Oravel Stays, the parent company of Indian hospitality company Oyo, on Tuesday completed its $525 million acquisition of G6 Hospitality from private equity firm Blackstone Real Estate. This deal brings the Motel 6 and Studio 6 brands, synonymous with affordable lodging, into Oyo’s fold, furthering its plans to strengthen its foothold in the U.S. hospitality market.
With Motel 6’s footprint of 1,500 locations across the U.S. and Canada, Oyo has announced its goal to add over 150 new properties under Motel 6 and Studio 6 by 2025. The hospitality company said it would target key markets with a focus on property upgrades and tech-driven growth.
For Oyo, this acquisition is not just about expanding its portfolio but also about tapping into Motel 6’s strong brand recognition and franchise network. In 2012, Blackstone purchased Motel 6 and Studio 6 from Accor Hotels for $1.9 billion. The combined franchises now bring in approximately $1.7 billion per year.
“Oyo will maintain and strengthen the Motel 6 and Studio 6 brands as they command a strong brand recognition and loyal customer base built over decades. All existing franchise agreements, including exclusivity rights, will be honored, and the current franchise success teams will continue their operations without disruption,” the company said in a statement.
Technology Integration to Lead the Way
Oyo is also betting big on technology. “In the distribution and revenue growth area, Oyo plans to develop a broader network of distribution partners beyond traditional online travel agencies, while simultaneously strengthening direct booking channels and corporate booking demand,” the company said.
Oyo has said it will develop advanced digital solutions, including dynamic pricing tools and improved mobile and web booking platforms. By strengthening direct booking channels and diversifying distribution partnerships, Oyo aims to boost Motel 6’s revenue while delivering a seamless guest experience.
Skift Research in its Hotel Distribution Outlook 2024, also predicts that by 2030, direct digital channels will have overtaken the OTAs as the dominant distribution channel for hoteliers.
Travel organization AAA expects about 119 million people to travel 50 miles or more this holiday season. Of these, 107 million will travel by road, a segment Motel 6 and Studio 6 properties serve.
Leadership Transition
Sonal Sinha, the newly appointed CEO of G6 Hospitality, will oversee this transformation.
As part of the integration, several executive committee members from G6 Hospitality are stepping down, including Julie Arrowsmith, former president and CEO; Adam Cannon, chief brand officer; and Perry Ping, chief financial officer.
The company plans to hire team members primarily in the franchisee facing functions and would also “consolidate and rightsize” some functions.
“We will continue to invest in skills that are unique and critical to the G6 business such as supply, account management, corporate sales, brand standards, offline marketing, safety and security,” Gautam Swaroop, CEO of OYO International, said.
Oyo’s Global Ambitions
The G6 acquisition aligns with Oyo’s broader strategy to expand into the U.S. The hospitality company that operates around 320 hotels in 35 U.S. states had said earlier this year that it plans to add an additional 250 properties in 2024. In 2023, Oyo added around 100 hotels in the U.S.
Oyo has also expanded its premium portfolio with the launch of its Sunday brand in the UK, Dubai, and Malaysia. It also unveiled its first luxury property, Palette Royal Reflections, in Dubai earlier this year.
Even as Oyo chases an IPO plan in the Indian bourses, recent reports have highlighted that Oravel Stays is in talks with overseas institutional investors and private Indian investors to raise $200 million at an estimated valuation of $4.5billion-$5 billion.
In its latest funding round in August, Oyo had raised $175 million at a valuation of $2.4 billion, a massive drop from the peak of $10 billion.