OYO, through its parent company Oravel Stays, is making a significant move in the hospitality sector by acquiring G6 Hospitality from Blackstone Real Estate for $525 million in an all-cash deal. This acquisition, announced on September 21, 2024, is expected to close in the fourth quarter of 2024 and includes nearly 1,500 Motel 6 and Studio 6 locations across the United States and Canada [92aabe71].
G6 Hospitality, which generates approximately $1.7 billion in gross room revenues, has transformed into a leading asset-light lodging company under Blackstone's management. Gautam Swaroop, CEO of OYO International, highlighted the acquisition's significance for enhancing OYO's international presence and plans to leverage its technology and marketing expertise to further develop the Motel 6 and Studio 6 brands [92aabe71].
Currently, OYO operates over 320 hotels across 35 states and aims to add 250 more by the end of 2024. This strategic acquisition aligns with OYO's ambition to strengthen its position in the budget hotel segment, catering to a growing demographic of cost-conscious travelers [92aabe71].
The acquisition follows a period of significant investment by Blackstone in G6, which reportedly tripled investors' capital and generated over $1 billion in profit since its purchase in 2012 for $1.9 billion [92aabe71].
This move comes as the U.S. hotel sector faces challenges such as declining occupancy rates and stagnant room prices. However, industry analysts remain optimistic about the economy hotel segment's recovery, projecting improvements in 2025 due to increased federal infrastructure spending that could boost travel and tourism [0448f196].
In a related context, Choice Hotels has reported a 'normalization' in the U.S. market, maintaining its profit forecast despite ongoing challenges. The company describes the current travel patterns as returning to more typical levels, indicating a resilient outlook for the hospitality industry [66ef415c].
As OYO embarks on this significant acquisition, it underscores a broader trend of consolidation within the hotel industry, where established brands are seeking to expand their market presence and adapt to changing consumer preferences. OYO's recent financial performance also reflects its growth trajectory, having reported its first annual profit after tax of ₹229 crores for FY24 and raising ₹1,457 crores in funding, valuing the company at $2.4 billion [92aabe71].