PC: Hotel Management
In a play of strategic positioning slatted to take shape the hospitality industry, OYO made known that it had agreed to acquire G6 Hospitality, owner and operator of the well-known Motel 6 and Studio 6 brands, in an all-cash deal worth $525 million. The deal is coming to be quite transformative as it waits to be finalized by the last quarter of 2024, according to a statement from OYO.
MNC hospitality brand OYO has scored yet another milestone in its journey after acquiring G6 Hospitality, post the absorption of iconic brands Motel 6 and Studio 6 brands under its diverse portfolios further strengthening its foothold in this competitive hospitality market. Blackstone had earlier bought the Motel 6 and Studio 6 brands from French hotel giant Accor in a very significant deal amounting to $1.9 billion more than eight years ago. Currently, Motel 6 has a strong footprint with more than 1,450 hotels across the US and Canada, while Studio 6 accommodates guests across over 200 hotels.
Needless to say, the franchise network of Motel 6 brings in an annual gross room revenue of $1.7 billion, which means it is significant in the marketplace and a potential source of revenue. OYO has added nearly 100 properties in the US in 2023 and plans to add another 250 in the calendar year as reported recently; these are important statistics pointing to its expansion and diversification efforts.
The acquisition marks the second significant buy for OYO in the recent past, after its purchasing of Paris-based Checkmyguest for an amount more than $27 million. Along with this acquisition, the growth-driven, value-optimizing strategy, and expansion strategy OYO keeps following it ensures improving its offerings and spreading its global footprint while positioning itself as the most significant player in the evolving hospitality landscape.
It comes as OYO closed its successful funding round of $175 million, where founder Ritesh Agarwal himself chipped in $100 million from his pocket. Also, OYO will shortly be filing draft IPO papers after having earlier withdrawn the draft due to unfavourable market conditions, which is a prima facie indicaton that it is committed to long-term growth and financial transparency.
OYO had achieved profitability in the previous fiscal year with a commendable profit after tax of Rs 239 crore. The company’s revenue from operations declined marginally, falling 1.4% to Rs 5,389 crore for FY24, down from Rs 5,464 crore in FY23. This performance, however, speaks to the resiliency and adaptability OYO applies toward sensitive market dynamics along with driving operational efficiencies and strategic investments for sustained growth.
Acquisition of G6 Hospitality marks a strategic leap for OYO, which places the company in a position to position itself further to augment market presence, diversified offerings, and fast-accelerated growth avenues in this dynamic hospitality sector. More distinctly placed as a leader in global hospitality, it emphasizes action and momentum outpacing targets.
