OYO estimates Ebidta to cross Rs 2,000 cr in FY26 with Motel 6 acquisition

The EBITDA of IPO-bound travel tech platform OYO is expected to cross Rs 2,000 crore in 2025-26 with the American budget hotel chain Motel 6 adding substantially to its topline, according to documents.

The travel tech unicorn estimates that Motel 6 will add over Rs 630 crore to its EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) in the coming financial year, which will be the first full year of its integration.

The travel tech major is expected to refile its initial public offering (IPO) papers with markets regulator Securities and Exchange Board of India (SEBI) after refinancing its existing USD 450 million Term Loan B (TLB) at a lower interest rate.

OYO on Saturday announced it has agreed to acquire Motel 6 and Studio 6 brands from Blackstone Real Estate for USD 525 million in an all-cash transaction.

Oravel Stays, the parent company of OYO stated that it will acquire G6 Hospitality, the leading economy lodging franchisor and parent company of Motel 6 and the chain's offshoot hotel brand, Studio 6.

The transaction is expected to close in the fourth quarter of 2024.

According to sources, OYO is planning to deploy a mix of debt and equity to finance the acquisition. It will utilise USD 250 mn from the recently concluded fund raise and existing cash balance.

The travel tech chain's hotel count grew from 12,938 hotels at the end of FY23 to 18,103 at the end of FY24, marking a 40 per cent growth.

"The acquisition will add another 1,500 additional hotels taking the total hotel count to nearly 20,000. But at an average of 110 rooms per hotel in Motel 6 and a higher average room rent, it will significantly augment OYO's topline," a source said.

Motel 6 operates 1,500 franchised hotels across the US and Canada and extended stay properties called Studio 6.

Before the acquisition, OYO had projected its PAT to surge over 3-fold to Rs 700 crore in the current fiscal vs FY24. OYO reported its first-ever profit after tax (PAT) of Rs 229 crore in FY24 and followed it up with a profit of Rs 132 crore in Q1 FY 2025. OYO's Adjusted EBITDA grew by 215 per cent to reach Rs 877 crore in FY24.