OYO’s Big Leap: Projected ₹1,550 Cr EBITDA in FY25, Boosted by G6 Hospitality Acquisition

OYO, the hospitality giant led by Ritesh Agarwal, is on track to achieve ₹1,550 Cr EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) in FY25, exceeding its initial projection of ₹1,200 Cr. This remarkable growth is fueled by the strategic acquisition of G6 Hospitality, a key player in the budget lodging segment in North America.

Over the years, OYO has evolved from an ambitious startup to a global hospitality disruptor. With a stronghold in the budget and mid-range hotel segments, the company has expanded its footprint across multiple continents. However, the latest acquisition of G6 Hospitality, the parent company of Motel 6 and Studio 6, marks a new era in OYO’s expansion strategy, contributing a significant ₹350 Cr to its projected EBITDA for FY25.

OYO’s Acquisition of G6 Hospitality: A Game-Changer

What Is G6 Hospitality?

G6 Hospitality is a well-established hotel group that owns and operates two major brands:

• Motel 6 – A widely recognized budget hotel chain with a strong presence in the U.S. and Canada.
• Studio 6 – An extended-stay brand catering to budget-conscious travelers.

Founded in 1962, Motel 6 has built a reputation as one of the most affordable and reliable lodging brands in North America. Meanwhile, Studio 6 serves long-term guests who seek cost-effective accommodation.

Why Did OYO Acquire G6 Hospitality?

In December 2024, OYO completed a $525 Mn (₹4,580 Cr) all-cash transaction to acquire G6 Hospitality. The deal aligns with OYO’s goal of strengthening its presence in the U.S. hospitality market.

Key Reasons Behind the Acquisition:

1. Expanding Market Share in North America
   • The U.S. is a lucrative yet competitive market. By acquiring G6 Hospitality, OYO gains instant access to over 1,400 properties across the U.S. and Canada.
   • The Motel 6 and Studio 6 brands are already well-known, reducing the marketing efforts needed for brand recognition.
2. Boosting OYO’s Profitability
   • G6 Hospitality is expected to add ₹350 Cr to OYO’s bottom line in FY25, significantly improving financial performance.
   • The acquisition helps diversify revenue streams beyond Asia and Europe.
3. Strengthening Budget Hospitality Segment
   • Budget hotels remain a high-demand segment, especially among business travelers, road trippers, and budget-conscious tourists.
   • OYO’s expertise in tech-driven hotel management will enhance G6 Hospitality’s operational efficiency.
4. Leveraging Synergies Between OYO and G6
   • OYO’s AI-powered pricing algorithms and dynamic hotel management solutions will optimize G6 properties.
   • The acquisition strengthens OYO’s ability to offer affordable, standardized lodging experiences worldwide.

Townhouse: The Backbone of OYO’s India Business

While OYO expands its global footprint, India remains its core market, with its Townhouse brand playing a crucial role.

What Is OYO Townhouse?

Launched in 2017, OYO Townhouse is a premium-budget hotel brand aimed at millennials, young professionals, and business travelers. It offers a blend of affordability and high-quality service, making it a preferred choice for urban stays.

Townhouse’s Growing Impact in India

• 50% of OYO’s India business now comes from Townhouse properties.
• The segment is growing at a double-digit monthly rate, reflecting strong consumer demand.
• Townhouse hotels are strategically located in metro cities, business hubs, and tourist destinations to attract high-occupancy rates.

Why Is Townhouse So Successful?

1. Affordable Luxury: It offers a premium stay experience at budget-friendly prices, making it accessible to young travelers.
2. Standardized Quality: OYO ensures a consistent and tech-driven hospitality experience across all Townhouse properties.
3. Prime Locations: Townhouses are placed in high-demand urban areas, ensuring steady occupancy.
4. Strong Online Presence: OYO’s app and website attract millions of users, driving direct bookings and higher margins.

OYO’s Financial Outlook: What’s Driving the Growth?

Key Factors Behind OYO’s Projected ₹1,550 Cr EBITDA in FY25

Several strategic initiatives are fueling OYO’s profitability:

1. Cost Optimization & Operational Efficiency
   • OYO has cut non-essential expenses and focused on tech-driven hotel management to improve efficiency.
   • AI-based dynamic pricing models optimize revenue per available room (RevPAR).
2. Strategic Acquisitions
   • G6 Hospitality is the latest example of OYO’s aggressive expansion strategy.
   • Past acquisitions, like Leisure Group in Europe, have strengthened OYO’s international presence.
3. Tech-Driven Business Model
   • OYO leverages AI, machine learning, and big data analytics to optimize pricing, marketing, and customer experience.
   • Its mobile-first strategy has significantly increased direct bookings.
4. Diverse Revenue Streams
   • Beyond traditional hotel stays, OYO offers:
     • Long-term rentals (OYO Life)
     • Co-living spaces
     • Vacation homes (OYO Homes & OYO Rooms)
   • This diversification minimizes risk and ensures steady revenue growth.

Challenges and Competition: Can OYO Maintain Its Growth?

Key Challenges OYO Faces

• Competition from Established Hotel Chains: Brands like Marriott, Hilton, and Hyatt dominate premium segments, while Airbnb and local hotel aggregators pose threats in the budget category.
• Economic Uncertainties: Fluctuations in tourism demand due to global economic conditions can impact revenue.
• Regulatory Challenges: OYO has faced legal and operational hurdles in several markets, including India and the U.S.

How OYO Is Overcoming These Challenges

1. Strengthening Brand Trust:
   • OYO has improved hotel partner relationships by ensuring transparent revenue-sharing models.
2. Enhancing Customer Experience:
   • AI-powered chatbots and 24/7 customer support ensure a seamless booking experience.
3. Investing in Marketing & Brand Positioning:
   • OYO aggressively markets its affordable, high-quality stays, targeting business and leisure travelers alike.

The Road Ahead: What’s Next for OYO?

OYO’s ambitious target of ₹1,550 Cr EBITDA in FY25 reflects its strong financial recovery and global expansion. With a strategic focus on high-growth segments, the company is poised for long-term success.

Future Growth Strategies

• Further Expansion in North America & Europe – More acquisitions and partnerships.
• Boosting Premium Offerings – Expanding Townhouse and Townhouse Oak brands.
• Enhancing Tech Capabilities – AI-driven solutions for better pricing and customer experience.

Final Thoughts

OYO’s journey from a small startup to a global hospitality leader has been nothing short of extraordinary. The acquisition of G6 Hospitality, coupled with Townhouse’s rapid growth in India, signals a strong future for the company.

With a clear vision, tech-driven strategies, and aggressive expansion plans, OYO is well-positioned to dominate the global hospitality industry in the coming years.