After languishing for two decades, Accor finally has cut ties with Motel 6 and Studio 6. And that might be the best news in a long time for the economy brands.
It’s no secret Motel 6 and Studio 6 were an anchor on Accor’s hotel group. Accor’s North American economy business made €15 million ($19.07 million) of earnings before interest and taxes in 2011. While the business represented 20% of Accor’s rooms, €15 million represents only 3% of total EBIT, according to Deutsche Bank research.
“The brand has a poor consumer image at present in our view, and had no synergies with the rest of the group,” Deutsche Bank Analyst Simon Champion wrote in a research note Tuesday.
But now that an affiliate of Blackstone Group has proposed buying the business for $1.9 billion, it seems Motel 6 and Studio 6 have a fresh start. Blackstone, owners of such mainstay hotel brands as Hilton and La Quinta, has the know-how to push the former Accor brands forward. And, just as importantly, Blackstone intends to invest from its deep pockets in the brands to put Motel 6 and Studio 6 on level footing with all the other refreshes taking place around the industry.
Accor’s roll out of its Phoenix room prototype for Motel 6, for instance, has dragged on for years now. Announced in 2008, the Phoenix project was stalled because of the downturn, and while Accor has previously stated publicly that it will continue to introduce Phoenix at its properties, Blackstone has the resources available to push these renovations through at a much faster pace than Accor.
Also, it appears that Blackstone has no ideas of merging either Motel 6 or Studio 6 with the other hotels under the Blackstone umbrella. So the two brands will be given the full attention of Blackstone executives; a good thing considering the success Blackstone has had with the other limited-service properties in its portfolio.
As for future development, don’t be surprised if you see Motel 6 and Studio 6 hotels, which comprise 1,102 hotels and 107,347 rooms, popping up in locations outside the United States and Canada. Blackstone has shown a preference to grow its hotels globally, so a Motel 6 in such a place as China or India would not necessarily be an unreasonable thought.
At the end of the day, this is a win-win for Accor and Blackstone. Accor is able to wash its hands of its U.S. economy business that has been hurting its earnings. And Blackstone has yet another brand to work its magic on.
Actually, you could call this a win-win-win, as well. We can’t forget the owners of the Motel 6 and Studio 6 properties who will begin reaping the benefits of Blackstone ownership.