DALLAS (Diya TV) — Indian hotel operator Oyo is poised to buy Motel 6, the highway-standard chain that defines U.S. highways for more than five decades. The Motel 6 and Studio 6 chains were announced Friday in an all-cash deal worth $525 million. It marks the latest step by Indian hotel operator Oyo in its aggressive expansion drive worldwide.
It is owned by the private equity giant Blackstone, who acquired it in 2012 for $1.9 billion. “This transaction represents an excellent return for investors, and it represents the fruition of our business plan that increased our investors’ capital more than threefold while bringing in over $1 billion in profit,” said Rob Harper, Senior Managing Director at Blackstone.
Oyo, in partnership with Japanese tech behemoth SoftBank, entered the US market in 2019 and had the pedal fully to the floor since then by operating over 300 hotels in the US. This acquisition marks a big push into the budget hotel space for the company. “Motel 6 has strong brand recognition, a solid financial profile, and a vast network in the U.S. This is a great acquisition for a start-up company like us to build up our international presence,” Gautam Swaroop, Oyo International CEO, said in an interview.
Launched in 1962 in Santa Barbara, California, Motel 6 initially operated on its famous business model of renting rooms for $6 per night. At present, the organization counts close to 1,500 hotels within the United States and Canada. Motel 6 has mainly become synonymous with no-frills travel and occupies an indelible spot in the annals of American culture.
Oyo enjoys rapid growth, though the company has struggled at home in India with some business practices causing concern. However, the company continues to drive forward on the international front. Oyo’s portfolio contains ventures in Europe and China. The company runs over 18,000 hotels and 85,000 home rentals around the world.
Julie Arrowsmith serves as the chief executive officer of G6 Hospitality, Motel 6 and Studio 6 operator. She said she feels “very excited” about the deal. “Oyo’s approach to hospitality innovation will help us enhance our offerings and add great value to our guests while maintaining the iconic Motel 6 brand that travelers have trusted for over six decades.”
The acquisition, which the company expects to close by the end of the year, comes as Oyo further leans on growing its presence in the U.S. market, where it plans to add more than 250 new hotels by the end of 2024. The deal would highlight Blackstone’s ability to sell hospitality assets with clear profit margins because it bought Motel 6 in one of the downturn cycles in the hotel industry.
