The Blackstone Group, already the owner of 5,613 hotels globally, including hotel companies Hilton Worldwide, La Quinta and Extended Stay, is now adding the Motel 6 chain to its growing lodging portfolio. Early this morning, Blackstone agreed to purchase the Motel 6 and Studio 6 chains of 1,102 economy hotels in the U.S. and Canada from Accor for $1.9 billion.
The move by Accor is no surprise. The French-based company had publically stated its goal of moving toward the asset-light model favored by most hotel companies and CEO Denis Hennequin last September announced the company would listen to offers for its North American brands. At that time, Jim Amorosia was promoted to CEO of Motel 6 and Studio 6 and in an interview with Lodging Hospitality, he discussed the brands' growth here and the challenges of working through those rumors.
Of Motel 6's 1,016 locations, 556 are corporate owned. With less than 100 locations, Studio 6, the extended-stay economy chain, has never really taken off.
It was business as usual for Motel 6 just a few weeks ago when I spoke to Accor's Bernard Rudler, executive vice president of franchise development, and Dean Savas, senior vice president, franchise, in Atlanta at the AAHOA convention. Both were excited about the brand's 50th anniversary this year and talked about plans to grow Motel 6 in Canada, Mexico and even into South America and possibly India. To celebrate the 50th milestone, Motel 6 was offering a 50% discount off royalty fees for 50 months for new deals with existing franchisees. This October, Motel 6 has plans for a brand-wide convention in Las Vegas to celebrate the anniversary. Certainly the agenda will need to change some as the new owners and potential new leaders will want to reiterate the brand is in good hands and the strategy will remain.
Motel 6 debuted an innovative new prototype called Phoenix in 2008 and has been renovating existing properties since. More than 100 properties a year are being upgraded and the entire chain should be renovated by 2015, said Rudler.
Could there be big changes coming to Motel 6? Certainly it's possible, but if Blackstone's past is any indication, Motel 6 will continue to be operated as an independent company much like Hilton and La Quinta and major changes shouldn't be expected.
"We are excited about the opportunity to acquire Motel 6 and we look forward to working with its employees and franchisees,” said Jonathan Gray, the global head of real estate at Blackstone, in a press release. “Although Motel 6 will be operated on a stand-alone basis, similar to other lodging investments we have made on behalf of our investors, we plan to invest significant capital in the company's properties and to accelerate the expansion of the franchise base."
Looking at La Quinta as an example, Wayne Goldberg remained after Blackstone's acquisition of the midscale chain in 2005. Just this January, Goldberg and Chief Development Officer Raj Trivedi told me how happy they've been with the backing and support of Blackstone. La Quinta has never been in a better position or better hands, they said, in response to questions about the ongoing rumors of La Quinta (and Hilton) possibly going public.
A more recent example, and maybe not a good one for Amorosia, is with Blackstone and its joint-venture partners Centerbridge Partners and Paulson & Co.'s purchase of Extended Stay America out of bankruptcy in 2010 for $4 billion. Long-time CEO Gary DeLapp was replaced by former Starbucks CEO Jim Donald this February.
Blackstone has shown no inclination to connect its lodging chains and kept La Quinta, Extended Stay and Hilton separate. Each has been run independently, and both Hilton and La Quinta have flourished. Before this acquisition, Blackstone's portfolio had climbed to 829,510 rooms worldwide and 5,463 hotels in the U.S. and Canada, with 798,070 rooms.