New York: Boosting its international presence, Indian hospitality major Oyo’s parent company Oravel Stays is acquiring the Motel 6 and Studio 6 chain, which has about 1,500 facilities across the US and Canada, from the investment company Blackstone in a $525 million cash deal, the US firm said on Friday.
With the acquisition of G6 Hospitality, the parent company of the two budget lodging chains, Oyo will become a major player in the US and Canadian hospitality industry, which is already dominated by Indian Americans.
Blackstone said that Motel 6’s franchise network produces gross room revenues of $1.7 billion.
Motel 6 is ubiquitous across the US and Canada is known for its relatively cheap rooms that conform to corporate standards in maintenance and hospitality.
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Stay 6 is an extended stay network for guests who want to rent rooms with more facilities for longer periods.
Oyo International CEO Gautam Swaroop said the group will continue operating as a separate entity.
“This acquisition is a significant milestone for a startup company like us to strengthen our international presence”, he said.
“Motel 6’s strong brand recognition, financial profile and network in the US, combined with Oyo’s entrepreneurial spirit, will be instrumental in charting a sustainable path forward for the company”, he said.
Blackstone said, “Oyo will leverage its comprehensive technology suite, global distribution network, and marketing expertise to further strengthen the Motel 6 and Studio 6 brands and drive continued financial growth.”
Since its launch in the US in 2019, Oyo has steadily increased its portfolio and now operates 320 hotels—about 100 of which were acquired last year—in 35 states, according to Blackstone.
There are 108,000 hotels and motels in the US, and according to the Asian American Hotel Owners Association, Indian American entrepreneurs own about 60 percent of them.
Indians already run a large number of Motel 6 facilities.
Blackstone bought Motel 6 from the French hotel company Accor in 2012 for $1.9 billion.
While selling the company for only $525 million may seem like a bad deal, the travel industry publication Skift said that, in fact, Blackstone made a sizeable profit by selling many of the properties it acquired.
“Blackstone managed to more than triple its investors’ capital and generated over $1 billion in profit by investing $900 million in improving the properties and then selling off hundreds of them”,’ the publication said.
When it was founded in 1962, Motel 6 was named for the $6 price of hotel rooms at that time.
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Arul Louis–IANS
