OYO seals $525m deal to acquire G6 Hospitality from Blackstone

In a monumental move, OYO is set to acquire G6 Hospitality, the parent company of Motel 6 and Studio 6, from Blackstone Real Estate in a $525 million all-cash deal. This acquisition, expected to close in late 2024, will significantly bolster OYO’s presence in the U.S. market, a region where the company has seen steady growth since 2019. The deal underscores OYO’s ambition to expand globally while securing its footing in the U.S. economy lodging sector.

G6 Hospitality, which operates nearly 1,500 properties across the U.S. and Canada, will continue to operate as an independent entity, though OYO plans to leverage its technology and marketing expertise to further enhance the Motel 6 and Studio 6 brands. These brands have long catered to budget-conscious travellers, generating over $1.7 billion in gross room revenues annually, making them a lucrative addition to OYO’s growing portfolio.

Blackstone’s strategic exit

Blackstone Real Estate, which purchased G6 Hospitality over a decade ago, views this sale as the culmination of a successful turnaround strategy. Under Blackstone’s ownership, G6 transitioned into an asset-light model, enabling it to thrive in the highly competitive economy lodging market. According to Rob Harper, Head of Blackstone Real Estate Asset Management Americas, this move delivered a significant return on investment, generating over $1 billion in profit during their hold period. Harper noted that the sale marks a profitable exit for Blackstone, highlighting the transformation of Motel 6 into a robust franchise network under their management.

OYO’s expanding U.S. footprint

For OYO, the acquisition of G6 Hospitality is a crucial step in cementing its presence in North America. Since entering the U.S. market in 2019, OYO has expanded rapidly, operating over 320 hotels across 35 states. The company added 100 new properties to its portfolio in 2023 and aims to increase that number by 250 in 2024. Gautam Swaroop, CEO of OYO International, emphasised the importance of this acquisition, stating that the strong brand recognition of Motel 6, coupled with OYO’s entrepreneurial drive, will lead to sustained growth and market penetration.

Experts weigh in on OYO’s strategy

Industry analysts view this acquisition as a significant win for OYO, enabling the company to tap into the well-established franchise network of Motel 6 and Studio 6. The low-cost lodging sector in the U.S. has proven resilient, even in economic downturns, making it an attractive space for investment. OYO’s focus on using technology to streamline operations and improve guest experience will likely enhance Motel 6’s operational efficiency. Some experts also suggest that this deal positions OYO as a formidable competitor to larger U.S. brands like Wyndham and Choice Hotels.

OYO’s growth strategy, which includes a heavy reliance on technology, is expected to modernise the Motel 6 and Studio 6 brands. The company’s suite of products includes tools designed to optimise hotel operations, increase bookings, and improve customer engagement. This focus on technology will be key as OYO looks to gain a competitive edge in a crowded U.S. hospitality market.

Looking ahead: What’s next for G6 Hospitality

While G6 Hospitality will continue to operate under its existing leadership, the influence of OYO’s management and resources is expected to bring significant changes. Julie Arrowsmith, CEO of G6 Hospitality, stated that she looks forward to working with OYO to enhance the Motel 6 and Studio 6 offerings. Arrowsmith noted that OYO’s innovative approach would help build on the strong foundations laid by Blackstone, allowing the company to remain competitive while offering greater value to its guests.

With the transaction set to be finalised by the end of 2024, industry insiders will be watching closely to see how this acquisition reshapes the landscape of economy lodging in the U.S.