Oravel Stays Limited, operating under the global travel technology brand OYO, has taken a major step forward in its expansion plans by securing a loan commitment from Deutsche Bank AG New York Branch (DBNY) and Deutsche Bank Securities Inc. The commitment letter outlines a new term loan facility specifically intended to finance OYO’s recently announced acquisition of G6 Hospitality, the parent company of the well-known Motel 6 and Studio 6 brands.
This financial arrangement is set to bolster OYO’s position in the hospitality industry, particularly in the economy lodging sector. G6 Hospitality, previously owned by Blackstone, is a leading economy lodging franchisor, and its acquisition by OYO signifies a strategic move to expand the company’s portfolio and market presence.
The loan commitment comes at a time when OYO is experiencing significant financial growth. The company recently reported its first-ever profit after tax (PAT) of approximately ₹17 million, according to its annual report. This milestone is accompanied by eight consecutive quarters of positive Adjusted EBITDA, with the figure growing by an impressive 215% to reach approximately $105 million in FY 23-24, up from $33 million in the previous fiscal year.
OYO’s financial health is further underscored by a recent equity funding round that raised $175 million. This round was led by the company’s founder, Ritesh Agarwal, and included participation from various Indian family offices and private investors. Notable participants included InCred Wealth, J&A Partners, investor Ashish Kacholia, the family office of Mankind Pharma promoters, and ASK Financial Holdings.
The acquisition of G6 Hospitality and the securing of this loan facility represent significant steps in OYO’s growth strategy. By incorporating the Motel 6 and Studio 6 brands into its portfolio, OYO is poised to strengthen its foothold in the economy lodging segment, particularly in the North American market.
This development is likely to have far-reaching implications for the hospitality industry. OYO’s expansion through the acquisition of established brands like Motel 6 and Studio 6 could lead to increased competition in the economy lodging sector. It may also result in the introduction of OYO’s technology-driven approach to a wider range of properties, potentially transforming guest experiences and operational efficiencies across a broader spectrum of the hospitality market.
For consumers, this move could translate into more diverse and potentially improved lodging options in the economy segment. The integration of OYO’s technology with G6 Hospitality’s established brand presence might lead to enhanced booking experiences and service offerings for guests of Motel 6 and Studio 6 properties.
The loan commitment from Deutsche Bank not only facilitates this significant acquisition but also reflects confidence in OYO’s business model and growth prospects. As the company continues to expand its global footprint and diversify its portfolio, it is likely to play an increasingly influential role in shaping the future of the hospitality industry, particularly in the budget and mid-scale segments.
As OYO moves forward with this acquisition and continues its trajectory of financial growth, the hospitality industry will be watching closely to see how this merger of technology-driven operations with established economy brands unfolds. The success of this venture could potentially set new standards for consolidation and technological integration in the lodging sector.
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