Indian travel technology company Oyo will increase its North American hotel presence fivefold with the $525M purchase of the Motel 6 franchise from Blackstone Real Estate, the companies announced.
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New York-based private equity firm Blackstone acquired the motel chain famous for keeping the lights on in 2012 from French hotel operator Accor, part of a $1.9B deal, The Wall Street Journal reported. Blackstone invested $900M into improving the chain’s real estate and converted the chain to a franchise, selling off almost all of the properties it acquired.
Oyo’s all-cash purchase of the brand represents an unusually late exit from the investment for Blackstone, as it was delayed by the pandemic, the WSJ reported. Blackstone was reportedly gauging interest from potential buyers earlier this year.
The deal between Oravel Stays, the parent company of Oyo, and G6 Hospitality, the parent company of Motel 6 and Studio 6, is expected to close in the fourth quarter.
“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,” Rob Harper, head of Blackstone Real Estate Asset Management Americas, said in a press release.
There are about 1,500 Motel 6 brand hotels across the United States and Canada, according to the companies’ release. The acquisition will significantly boost Oyo’s American holdings as it sets its sights on growth.
Oyo was established in 2012 and launched in the U.S. in 2019, the same year SoftBank’s investment brought the company’s value to $10B. It now has 320 hotels across 35 states, according to the release. Nearly 100 of those hotels were added in 2023, and Oyo aims to add another 250 hotels this year.
Motel 6’s franchise network produces gross room revenues of $1.7B annually, generating a strong cash flow for G6, Blackstone said.
“This acquisition is a significant milestone for a startup company like us to strengthen our international presence,” Gautam Swaroop, CEO of Oyo International, said in the release. “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.”
The Motel 6 brand was founded in Santa Barbara, California, in 1962. It was named for its nightly price of just $6 at that location. The beachfront motel is now charging more than $300 per night for rooms this weekend, according to its website.
While Motel 6 locations have been able to pull as much as $854 per night during special events like the Super Bowl, economy-class hotel customers paid an average of $79 per night as of August this year, the WSJ reported, citing CoStar data. That is slightly down from last year but up 14% from five years ago.
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