Indian Travel Giant Oyo Acquires Motel 6 in $525 Million Deal

Oyo, the Indian travel company, is set to acquire budget motel chain Motel 6 from Blackstone Real Estate for $525 million. This all-cash transaction marks a significant expansion for Oyo in the US hospitality market.

September 20 2024, 11:00 PM • 656 views

Indian Travel Giant Oyo Acquires Motel 6 in $525 Million Deal

In a significant development in the hospitality industry, Oyo, the Indian travel company, has announced its acquisition of the iconic budget motel brand Motel 6 from Blackstone Real Estate. The all-cash transaction, valued at $525 million, also includes the Studio 6 brand.

This acquisition marks a substantial expansion for Oyo in the United States hospitality market. Founded in 2013 by Ritesh Agarwal at the age of 19, Oyo has rapidly grown to operate in over 80 countries. The company entered the US market in 2019 and currently manages 320 hotels across 35 states.

Gautam Swaroop, CEO of Oyo International, stated:

This acquisition is a significant milestone for a start-up company like us to strengthen our international presence. 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 which will continue to operate as a separate entity.

Motel 6, founded in the early 1960s, has approximately 1,500 locations throughout the United States and Canada. The brand gets its name from its original room rate of $6 per night, with the first Motel 6 opening in Santa Barbara, California in 1962. It gained widespread recognition through its memorable slogan, "We'll leave the light on for you," introduced in 1986.

Blackstone Real Estate, a division of one of the world's largest private equity firms, acquired Motel 6 and Studio 6 in 2012 for $1.9 billion. During its ownership, Blackstone sold hundreds of properties, generating substantial revenue and transitioning the brand into a franchise network.

Rob Harper, head of Blackstone Real Estate Asset Management Americas, commented on the deal's success:

This transaction is a terrific outcome for investors and is the culmination of an ambitious business plan that more than tripled our investors' capital and generated over $1 billion in profit over our hold period.

This acquisition aligns with Oyo's business model of partnering with independent hotels to standardize offerings. However, the company has faced controversy over its rapid expansion and business practices in some markets.

As the hospitality landscape continues to evolve, this deal represents a significant shift in the budget accommodation sector, combining Oyo's innovative approach with Motel 6's established brand recognition and extensive network.