Blackstone Selling Motel 6 Lodging Brand to India’s Oyo for $525M

Private equity giant Blackstone has agreed to sell the franchiser of Motel 6, an American budget hotel chain, to Indian hospitality group Oyo for $525 million.

Oyo’s parent firm, Oravel Stays Ltd, will acquire G6 Hospitality in an all-cash deal, Blackstone said late last week in a release. Texas-based G6 has a franchise network of 1,500 hotels in the US and Canada, including the low-priced Motel 6 and extended-stay Studio 6 brands.

Named for the $6 nightly rate it charged in its early years, Motel 6 will continue as a separate entity under Oyo, which entered the US in 2019 and now runs more than 320 hotels across 35 states. The Gurugram-based group, which is backed by Japan’s SoftBank Vision Fund, said it added nearly 100 hotels to its US portfolio last year and aims to add 250 locations in 2024.

“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,” said OYO International CEO Gautam Swaroop.

Checking Out

Blackstone bought Motel 6 from French hotel giant Accor in 2012 for $1.9 billion and launched a plan to turn the business into an asset-light lodging company. After a multimillion-dollar campaign to renovate the chain’s hotels, the franchise network generates annual room revenue of $1.7 billion, according to Manhattan-based Blackstone.

“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,” said Rob Harper, head of real estate asset management for the Americas at Blackstone. “We believe G6 is extremely well-positioned for the future and we look forward to seeing its brands continue their success in the years to come.”

Blackstone has made hotels a key part of its real estate strategy spearheaded by president and chief operating officer Jon Gray. The firm purchased Hilton Worldwide in 2007 for $26 billion, including $20.5 billion in leverage, and staged a successful $2.35 billion IPO of the company, which also owns Conrad, DoubleTree and other brands, in 2013.

Blackstone sold a 25 percent stake in Hilton to China’s HNA Group in 2016 for $6.5 billion and exited the company entirely in 2018, reportedly taking a $14 billion profit on its original investment.

More recently, the firm sold the 268-room Hilton Paris Opera to Singapore’s City Developments Ltd for €240 million ($260.9 million) in a transaction completed in May. Blackstone had acquired the property, then known as Concorde Opera, in 2013 for €153 million on behalf of its fourth European opportunistic real estate fund.

Scraping a Profit

The Motel 6 deal is expected to close in the fourth quarter of this year, expanding Oyo’s footprint after the privately held group reported its first-ever annual profit after tax of INR 2.3 billion ($28 million).

Founded in 2012 by Ritesh Agarwal, Oyo received more than $1.5 billion in investment from SoftBank and sought to go public in 2021 in an IPO valuing the group at $12 billion, but the listing process stalled.

Bloomberg reported in January that Malaysia’s sovereign wealth fund, Khazanah Nasional Berhad, was in talks to lead a $400 million funding round for Oyo.