OYO, the global travel technology brand operated by Oravel Stays Limited, has taken a significant step towards expanding its footprint in the economy lodging sector. The company has entered into a commitment letter with Deutsche Bank AG New York Branch (DBNY) and Deutsche Bank Securities Inc. for a new term loan facility to finance its recently announced acquisition of G6 Hospitality, the parent company of Motel 6 and Studio 6 brands.
This financial arrangement marks a crucial development for OYO, which has been making waves in the hospitality industry. The acquisition of G6 Hospitality from Blackstone represents a strategic move to strengthen OYO's position in the economy lodging segment, particularly in the North American market.
The timing of this loan commitment is noteworthy, as it coincides with OYO's recent financial milestones. The company reported its first-ever profit after tax (PAT) of approximately ₹17 million, according to its annual report. Additionally, OYO has demonstrated consistent financial growth, with eight consecutive quarters of positive Adjusted EBITDA. The company's Adjusted EBITDA saw a remarkable 215% increase, reaching approximately $105 million in FY 23-24, up from $33 million in the previous fiscal year.
OYO's financial trajectory has been further bolstered by a recent equity funding round of $175 million, led by the company's founder Ritesh Agarwal. This round saw participation from various Indian family offices and private investors, indicating strong confidence in OYO's business model and growth prospects.
The loan commitment from Deutsche Bank and the acquisition of G6 Hospitality could have far-reaching implications for the hospitality industry. It signals OYO's ambition to become a major player in the global economy lodging market, potentially reshaping the competitive landscape. For consumers, this move may lead to an expanded network of affordable accommodation options, blending OYO's technology-driven approach with the established brand recognition of Motel 6 and Studio 6.
As OYO continues to grow and diversify its portfolio, industry observers will be watching closely to see how this acquisition and financial backing translate into market performance and customer experience enhancements. The company's ability to successfully integrate G6 Hospitality's operations and leverage its brand equity will be critical factors in determining the long-term impact of this strategic move on the economy lodging sector.
