Oyo agreed to purchase Motel 6 from Blackstone Real Estate for $525 million in an all-cash deal. The sale includes G6 Hospitality, which operates Motel 6 and its extended-stay counterpart, Studio 6. The deal is expected to close by the end of 2024.
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Oyo has been steadily building its presence in the US since 2019. The company operates 320 hotels across 35 states and plans to increase this number by adding 250 more hotels this year.
Acquiring Motel 6, which has 1,500 locations across the US and Canada. Gautam Swaroop, Oyo International CEO addressed that Motel 6 would continue to operate independently but would now be a part of Oyo’s growing international portfolio.
It was founded in 1962, Motel 6 popularized the budget motel concept with rooms initially priced at $6 per night. Over the years, Motel 6 has grown into one of the most recognizable budget hotel brands in the US.
In addition to standard Motel 6 properties, the chain also operates Studio 6, which targets customers looking for longer stays with amenities designed for extended accommodations.
Blackstone purchased Motel 6 in 2012 for $1.9 billion. During its ownership, Blackstone invested heavily in Motel 6, transitioning it from a corporately owned model to a franchise-based system.
This strategy allowed Blackstone to triple its investors’ capital generating over $1 billion in profit during its holding period. The sale to Oyo represents the culmination of Blackstone’s plan for Motel 6.
With backing from SoftBank, the company grew into one of the world’s largest hotel operators valued at $10 billion by 2019. However, Oyo has faced challenges including the COVID-19 pandemic, which impacted the hospitality industry globally.
Oyo has also been criticized for its business practices such as offering rooms from unlicensed or unavailable hotels.
The $525 million acquisition price represents a considerable markdown from the $1.9 billion Blackstone paid for Motel 6 in 2012. Oyo was reported to have a valuation drop to $2.5 billion during its latest funding round down from its $10 billion peak in 2019.
Although Oyo denies reports of its reduced valuation, the acquisition of a well-known brand like Motel 6 may help solidify investor confidence in the company’s strategy.
Motel 6 has franchise network with 1,500 locations spread across the United States and Canada.
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OYO entered the US market in 2019 and has grown its presence since then. As of 2024, OYO operates over 320 hotels across 35 states in the US with plans to expand its portfolio by adding around 250 new hotels in 2024.
In 2023 alone, OYO added nearly 100 hotels to its portfolio. The acquisition of Motel 6 and Studio 6 is a major milestone in OYO’s efforts to enhance its presence in the North American economy lodging sector.
Motel 6’s strong brand recognition along with its financial stability and franchise network will provide OYO with a solid foundation to expand its presence in the budget hotel market.
OYO’s entrepreneurial spirit and technological capabilities will enable it to innovate and enhance the Motel 6 and Studio 6 brands.
The $525 million deal is an all-cash transaction. The strong financial profile of G6 Hospitality with $1.7 billion in gross room revenues, will help OYO generate stable cash flows and provide a foundation for further growth.
OYO plans to leverage its technology suite, global distribution network and marketing expertise to optimize the operational performance of Motel 6 and Studio 6.
The acquisition is expected to drive financial growth and strengthen OYO’s ability to compete with other major players in the US budget hotel market.
With Motel 6 now under the Oyo umbrella, the Indian hotel operator is set to compete more aggressively in the US budget hotel segment. The acquisition positions Oyo to challenge other major budget hotel chains such as Red Roof Inn, Super 8 and Days Inn.
Goldman Sachs LLC served as the lead financial advisor to Blackstone in the transaction, while Jones Lang LaSalle Securities, LLC and PJT Partners provided additional financial advice. Simpson Thacher & Bartlett LLP acted as Blackstone’s legal advisor in the deal.
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