Accor has agreed to sell the Motel 6 and Studio 6 lodging chains to Blackstone Real Estate Partners VII in a transaction worth $1,900,000,000.00, which is expected to be completed in October 2012.
Although Hilton Worldwide and LQ Management LLC — which is the La Quinta chain of inns and suites — are both already owned by Blackstone, Motel 6 will be operated on a stand-alone basis, according to Jonathan Gray, Global Head of Real Estate at Blackstone.
Accor-ding to the official press release issued by Accor — please accept my apologies, as I could not resist — this transaction strengthens the Group’s economic model and follows Accor’s decision to reduce capital employed in Motel 6 and Studio 6, as announced in September 2011. Based on financial year 2011 pro forma results, the Group’s restated ROCE increases to 13.9% vs.12.3%, and the EBIT margin reaches 9.2 percent versus 8.7 percent. The transaction also reinforces Accor’s asset-light profile and further reduces the volatility of the Group’s results, with franchise and management contracts accounting for more than 54 percent of the pro forma total room portfolio as of March 2012.
As a result of the transaction, Accor will reduce its net debt by approximately €330 million and its fixed-lease commitments by c. €525 million. The Group will register an exceptional non-cash loss of c.€600 million, linked to the early buyout of fixed-lease hotels.
Accor will remain present in North America with its luxury and upscale flagship Sofitel and Novotel brands, which could be interpreted to mean that there will be no offering of a lower-end brand such as Mercures in North America by Accor.
Although it is not expected to happen, FlyerTalk member kanerf speculated that Motel 6 could replace Hampton Inn as the lowest-end brand of Hilton Worldwide, as Hampton Inns have become more upscale in recent years in terms of both amenities and price.
I have mixed feelings about that speculation. It would be nice for Hilton Worldwide to offer a lower-cost option than Hampton Inn currently offers for those Hilton HHonors frequent guest loyalty program members who only need a place to sleep for the night in a room with nothing special, but adding Motel 6 to the Hilton portfolio could possibly cheapen the brand.
For me, Motel 6 was perfect when I was a college student who had just became 20 years old and was driving my cousin’s 1979 Honda Civic CVCC with a five-speed manual transmission from the Seattle area to San Antonio via the west coast during the summer years ago. Along the way, I stopped at a few Motel 6 properties. I stayed at one in Tucson, where for dinner I purchased a sack full of McDonald’s hamburgers on sale for a quarter each and spent fewer than $20.00 — including all taxes and fees — for a stark dingy utilitarian room with bare white walls. Operating the television cost extra back then, but I did not pay it. I only stopped because it was night time, and I wanted to see the entire trip during the daylight hours. I got a good night’s sleep — and when I awoke early the next morning, I checked out and continued on my journey.
For a college student on a budget, Motel 6 served its purpose perfectly for me. However, I have not stayed at one since. I understand that its amenities have vastly improved at some properties since I last stayed at a Motel 6 — hey, the television is now included in the room rate — but looking at the room rate at the property in Tucson at which I stayed, the room rate has at least doubled and the room was only marginally better than I remembered it when I watched the video showing the property.
As of now, I really have no desire to stay at a Motel 6 property. I had the opportunity several years ago to stay at one in Carlsbad, New Mexico, but the room rate was rather high — so I passed on it.
I hope they did not leave the light on for me…