OYO
OYO to acquire iconic hotel chains Motel 6 and Studio 6 for $525 million in US expansion bid
New Delhi/IBNS: Indian homegrown hospitality giant Oyo is set to acquire Motel 6, one of the most well-known budget hotel chains in the United States, for $525 million from Blackstone's real estate division.
This deal aligns with Oyo's strategy to strengthen its presence in the American market, reports said.
Oyo's parent company Oravel Stays Ltd signed the agreement on Friday (Sept. 20) to purchase G6 Hospitality LLC, the operator of both Motel 6 and Studio 6 brands.
The transaction is expected to be completed by the fourth quarter of 2024, as per Blackstone's announcement.
The acquisition comes amid challenges in the US hospitality industry, with a decline in occupancy rates and stagnant room prices.
According to a Wall Street Journal (WSJ) report, budget hotel customers paid an average of $79 per night in August 2024, marking a 14 percent rise compared to five years ago but lower than in 2023, based on data from CoStar.
Oyo, founded in 2012 by Ritesh Agarwal and headquartered in India's Gurugram, is a global hotel chain that simplifies hotel booking via its app.
Its portfolio spans leased and franchised properties, with over 174,000 hotels in more than 35 countries.
In the US alone, Oyo manages more than 320 hotels across 35 states, having added nearly 100 properties in 2023, and plans to expand by another 250 hotels in 2024.
On the other hand, G6 Hospitality, the parent company of Motel 6 and Studio 6, operates around 1,500 budget hotels across the US and Canada.
Motel 6, a 62-year-old brand originally founded in California's Santa Barbara, gained popularity by offering rooms for just $6 a night when it launched.
It currently ranks among the top 50 franchises in the 2024 Entrepreneur Franchise 500 report.
Blackstone acquired Motel 6 in 2012 from French hotel chain Accor, investing $900 million to revitalize the brand.
The chain now generates $1.7 billion in gross room revenues annually, as per reports.
Despite rising costs due to inflation, budget hotels could see growth in 2025, driven by construction projects linked to the $53 billion Chips Act, which boosts semiconductor manufacturing.
According to Jan Freitag, national director of hospitality at CoStar, construction crews traveling for these projects will likely seek out affordable accommodations, benefiting the economy lodging sector.
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