Paris-based Accor has reached an agreement to sell the 1,100-unit Motel 6 chain to Blackstone Group for $1.9 billion.
Last September, Accor said it was fielding offers for Motel 6 because a sale would enable the company to increase cash flow and reduce debt.
With the Motel 6 sale, Accor said the company will cut its debt by about 330 million euros (about $421 million at today's exchange rate) and will reduce its lease obligations by 525 million euros (about $669 million). The transaction is expected to close by October.
With the sale, Accor can increase focus on its other chains, which include Sofitel, Novotel and Ibis.
CEO Denis Hennequin said selling Motel 6 "provides Accor with additional resources to address the tremendous growth potential in the Asia-Pacific region, in Latin America and in Europe."
Meanwhile, Blackstone will further widen its presence in the travel industry. Blackstone acquired travel technology company Travelport in 2006 for $4.3 billion. A year later, Blackstone took Hilton Worldwide private in a $26 billion buyout. In December 2009, Blackstone acquired 11 theme parks from Anheuser-Busch, including the SeaWorld and Busch Gardens parks, for $2.7 billion.
"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,” said Jonathan Gray, Blackstone’s global head of real estate.
Motel 6 was founded in Santa Barbara, Calif., 1962. The chain's name stemmed from its initial $6 room rates.
Motel 6, which has long marketed itself as the lowest-priced U.S. hotel brand, has been using its 50th anniversary to promote the chain.
The chain had unveiled plans to upgrade about 100 hotels this year with touches such as improved flooring, new signage and flat-screen televisions.
Follow Danny King on Twitter @dktravelweekly.