Oyo Acquires G6 Hospitality led by Ritesh Agarwal, is a travel-tech startup that has garnered headlines following its acquisition of US-based G6 Hospitality, operator of Motel 6 and Studio 6 brands. The deal with Blackstone Real Estate worth $525 million is an important milestone for Oyo in enhancing its North American market footprint. Let’s dig into the acquisition, its impact, and the strategic vision behind it.
Oyo Acquires G6 Hospitality: The Acquisition: Expanding Horizons in North America
Acquiring G6 Hospitality would bring nearly 1,500 franchised hotels across the US and Canada into Oyo’s books. This would further strengthen operational scale and financial performance of the business. Oyo expects that following this integration, it would be able to reach $3 billion in gross booking value, with G6 Hospitality alone adding $1.7 billion.
According to Ankit Tandon, Oyo’s Chief Business Officer, the acquisition was very transformative and brought potential growth opportunities, especially with the synergies available from Motel 6 and Studio 6 brands. It has been a move aligned with Oyo’s vision for strengthening its global footprint, riding on the significant brand equity of G6 Hospitality in North America.
Oyo Acquires G6 Hospitality Financial Impact: EBITDA to the Rescue
This acquisition will substantially increase Oyo’s EBITDA. The contribution of Motel 6 to EBITDA of Oyo for FY25 is expected to be over ₹630 crore. As a reference point, the adjusted EBITDA for FY24 stood at ₹877 crore for the company.
The deal will likely increase Oyo’s EBITDA to over ₹2,000 crore by FY26, which shows its long-term profitability. Oyo’s US operations have been performing well, with the company already managing 400 hotels across 35 states.
Growth plans and leadership for G6 Hospitality
With an intent of hassle-free inclusion in Oyo operations, the company has given the title of CEO at G6 Hospitality to Sonal Sinha. Over the next one year, it expects to add over 150 properties under the brand Motel 6 and Studio 6. As such, these expansion strategies ensure that all the new inclusions support the Oyo’s agenda of strengthening a newly inducted brand.
Oyo has more than 184,000 properties across the globe with strong presence in Europe, UK, Southeast Asia, and the Middle East. Europe is the company’s key market and is currently supported by its OYO Vacation Homes (OVH) business. Recent acquisitions in the vacation rental market include CheckMyGuest in Paris and Direct Booker in Croatia.
Key European portfolio companies:
- DanCenter: Manages 12,000 vacation homes across Scandinavia.
- Belvilla: Offers 65,000 holiday homes across 20 countries.
- Traum-Ferienwohnungen: Lists 100,000 vacation homes on its platform.
In FY24, Oyo nearly tripled its EBITDA in the European vacation home segment, showcasing the success of its focused growth strategy.
Oyo Acquires G6 Hospitality Journey to Profitability
G6 Hospitality acquisition marks Oyo’s milestone as it crosses the profitability bar. The company reported a profit of ₹229 crore in FY24, the first time it has reported profit, while in FY23, it had incurred a loss of ₹1,286 crore. Oyo continued to grow with a profit of ₹132 crore during the first quarter of FY25.
The Road Ahead for Oyo
Oyo’s acquisition of G6 Hospitality is a clear indicator of its ambition to dominate the global hospitality market. Adding a significant number of hotels to its North American portfolio and leveraging synergies with G6 Hospitality, Oyo is poised to achieve significant growth. With strategic leadership, strong financial performance, and an expanding global footprint, Oyo’s journey toward becoming a hospitality giant is well on track.
FAQs
1. What does Oyo G6 Hospitality acquisition mean for the company?
Acquires 1,500 franchised hotels spread across the US and Canada. Which will further strengthen Oyo’s presence in North America as well as improve the revenue and profitability of the group.
2. How is acquisition going to impact the finance of Oyo?
Going forward, Oyo predicts that EBITDA should cross ₹2,000 crore. By FY26 as Motel 6 contribution in FY25 stands at ₹630 crore.
3. Who will run G6 Hospitality after the acquisition?
Sonal Sinha has been made CEO of G6 Hospitality and is supposed to handle integration and growth of the brand under Oyo.
4. What is the strategy for G6 Hospitality with Oyo?
Oyo would be adding over 150 hotels in Motel 6 and Studio 6 in the coming year. Thus, this is to boost the North American footprint for the company.
5. How has Oyo been doing in the recent financial years?
Oyo achieved its first-ever profit of ₹229 crore in FY24, which reversed a ₹1,286 crore loss reported in FY23. In Q1 FY25, the company also reported a profit of ₹132 crore.
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