Oravel Stays Ltd, the parent of Indian travel-tech startup Oyo, has agreed to acquire G6 Hospitality, the operator of the iconic Motel 6 and Studio 6 brands in the US, from Blackstone Real Estate for $525 million in an all-cash transaction.
Oyo will leverage its technology suite as well as its global distribution network and marketing expertise to strengthen the two brands and drive financial growth, according to a press statement.
Motel 6’s franchise network produces gross room revenue of $1.7 billion (about Rs 14,200 crore at current exchange rates), which generates a strong fee base and cash flow for G6, per the statement.
Oyo's latest annual report shows it posted consolidated revenue from operations of Rs 5,389 crore for the year through March 2024, down a tad from Rs 5,464 crore the year before. The company, however, swung to a net profit of Rs 229 crore for FY24 from a net loss of Rs 1,287 crore the year before.
The Indian company, which is backed by Japanese investor SoftBank, has steadily expanded its footprint in the US since its launch in the region in 2019. It currently operates over 320 hotels across 35 states. In 2023, Oyo added nearly 100 hotels to its US portfolio and aims to add about 250 hotels in 2024.
“This acquisition is a significant milestone for a startup company like us to strengthen our international presence. 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 which will continue to operate as a separate entity,” said Gautam Swaroop, CEO at Oyo International.
Blackstone said in the statement that, under its ownership, it invested "significant capital" to create value and enhance the Motel 6 brand. This included executing a strategy to transform the business into an asset-light lodging company with a franchise network of about 1,500 hotels across the US and Canada.
“This transaction is a terrific outcome for investors and is the culmination of an ambitious business plan that more than tripled our investors’ capital and generated over $1 billion in profit over our hold period,” said Rob Harper, Head of Blackstone Real Estate Asset Management Americas.
The transaction is expected to close in the fourth quarter of 2024, subject to customary closing conditions.
Goldman Sachs & Co. LLC acted as Blackstone’s lead advisor and Jones Lang LaSalle Securities, LLC and PJT Partners acted as financial advisors. Simpson Thacher & Bartlett LLP served as Blackstone’s legal advisor.