to provide a strategic recommendation.

Step 1

Clarifying Questions (3 minutes)

• Context: I'm assuming Sonder is experiencing growth but facing challenges in resource allocation. Could you provide more context on Sonder's current market position and recent performance?

Why it matters: Helps understand the urgency of expansion vs. optimization Expected answer: Moderate growth with untapped potential in existing markets Impact on approach: Would influence the balance between expansion and optimization strategies

• Business Context: Based on Sonder's business model, I'm thinking revenue is primarily driven by nightly rates and occupancy. How does our current revenue split look between established and newer markets?

Why it matters: Indicates where the most significant growth opportunities lie Expected answer: Established markets contribute majority of revenue, but new markets show higher growth rates Impact on approach: Would help prioritize between expanding to new cities or focusing on existing locations

• User Impact: Considering our target audience, I'm curious about the booking patterns we're seeing. Are we noticing any shifts in user preferences for locations or types of properties?

Why it matters: Helps align expansion or optimization efforts with user demands Expected answer: Increasing demand for unique, local experiences in diverse locations Impact on approach: Could influence the type of properties we prioritize in expansion or optimization

• Technical: Given the importance of our booking platform, I'm wondering about our current technical capacity. How scalable is our current system for managing an expanded property portfolio?

Why it matters: Determines if technical limitations could impact expansion plans Expected answer: System is scalable but would require some upgrades for rapid expansion Impact on approach: Might influence the pace of expansion or need for technical investment

• Resource: Thinking about our team structure, how are our operations teams currently distributed between managing existing properties and scouting new locations?

Why it matters: Indicates current resource allocation and capacity for expansion Expected answer: Teams are stretched thin, with a slight bias towards managing existing properties Impact on approach: Could suggest need for team expansion or reorganization before major growth initiatives