Oyo, an India-based hotel company, has announced the acquisition of the Motel 6 and Studio 6 hotel brands from Blackstone for $525 million in an all-cash deal. This move is part of Oyo’s strategy to gain traction in the U.S. market and expand its presence ahead of its planned public offering in India. Motel 6 has about 1,500 locations in the U.S. and Canada, while Oyo currently operates 320 hotels across 35 states. The franchise network of Motel 6 generates $1.7 billion in annual gross room revenues, and Oyo was recently valued at $2.4 billion in a round of fundraising.
With this acquisition, Oyo aims to leverage Motel 6’s strong brand recognition and extensive footprint in the U.S. market. This move could also help Oyo tap into the significant Indian diaspora visiting friends and family in the U.S. and owning lodging in North America, potentially generating additional inbound Indian demand. The deal is expected to see Motel 6 continue to operate as a separate entity, and the addition of the Studio 6 brand is also part of the agreement. The acquisition is set to close before the end of the year, providing Oyo with a strategic advantage in the competitive U.S. hospitality market.
The acquisition of Motel 6 marks the end of Blackstone’s ownership of the budget hotel chain after twelve years. Blackstone acquired Motel 6 from Accor for $1.9 billion and managed to more than triple its investors’ capital by investing $900 million in property improvements and selling properties. While the budget hotel sector in the U.S. is currently facing challenges such as flat-lining occupancy and stagnant room rates, industry experts expect improvements by 2025, driven in part by increased federal infrastructure spending that could boost demand for budget accommodations.
This acquisition is significant for Oyo as it provides a strong entry point into the U.S. market and expands its portfolio of hotels. With Motel 6’s brand recognition and network, Oyo can potentially chart a sustainable growth path for the company. Oyo’s CEO Ritesh Agarwal confirmed the deal, underscoring the importance of this strategic move for the company’s future growth plans. The deal underscores Oyo’s commitment to scaling its business quickly through acquisitions and partnerships, positioning itself as a key player in the global hospitality industry.
Overall, the acquisition of Motel 6 and Studio 6 by Oyo represents a strategic move that could provide the company with a competitive edge in the U.S. hospitality market. By leveraging Motel 6’s strong brand recognition and extensive footprint, Oyo aims to drive growth and tap into new market segments. As the U.S. economy hotel sector faces challenges, Oyo’s acquisition could help position the company for future success and expansion. With the deal set to close in the near future, Oyo is poised to make a significant impact in the U.S. hospitality industry and solidify its position as a major player in the global travel market.
