New Delhi: IPO-bound travel tech platform OYO on Saturday announced it has agreed to acquire iconic American budget hotel chain Motel 6 and Studio 6 brands from Blackstone Real Estate for $525 million in an all-cash transaction, as the Indian unicorn eyes expansion in the US.
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.
The transaction is expected to close in the fourth quarter of 2024, subject to customary closing conditions.
Motel 6's franchise network produces gross room revenues of $1.7 billion, which generates a strong fee base and cash flow for G6.
OYO will leverage its comprehensive technology suite as well as its global distribution network and marketing expertise to further strengthen the Motel 6 and Studio 6 brands and drive continued financial growth, it stated.
The travel tech platform has steadily expanded its footprint in the US since its launch in the region in 2019 and 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 OYO International.
Under its ownership, Blackstone invested significant capital to create value and enhance the Motel 6 brand, including executing a strategy to transform the business into a leading asset light lodging company with a franchise network of close to 1,500 hotels across the US and Canada.
Julie Arrowsmith, Chief Executive Officer at G6 Hospitality said, "OYO's innovative approach to hospitality will allow us to enhance our offerings and great value to our guests while maintaining the iconic Motel 6 brand that travellers have trusted for over six decades." Rob Harper, Head of Blackstone Real Estate Asset Management Americas, said, this transaction is a terrific outcome for investors and is the culmination of an ambitious business plan that more than tripled investors' capital and generated over $1 billion in profit over the hold period.
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.