Ritesh Agarwal's OYO acquires US hotel chain Motel 6 for ₹4400 Cr

Oyo has recently purchased US motel chain ‘Motel 6’ from Blackstone Real Estate, for $525Mn.This would result in the Indian hotel aggregator gaining nearly 1400 properties across the United States.

Oravel Stays Ltd, the parent company of Oyo bought G6 Hospitality LLC, the parent company of the Motel 6 as well as Studio 6 brands on September 20, 2024, the transaction is expected to close in the fourth quarter of 2024, as stated by Blackstone. 

Oyo - the brand

Oyo was founded in 2012 by Ritesh Agarwal at Gurugram. In a short period, the brand has become India’s largest and fastest-growing hotel chain. Now, it is aggressively building up its international presence.

Oyo chain allows fast and convenient booking of hotel rooms through its app. Its hotel portfolio comprises leased and franchised hotels, homes, and living spaces, now offering more than 174,000 hotels in over 35 countries.

Currently, Oyo has more than 320 hotels across 35 states in the US, adding nearly 100 in 2023 alone, and aiming to put on another 250 to its chain by 2024.

What is Motel 6?

On the other hand, Motel 6 runs motels across the US and Canada, providing neat and clean affordable hotel rooms to travelers The name ‘Motel 6’, hails from the chain’s original price of US$6 per night, back when it was started. 

The motto of both companies aligns well with providing clean rooms to budget-friendly travelers. 

However, the acquisition comes at a time when the US hotel sector is struggling with reduced occupancy and stagnant room rates, according to a Wall Street Journal report, which disclosed that economy segment hotel customers in the US usually pay $79 a night on average as on this year's August, which is 14% higher compared to five years back, but lesser than the previous year. [Source: The Hindustan Times]

The acquisition 

“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, remarked as provided by Blackstone’s press release. 

“This transaction is a terrific outcome for investors,” Rob Harper, head of Blackstone Real Estate Asset Management Americas has commented. 

Blackstone purchased Motel 6 in 2012 from French hotel giant Accor for $1.9 billion and then invested $900Mn to improve the chain’s offerings. However, it has now sold it for less than half of the 2012 valuation to Oyo. 

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