Oyo, the Indian hotel aggregator upstart that recently turned profitable and has been aggressively ramping up international presence, has bought US motel chain ‘Motel 6’ from Blackstone, for $525Mn, reports WSJ. The transaction would result in Oyo gaining nearly 1400 properties across the United States.
Motel 6 runs motels across the states and Canada, providing affordable travelers with neat and clean hotel rooms, at dirt-cheap prices. The name ‘Motel 6’, comes from the chain’s original price of US$6 per night, back when it was founded. The chain aligns well with Oyo’s original mission, of providing clean rooms to budget friendly travelers. Oyo started with this in India by tying up with existing independent small hotels and converting them to reasonable hygiene levels. However of late, Oyo has focused on either buying up hotel chains or building its own. Its purchases in Europe, specially the Nordic areas of Norway and others, is another example of that.
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“Motel 6’s strong brand recognition, financial profile and network in the U.S., combined with Oyo’s entrepreneurial spirit will be instrumental in charting a sustainable path forward for the company,” Gautam Swaroop, CEO of Oyo’s international division, said in a statement provided by Blackstone.
Motel 6 was a relatively unusual buy for some with a PE pedigree like Blackstone. The chain was bought up by Blackstone from French hotel giant Accor in a deal valued at $1.9 billion. The pandemic delayed Blackstone’s exit from the investment, according to a person familiar with the matter. Blackstone reportedly put in $900Mn to improve Motel 6’s offerings, though has now sold it for less than half of the 2012 valuation.
“This transaction is a terrific outcome for investors,” said Rob Harper, head of Blackstone Real Estate Asset Management Americas. In all, Blackstone more than tripled its investors’ capital and generated over $1 billion in profit, he said.
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Motel 6’s franchise network produces annual gross room revenues of $1.7 billion, according to Blackstone.
