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PARIS, France — Accor announced Tuesday that it has agreed to sell Motel 6 and Studio 6 hotel chains to the Blackstone Group for $1.9 billion. Based in Carrollton, Texas , the North American arm of the giant French hotel group, oversees 1,102 budget hotels in the United States and Canada.
Franchise and management contracts account for more than 54 percent of the pro forma total room portfolio of Motel 6 and Suite 6.
Denis Hennequin, chairman and CEO of parent company Accor said that the pull out of the economy brands from the United States will help economically strengthen the upscale Sofitel and Novotel brands. "This deal will provide Accor with additional resources to address the tremendous growth potential in the Asia Pacific region, in Latin America and in Europe, where the leadership of our brands is one of the key drivers of our future growth."
Upscale hotel competitors Hilton, Intercontinental Hotels Group, Marriott and Starwood are all heavily focused on growth opportunities in Asia and Latin America.
Jonathan Gray, global head of private investment firm Blackstone Real Estate Partners VII said, "We are excited about the opportunity to acquire Motel 6 and we look forward to working with its employees and franchisees. 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."
Blackstone owns the Hilton Worldwide hotel chain.
The Parisian-based Accor had announced in September its intention to sell its U.S. budget hotel chains. As a result of the transaction, Accor will reduce net debt by approximately $418 million and its fixed-lease commitments by $665 million. The Group will register an exceptional non-cash loss of $760 million, linked to the early buyout of fixed-lease hotels.
The chain had difficulty rolling out a new room model introduced in 2008 because of a lack of funding. Now even that prototype is getting a little dated. The new acquisition may change that. Stanley Turkel, a well-known hotel consultant and author of several books on hotels, chains and their leaders, observes: "If Blackstone is to succeed in operating the Motel 6 brand, it needs to embark on an intensive refresh and revive campaign. Hire Thierry Despont, Philippe Starck or an equally talented interior designer to design guest rooms that are colorful, comfortable and unique with hardwood floors, excellent lighting, blackout drapes that work, fully- tiled bathrooms with showers that have multiple sprays, and a full array of outlets for mobile devices and free Wi-Fi access."
The transaction is scheduled to be completed in October 2012, subject to the unwinding of leases and customary closing conditions.