Skift Take
Oyo, based in India, has tried for years to gain traction in the U.S., but it has claimed that competitors have played hardball. It’s now betting that buying a network is its best way to gain scale fast.
Oyo, the India-based hotel giant, has agreed to acquire the Motel 6 and Studio 6 hotel brands from Blackstone for $525 million in an all-cash deal, Blackstone said in a press release.
The big picture: This acquisition marks Oyo’s second attempt to expand in the U.S. market ahead of the Softbank-backed startup’s ongoing effort to go public in India.
Oyo CEO and co-founder Ritesh Agarwal confirmed the deal to Skift. The Wall Street Journal was first to report the news Friday.
By the numbers
- Motel 6 has about 1,500 locations across the U.S. and Canada and is now an asset-light brand.
- Oyo currently operates 320 hotels across 35 U.S. states.
- Motel 6’s franchise network generates $1.7 billion in annual gross room revenues.
- Oyo was valued last month at $2.4 billion in a round of fundraising.
Key Details
- Motel 6 will continue to operate as a separate entity.
- The deal includes the Studio 6 hotel brand.
- The deal is expected to close before the end of the year.
Why it matters
For Oyo, the deal brings Motel 6’s strong brand recognition and extensive footprint.
Oyo’s strongest hotel customer base is in its home country of India, which has a significant diaspora visiting friends and family in the U.S. and owning lodging in North America. So, Oyo may be able to generate some incremental inbound Indian demand.
“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,” said Gautam Swaroop, CEO Oyo International, in a statement.
Backstory
It ends Blackstone’s dozen years of ownership of the iconic budget hotel chain, which it acquired from Accor for $1.9 billion.
That sounds like a bad return, but Blackstone managed to more than triple its investors’ capital and generate over $1 billion in profit by investing $900 million in improving the properties and then selling off hundreds of them.
The bottom line: This acquisition comes as the U.S. economy hotel sector faces challenges, including flat-lining occupancy and stagnant room rates. However, industry experts expect the outlook to improve in 2025, partly due to increased federal infrastructure spending driving demand for budget accommodations.
Accommodations Sector Stock Index Performance Year-to-Date
What am I looking at? The performance of hotels and short-term rental sector stocks within the ST200. The index includes companies publicly traded across global markets, including international and regional hotel brands, hotel REITs, hotel management companies, alternative accommodations, and timeshares.
The Skift Travel 200 (ST200) combines the financial performance of nearly 200 travel companies worth more than a trillion dollars into a single number. See more hotels and short-term rental financial sector performance.