Do you hear that?

It’s the unmistakable sound of a cash register cha-chinging as Blackstone slaps a Sold sign on one of America’s most iconic budget hotel chains. That’s right, Blackstone Inc. just offloaded Motel 6 (yes, the Motel 6) to India’s Oyo Hotels for a cool $525 million in straight cash, homie.

(Source: Giphy) 

ICYMI, that’s the same Motel 6 that’s been burning bright with its “We’ll leave the light on for you” slogan (and the pivotal spot of a tweaker's first taste of meth) since 1962. And now, it’s about to get a spicy makeover courtesy of Oyo, a SoftBank-backed startup that’s been gobbling up properties faster than Patric Bertoletti gobbles up wieners hot dogs. 

(Source: USA Today) 

For starters, everyone’s talking about how Blackstone’s taking a “haircut” on this deal. You see, they bought Motel 6 from Accor SA back in 2012 for a whopping $1.9 billion. Fast forward to today, and they’re selling it for just over half a billion. But before you start feeling sorry for Blackstone (lol), remember this: they're still walking away with over $1 billion in profit throughout their tenure of owning the Motel 6 name. How, you ask? 

Well, because Blackstone played this game smart. They went “asset-light” (which is fancy finance-speak for “we sold off a bunch of real estate and still kept the brand”). So, while they might not own all the Motel 6 properties anymore, they still owned the rights to that sweet, sweet logo and all the royalties that came with it.

(Source: Facebook) 

Rob Harper, Blackstone’s real estate boss, summed it up best: “This is a terrific outcome for investors.” Translation: we made a boatload of cash even if the headline number looks like a markdown. 

(Source: Giphy) 

Now on the other side, what’s in it for Oyo? Well, everything. Oyo’s been hustling to get a bigger piece of the U.S. hospitality pie ever since it landed stateside in 2019. Right now, Oyo has about 320 hotels across the U.S. and plans to add 250 more this year. But with this Motel 6 acquisition, they’re basically getting a fast pass to the top tier of budget hotel chains.

Especially since Motel 6 has over 1,500 locations sprinkled all over the U.S. and Canada. So obviously, this purchase comes with an instant footprint that Oyo just can’t pass up and one Gautam Swaroop, Oyo’s international CEO, calls a “significant milestone,” for his company. 

(Source: Hotel Dive) 

The plan now is that Oyo’s not looking to mess with success. According to reports, Oyo is still going to keep Motel 6 running as a separate entity, but, but, but… what they are going to do is sprinkle some of their own magic on it.

In short, Oyo’s known for its tech-driven approach to hospitality, and they’ll likely use their global distribution network to optimize Motel 6’s performance. Which means according to Motel 6 CEO Julie Arrowshmith, these serious upgrades will help modernize the Motel 6 brand in a more efficient and innovative way (aka to keep up with its more luxurious competitors besides only relying on their cheap “stay” prices). 

(Source: Imgflip) 

Stepping back a bit, this deal isn’t happening in a vacuum either. The budget hotel segment is booming right now, thanks to a perfect storm of cost-conscious travelers and a post-Covid travel rebound that’s hotter than a Motel 6 parking lot in July. Rivals like Choice Hotels are also expanding like crazy, but Oyo’s move could give them a serious leg up in the race for the economy lodging crown within the U.S. of A. 

However, with that said though… let’s not forget who really wins here - Blackstone. 

(Source: Giphy) 

Simply put, this sell-off is just another notch on their belt of high-return hospitality plays. They bought low, executed a solid strategy, and sold high (even if it looks like a lowball number on the surface). Now of course, the deal isn’t closed yet—it still needs regulatory approval—but once it’s done, it’ll be Oyo’s biggest acquisition ever. 

My take on the matter? This is a power move for Oyo. They’re getting one of the most iconic budget hotel brands in the U.S., and they did it for a fraction of what Blackstone paid a decade ago. Sure, Motel 6 may not be glamorous (or clean), but it’s got deep roots and a loyal customer base (tweakers). 

And while this is a massive step for Oyo to expand into budget travel within the U.S., Blackstone is still doing what they do best - making billions and exiting at the right moment. Which explains why Blackstone shares are on a tear this year up +23.27% YTD. 

As for the rest of us though, I still wouldn’t advise staying at a Motel 6 myself even with Oyo’s fancy tech upgrades. But hey, if bed bugs, bodily fluids, and “sharps” are your version of “comfort living” then, all power to ya friend. 

In the meantime, keep an eye on Blackstone and this deal going forward, and as always stay safe and stay frosty, friends! 

Stocks.News does not hold positions in companies mentioned in the article.