Blackstone Agrees to Sell Motel 6 to India-Based Hotel Company for $525 Million

A sign marks a Motel 6 property on July 11, 2018, in Espanola, New Mexico. Brian Snyder/Reuters

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.

Oravel Stays, the parent company of OYO, will acquire G6 Hospitality, which controls both the Motel 6 and Studio 6 hotel brands. Blackstone acquired the brands from Accor for $1.9 billion in May 2012.

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.

“This acquisition is a significant milestone for a startup company like us to strengthen our international presence,” Swaroop said in a press release.

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.

“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,” Rob Harper, head of Blackstone Real Estate Asset Management Americas, said in a statement.

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.

In June, STR and Tourism Economics downgraded their forecasts for average daily rate by 1 percentage point and for revenue per available room by 2.1 percentage points, suggesting lower-than-expected hotel performance this 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.

“We have seen a bifurcation in hotel performance over the first four months of the year, which we don’t believe will abate soon,” Hite said in a press release.

“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.”