SoftBank-backed hospitality company Oravel Stays, the parent company of Oyo Hotels and Homes, has entered into a financial commitment with Deutsche Bank AG New York Branch (DBNY) and Deutsche Bank Securities for a new term loan facility.
As a part of the arrangement, DBNY has provided the company with a commitment for a new term loan facility to finance Oyo’s recently announced acquisition of G6 Hospitality (G6).
G6 Hospitality, the parent company of Motel 6 and Studio 6, was acquired from Blackstone, representing a significant step in Oyo’s expansion into the North American market.
G6 Hospitality is a leading economy lodging franchisor, with a network of over 1,400 properties across North America. The acquisition seems to align with company’s strategy to strengthen its presence in the region while expanding its portfolio of budget and mid-scale hospitality offerings.
Oyo recently reported its first-ever profit after tax (PAT) of approximately ₹17 million in its FY 2023-24 annual report. In addition, it achieved eight consecutive quarters of positive adjusted EBITDA, which grew significantly year-on-year to $105 million in FY 2023-24, compared to $33 million in FY 2022-23.
Earlier this year, Oyo raised $175 million in equity funding, with contributions from its founder Ritesh Agarwal and a consortium of investors, including prominent Indian family offices and private equity players.
According to the Hospitality Global Market Report 2024, the global hospitality industry is experiencing a recovery, with the market size expected to grow from $4,699.57 billion in 2023 to $5,816.66 billion by 2027, at a compound annual growth rate (CAGR) of 5.5%.
In line with this trend, the hospitality sector has witnessed similar developments, with various operators securing funding for acquisitions and expansion. Recently, budget hotel chain Red Roof, which operates over 600 properties, primarily in the Midwest, Southern, and Eastern United States, secured a new line of credit to upgrade its properties.
