OYO’s Acquisition Of Motel 6 To Take Its EBITDA Past INR 2,000 Cr Mark In FY26

Travel tech major OYO has informed its investors that the acquisition of Motel 6 and Studio 6 parent G6 Hospitality will take its earnings before interest, tax, depreciation, and amortisation (EBITDA) past the INR 2,000 Cr mark in the financial year 2025-26 (FY26), sources told Inc42.

OYO expects the new acquisition to start showing results immediately. “The acquisition of G6 Hospitality entails a quick return of investment for OYO. The reason behind this is the fact that both OYO and G6 are EBITDA positive and command large footprints in India and America, respectively. Thus, OYO’s EBITDA will get a boost because of the move,” one of the sources said. 

The development was first reported by PTI. Sources told the publication that OYO will be financing the acquisition in a mix of debt and equity. Further, the startup is also set to utilise $250 Mn from its recent fundraise and existing cash balance. In August, OYO raised INR 1,457 Cr (around $175 Mn) in a down round led by Patient Capital, along with J&A Partners and ASK Financial Holdings. 

Marking its biggest acquisition till date, OYO, last week, announced the acquisition of G6 Hospitality from Blackstone Real Estate for $525 Mn in an all-cash transaction. The deal is expected to close in the fourth quarter of 2024.

Besides the acquisition, OYO is looking to add about 250 hotels to its US network in 2024. As of September 20, OYO runs 320 hotels across 35 states in the country. 

On the other hand, G6 owner Blackstone claims that the Motel 6 brand operates a franchise network of about 1,500 hotels across the US and Canada. Blackstone bought the motel chain for $1.9 Bn in 2012. 

Since its acquisition, Blackstone Real Estate Asset Management Americas’ head Rob Harper claims that Blackstone more than tripled its investors’ capital and generated over $1 Bn in profit over its hold period. 

“Motel 6’s franchise network produces gross room revenues of $1.7 Bn, which generates a strong fee base and cash flow for G6,” Blackrock said in a statement. 

OYO, which has delayed its IPO plans multiple times, reported its first profitable year in FY24. The unicorn posted a net profit of INR 229.5 Cr during the year as against a net loss of INR 1,286.5 Cr in FY23, as per its filings with the Ministry of Corporate Affairs. 

However, operating revenue dipped 1.3% to INR 5,388.7 Cr in FY24 from INR 5,463.9 Cr in the previous fiscal year. 

Moving forward, the startup’s founder and CEO Ritesh Agarwal said that OYO is expecting to triple its PAT to INR 700 Cr in the ongoing fiscal year. For the improvement in its top line, the company said in its annual report that it will be looking to expand across Europe, the US, Southeast Asia and the Middle East, besides focusing on its India business. 

As part of this plan, OYO also acquired Paris-based premium rental homes company Checkmyguest for INR 230 Cr ($27.4 Mn) in a cash and stock deal last month.