OYO, the Indian-based hospitality giant, has announced a significant move to acquire G6 Hospitality, the company behind the popular Motel 6 and Studio 6 brands. This $525 million all-cash deal will see OYO expanding its footprint in North America by taking control of G6 Hospitality from Blackstone Real Estate. The transaction is expected to be completed by the last quarter of 2024, according to a press release from OYO.

A Strategic Acquisition

G6 Hospitality is a major player in the budget hotel market, operating more than 1,450 Motel 6 locations across the United States and Canada, along with over 200 Studio 6 extended-stay properties. Motel 6 has been known for its affordable accommodations, and its franchise network generates $1.7 billion in annual gross room revenues.

For OYO, this acquisition represents a strategic effort to solidify its position in the global hospitality market. The company has already made significant strides in the U.S., adding nearly 100 properties in 2023 alone. OYO has ambitious plans to expand further, aiming to add 250 more hotels by the end of the year.

This acquisition is particularly noteworthy as it marks OYO’s second major purchase in recent months. In a separate deal, OYO recently acquired Paris-based Checkmyguest for $27 million, signaling the company’s intent to grow its presence in both the U.S. and Europe.

OYO’s Growth Story

Founded by Ritesh Agarwal, OYO has grown rapidly since its inception, offering budget-friendly hotel rooms across the world. The acquisition of G6 Hospitality adds another chapter to OYO’s ongoing growth story. With this latest purchase, OYO stands to gain access to an extensive franchise network across North America, further diversifying its portfolio.

The acquisition of G6 Hospitality comes at a time when OYO is also gearing up for its Initial Public Offering (IPO). The company raised $175 million in a recent funding round, with $100 million contributed by its founder, Ritesh Agarwal. This financial backing positions OYO strongly for its future plans. OYO is expected to refile its draft IPO papers soon, after earlier withdrawing its draft due to unfavorable market conditions.

A Look Back at G6 Hospitality

G6 Hospitality has been under Blackstone Real Estate’s ownership since 2012, when Blackstone acquired it from French hotel company Accor for $1.9 billion. The Motel 6 and Studio 6 brands are well-established in the budget hospitality sector, making them an attractive acquisition target for OYO.

Financial Performance

OYO has made significant strides in improving its financial health. The company posted a Rs 239 crore profit after tax in the last fiscal year, a major achievement as it continues its global expansion. However, its revenue from operations slightly dipped by 1.4%, declining from Rs 5,464 crore in FY23 to Rs 5,389 crore in FY24.

With the acquisition of G6 Hospitality, OYO is poised to strengthen its position in the global market while continuing to refine its business model for sustained profitability.

Conclusion

OYO’s acquisition of G6 Hospitality for $525 million is a strategic move that reflects the company’s ambition to become a global leader in the budget hospitality sector. As OYO continues to grow and expand its reach, this acquisition will provide a strong foothold in the U.S. market, paving the way for future success.

Key phrases: OYO acquisition, G6 Hospitality, Motel 6, Studio 6, budget hotel market, OYO expansion, Ritesh Agarwal, Blackstone Real Estate, OYO IPO, hotel franchise network