Blackstone announced on Friday that it has agreed to sell the budget hotel brand Motel 6 to the owner of India-based hotel giant OYO for $525 million in an all-cash transaction.
The companies said the deal is expected to close in the fourth quarter of the year, subject to customary closing conditions.
Gautam Swaroop, CEO of OYO International, said Motel 6 will continue to operate as a separate entity after the acquisition is completed.
Motel 6 was founded in Santa Barbara, California, in 1962 and is known for its tagline, “We’ll leave the light on for you.”
The brand currently has around 1,500 locations across the United States and Canada, with its franchise network generating $1.7 billion in gross room revenues.
Founded in 2012 and headquartered in Gurgaon, India, OYO operates more than 175,000 hotels and home storefronts across 35 countries, including India, Europe, and Southeast Asia, according to the statement.
OYO started expanding its business in the United States in 2019, and now owns more than 320 hotels across 35 states, after adding nearly 100 hotels last year. The company said it plans to add another 250 hotels to its U.S. portfolio this year.
The deal was made at a time when the hotel industry is facing challenges due to the rising cost of living, which has affected consumer travel habits. STR and Tourism Economics projected a decline in U.S. hotel occupancy rates for the year.
STR president Amanda Hite said the rising cost of living affected lower-to-middle income households and their ability to travel, resulting in declining demand for hotels in the lower price tier.
“The Upscale through Luxury tier is seeing healthy demand, but pricing power has waned given changes in mix and travel patterns and to a lesser extent, economic conditions.”