Budget hotel company Oyo, one of India's largest start-ups, has inked a deal to acquire Motel 6 operator G6 Hospitality.
OYO will pay $525 million in all-cash to Blackstone Real Estate in a deal that also includes the Studio 6 extended-stay brand and is expected to close in the fourth quarter of this year.
The Indian startup opened its first U.S. location in 2019 and now operates more than 320 hotels across 35 states. OYO has a franchise network of about 1,500 in the U.S. and Canada and is dramatically expanding its presence in North America with the acquisition of Motel 6, arguably the best-known budget hotel brand in the U.S.
“This acquisition marks an important milestone for a start-up like us in strengthening our international presence,” Oyo International CEO Gautam Swaroop said in a statement, adding that Motel 6 “will continue to operate as an independent entity.”
Founded in 2012 and backed by SoftBank, Oyo reached a valuation of $10 billion in 2019 but has struggled in recent years amid pandemic-related challenges and criticism over practices such as offering rooms in empty and unlicensed hotels.
This summer, TechCrunch reported that the new funding round had valued the company at $2.5 billion, less than the total capital it had raised. (Oyo has denied the valuation cut.)
Motel 6, on the other hand, was founded in 1962. It popularized the concept of budget hotels (originally charging $6 a night) and was acquired by Blackstone in 2012 for $1.9 billion.