Earlier this year at NYU IHIF we heard from a number of leaders in the hospitality industry on high-profile deals done in the market. The candid conversations covered valuation metrics, strategic alignment as well as the motivations of buyers and sellers. Below is the first in the series. You can also listen to parts of the discussion as well.
Ritesh Agarwal, the founder of Prism the parent company of hotel platform Oyo discussed the acquisition of the G6 portfolio from Blackstone, which it acquired for $525-million, in all-cash deal.
Agarwal argued that the G6 portfolio is well worth the half billion paid for the asset, which includes 1,500 U.S. and Canadian hotels that generate $1.7 billion in gross room revenue annually.
”So a lot of people who reacted, who did not know about G6's earnings or EBITDA and so on, they reacted saying: 'just half a billion?' And I think that talks a lot to saying this brand is truly worth a lot more,” he said. Blackstone had paid $1.9 billion for the G6 portfolio in 2012.
“It’s an incredibly loved brand, and franchisees of Motel 6 or Studio 6 say they make more money doing this business than any other brand,” Agarwal continued.
Buying from Blackstone
Agarwal noted that Blackstone did an exceptional job with this company, transforming it to a totally different business, which is now asset-light and fully franchised.
“On the other hand, they were able to build up brand, which is very successful. So they returned a billion dollars to shareholders over a period of 10 years. So congratulations to Blackstone,” he said.
To read and listen to the full discussion, visit our sister site Hospitality Investor.