In a major development, Oyo said Wednesday that it has agreed to acquire Motel 6, one of the most recognizable budget motel brands in America, as part of an all-cash deal worth $525 million. It also includes the extended-stay counterpart, Studio 6. The acquisition will be a strong addition to the international campaign and the continuous process of increasing the company's presence in the United States for Oyo. G6 Hospitality, the parent company of Motel 6 and Studio 6, has been acquired by Blackstone, a New York-based investment firm, which owned G6 since 2012. Blackstone took away this brand for $1.9 billion and invested significantly in the past to make it a franchise-based operation. Blackstone will indeed be exiting the motel business by making enormous profits for its investors.
Having its inception in India, the company, Oyo, has witnessed rapid growth and development to one of the largest hotel chains across the world. Launched over a decade ago, the company now functions with more than 320 hotels spread across 35 states in the U.S. Another 250 are also to be added at the end of the year.
Gautam Swaroop, head of Oyo's international division, highlighted the deal.“This acquisition is a significant milestone for a startup company like us to strengthen our international presence,” he added. Blackstone sold G6 Hospitality, after investing years of tireless efforts to transform Motel 6 and Studio 6 into profitable franchise businesses. Blackstone's Senior Managing Director Rob Harper described the sale as an outstanding return on investment for investors. According to Harper, this was an extremely successful implementation of a very aggressive business plan that revitalized Motel 6 and then cashed out the value. Blackstone is hoping to divest G6 to Oyo in a hunt to seize new opportunities that will maximize returns on invested capital for the shareholders.
Why This Deal Matter for Oyo
This acquisition places a solid foothold for Oyo within the hospitality market of the U.S., an area of prime focus. Every American knows this brand, especially next to highways and small towns. Buying Motel 6 with Studio 6 will be helpful to Oyo in serving the kind of traveler who might need just an overnight stopover and others who will require longer stays. Oyo's expansion across the United States marks its next step in trying to solidify its position as a formidable player on the international stage. The company was founded by Ritesh Agarwal back in 2013, and today it operates in over 80 countries. Oyo has enjoyed some real success, not just through innovative uses of technology.
What's Next for Oyo?
With the deal likely to close by year-end, this has further become a great stride in the journey toward Oyo becoming a leading global hotelier. According to experts, this move shall go a long way in cementing Oyo's presence in North America, thus far dominated by established hotel chains. Oyo emphasizes affordable accommodation and strategic growth that puts it at a strong position to compete well with other big players in the market.
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