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• Oravel Stays, Oyo's parent company, is set to acquire US-based Motel 6 and Studio 6 chains for $525 million.
• The acquisition will transform Oyo into a major player in the US and Canadian hospitality industry.
• Oyo's International CEO, Gautam Swaroop, sees the acquisition as a milestone for Oyo's global expansion.
• The acquisition is expected to significantly strengthen Oyo's presence in the US hospitality market.

In a significant move that marks a new chapter in the global hospitality industry, Oravel Stays, the parent company of Indian hospitality giant Oyo, is set to acquire the US-based Motel 6 and Studio 6 chains. The acquisition, valued at a staggering $525 million, will see Oyo take control of approximately 1,500 facilities spread across the United States and Canada. This strategic move was announced on September 21, and it is expected to significantly bolster Oyo's international presence.

The acquisition of G6 Hospitality, the parent company of the two budget lodging chains, is a game-changer for Oyo. It will transform the company into a major player in the US and Canadian hospitality industry, a sector already heavily influenced by Indian Americans. The deal is a testament to Oyo's ambitious global expansion strategy and its commitment to delivering quality, affordable accommodation to customers worldwide.

Motel 6, a brand synonymous with affordable rooms that adhere to high corporate standards in maintenance and hospitality, is a household name across the US and Canada. Its franchise network generates gross room revenues of $1.7 billion, according to Blackstone, the investment company from which Oyo is acquiring the chains.

Oyo's Strategy and Future Plans

Studio 6, on the other hand, is an extended stay network catering to guests seeking to rent rooms with more facilities for longer periods. Oyo's International CEO, Gautam Swaroop, expressed his excitement about the acquisition, stating that the group would continue to operate as a separate entity. He emphasized the significance of this milestone for a startup like Oyo, which is keen on strengthening its international presence.

He further added that the strong brand recognition, financial profile, and network of Motel 6 in the US, combined with Oyo's entrepreneurial spirit, would be instrumental in charting a sustainable path forward for the company. Blackstone, the current owner of Motel 6 and Studio 6, expressed confidence in Oyo's ability to leverage its comprehensive technology suite, global distribution network, and marketing expertise to further strengthen the Motel 6 and Studio 6 brands and drive continued financial growth.

Since its launch in the US in 2019, Oyo has steadily increased its portfolio and now operates 320 hotels in 35 states, with about 100 of these acquired last year. The acquisition of Motel 6 and Studio 6 will significantly add to this portfolio, further solidifying Oyo's presence in the US hospitality market.

The Impact on the US Hospitality Industry

The US is home to 108,000 hotels and motels, and according to the Asian American Hotel Owners Association, Indian American entrepreneurs own about 60 per cent of them. A large number of Motel 6 facilities are already run by Indians, and this acquisition will further increase Indian influence in the sector.

Blackstone had bought Motel 6 from the French hotel company Accor in 2012 for $1.9 billion. While selling the company for only $525 million may seem like a bad deal, the travel industry publication Skift reported that Blackstone made a sizeable profit by selling off many of the properties it acquired. Blackstone managed to more than triple its investors' capital and generate over $1 billion in profit by investing $900 million in improving the properties and then selling off hundreds of them.

The acquisition of Motel 6 and Studio 6 by Oyo is reminiscent of similar historical events in the hospitality industry. For instance, in 2007, Blackstone Group acquired Hilton Hotels Corporation for $26 billion, marking one of the largest leveraged buyouts in history. This acquisition transformed Blackstone into one of the largest hotel owners in the world.