Motel 6 was sold to Indian hospitality startup OYO for $525 million.
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OYO, the 11-year-old Indian hospitality startup, is acquiring Motel 6 owner G6 Hospitality for $525 million in an all-cash deal, the budget-lodging chain’s parent company, Blackstone Real Estate, announced in a press release on Friday.
OYO, a well-known brand that manages over 10,000 properties in India, was once valued at $10 billion, but that figure plummeted amid the COVID-19 pandemic. Japanese investment firm SoftBank, which owns more than 45% of OYO, lowered its valuation of the Indian company to $2.7 billion in 2022. Then in August this year, OYO saw its valuation drop further to $2.4 billion after it raised $173.5 million in Series G funding.
A hospitality startup with fueled global ambitions, OYO has expanded rapidly to more than 35 countries across Europe, Southeast Asia and North America since its founding in 2013. But along with its explosive growth, the company has faced legal and regulatory challenges in key markets, been forced to restructure loans and withdraw its initial public offering (IPO) papers twice in the past three years.
The acquisition of Motel 6 and its sister extended-stay brand, Studio 6, gives Oyo a fast track to U.S. expansion as it gears up for an India public listing. “This acquisition marks an important milestone for a startup like us in strengthening our international presence,” Oyo International CEO Gautam Swaroop said, noting that Motel 6 “will continue to operate as an independent entity.”
OYO began operations in the US in 2019 and currently owns 320 properties across 35 states, with another 250 planned to open by the end of 2024. Motel 6 owns around 1,500 properties across the US and Canada. Both companies target budget travelers, offering clean rooms with basic amenities and very low rates below $60 a night. The acquisition is expected to close by the end of the year.
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This year has been a remarkable turnaround for OYO, with the company reporting its first-ever annual profit of $27.5 million in fiscal 2024, marking a significant turnaround from a loss of $153.9 million in 2023.
Blackstone bought Motel 6 from French hotel group Accor for $1.9 billion in 2012. At first glance, the OYO deal may seem like a poor return for investors, but Blackstone says it has been working to improve Motel 6 properties over the past 12 years, selling hundreds of properties and transforming the chain into an asset-light franchise-based operation that now generates $1.7 billion in annual gross room revenue.
“This transaction marks a fantastic outcome for our investors and the culmination of an ambitious business plan that has more than tripled our investors’ capital and generated more than $1 billion in profits during our holding period,” said Rob Harper, head of Blackstone Real Estate Asset Management Americas.
