Oravel Stays, the parent company of the Indian travel technology company OYO, has acquired G6 Hospitality for $525 million in an all-cash deal. G6 Hospitality is an American company that has franchised iconic brands like Motel 6 and Studio 6, and it is owned by Blackstone Real Estate. This deal is expected to close in the 4th quarter of 2024.
How will this acquisition be financed?
Softbank-banked Oravel Stays is anticipated to finance this deal in all cash by raising fresh debt despite no official comments on the details of the transactions from the company representatives.
What do the company’s higher-ups say?
As per the Chief Executive of OYO International, Gautam Swaroop, “This acquisition is a significant milestone for a startup company like us to strengthen our international presence. Motel 6’s strong brand recognition, financial profile, and network in the US, combined with OYO’s entrepreneurial spirit will be instrumental in charting a sustainable path forward for the company which will continue to operate as a separate entity.”
Julie Arrowsmith, CEO of G6 Hospitality said, “OYO’s innovative approach to hospitality will allow us to enhance our offerings and great value to our guests while maintaining the iconic Motel 6 brand that travelers have trusted for over six decades.”
Rob Harper, Head of Blackstone Real Estate Asset Management Americas, said, “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. We believe G6 is extremely well-positioned for the future and we look forward to seeing its brands continue their success in the years to come.”
How is OYO’s market performance?
OYO entered the US market in the year 2019. It is currently operating with 320 hotels across 36 states. In 2023, the company expanded by adding 100 hotels. This it has plans to add 250 more. In India, the company mainly focuses on providing hotel aggregation services, whereas in Europe, it focuses on the home rental business. Worldwide, OYO manages 1,75,000 hotels and home rentals across India, Europe, Malaysia, and Indonesia.
How is OYO’s financial performance?
In FY23-24, Oyo recorded a net profit of Rs. 229.5 crore against a loss of Rs. 1,286.5 crore in FY23. Its operational revenue also saw a decline of 1.4%. The EBITDA of OYO is expected to cross Rs. 2,000 crore in FY25-26.
It is expected that Motel 6 will add over Rs. 630 crore to it EBITDA as well. In terms of funding, it has recently raised Rs. 1,457 crores at a valuation of $2.5 billion from several investors including:
- InCred Wealth
- J&A Partners
- ASK Financial Holdings
- Patient Capital
This capital will be used to support OYO’s global expansion strategies.
Also Read: Oyo Posts First Ever Annual Profit Of Rs 229 Crore In FY 2024
What are the implications of this acquisition?
Motel 6 franchises generate a gross revenue of $1.7 billion that providing G6 Hospitality with a steady cash flow. Through this acquisition, OYO will be able to leverage:
- G6 comprehensive technology suite,
- Its global distribution network, and
- Marketing expertise
This acquisition is expected to boost OYO’s international expansion plans and profitability as well as it will strengthen the brands Motel 6 and Studio 6.
Investment Opportunities in OYO Unlisted Shares
OYO is spread across 80 countries with 1 million rooms, and this new hotel is an addition to the list but can contribute more than a few rooms combined. The growth line of OYO is rising each year and is driving many to invest in it. The OYO share price is currently trading around ₹44-₹45 per share.
If you want to invest in OYO, today is the best time. Get in touch with Stockify before the OYO rooms share price increases. Stockify is India’s leading unlisted stock trading platform. Helping investors like you invest in trending unlisted shares from the comfort of your zone.
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