OYO parent Oravel Stays to acquire Motel 6, Studio 6 from Blackstone paying $525 million in an all-cash deal

Oravel Stays, parent of OYO, will acquire G6 Hospitality, operator of Motel 6 and Studio 6, with the deal closing in Q4 2024. OYO aims to enhance these brands using its technology and distribution network, while maintaining their separate identities.

Livemint
Updated21 Sep 2024, 11:40 AM IST
Oravel Stays, the parent company of OYO stated that it has agreed to acquire G6 Hospitality, the leading economy lodging franchisor and parent company of Motel 6 and the chain's offshoot hotel brand, Studio 6.
Oravel Stays, the parent company of OYO stated that it has agreed to acquire G6 Hospitality, the leading economy lodging franchisor and parent company of Motel 6 and the chain’s offshoot hotel brand, Studio 6.(Bloomberg)

Oyo's parent, Oravel Stays, has agreed to acquire American budget hotel chain G6 Hospitality, owner of the “iconic” Motel 6 and Studio 6 brands, from Blackstone Real Estate in a $525 million all-cash deal, PTI reported.

The move comes ahead of Oyo's likely IPO plans and as the company looks to expand in the United States, it said, adding, that the deal is likely to close in Q4 of CY2024, subject to conditions.

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US Expansion

The report added that Oyo has expanded its US footprint “steadily” since 2019 launch and now operates more than 320 hotels in the country across 35 states. It added close to 100 of these hotels in 2023 alone, and aims to increase the number by another 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,” Gautam Swaroop, CEO of OYO International said in the release.

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About G6 Hospitality Brands

The Motel 6 franchise generates $1.7 billion in gross room revenue, and supports a strong fee base and cash flow for G6 Hospitality, Oyo informed in a release.

It added that Oyo will “leverage its comprehensive technology suite and global distribution network and marketing expertise” to continue strengthening Motel 6 and Studio 6, “and drive continued financial growth”.

As owner Blackstone said it invested “significant capital” to create value for the Motel 6 brand and transform the business into a franchise of nearly 1,500 hotels in Canada and the US.

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Julie Arrowsmith, CEO of G6 Hospitality said that Oyo's “innovative approach to hospitality” would allow the company to offer value for guests and maintain the “iconic Motel 6 brand that travellers have trusted for over six decades”.

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, the report added.

(With inputs from PTI)

Key Takeaways
  • OYO’s acquisition of Motel 6 represents a strategic expansion into the U.S. budget hotel market.
  • The deal is expected to enhance OYO’s brand presence and operational capacity in North America.
  • Motel 6’s established brand and revenue model could significantly benefit OYO’s growth trajectory.

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First Published:21 Sep 2024, 11:40 AM IST
Business NewsCompaniesNewsOYO parent Oravel Stays to acquire Motel 6, Studio 6 from Blackstone paying $525 million in an all-cash deal

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