Deals in South Bay part of private equity firm’s larger divestiture
San Francisco / July 12, 2022 10:30 AM
Blackstone Group has unloaded four Motel 6 properties in the South Bay for $40.3 million to buyers who will still leave the lights on for you.
A hotel affiliate controlled by the New York-based private equity firm sold the four Motel 6 properties in San Jose, Santa Clara, Gilroy and Campbell, the San Jose Mercury News reported. Each motel was sold to a separate buyer.
“Blackstone is attempting to sell off a lot of their Motel 6 properties,” said Alan Reay, president of Irvine-based Atlas Hospitality Group, which tracks the California lodging market.
Budget hotels have generally outperformed full-service hotels that are geared toward business travelers and convention events, which took an economic hit from coronavirus pandemic shutdowns.
But budget hotels still require staff levels that may not be as profitable as other hotels that generate much more revenue with modest levels of employees to operate them, analysts say.
“With budget hotels, labor costs will be a higher percentage of their revenue,” Reay said.
In 2012, Blackstone bought G6 Hospitality, which launched the Motel 6 chain in 1962 with a hotel in Santa Barbara that offered rooms for $6 a night. The purchase included more than 1,000 Motel 6 and Studio 6 hotels. The Studio 6 hotels are an extended-stay brand.
The investment firm is said to be eyeing a sale that would value the G6 Hospitality assets at more than $1 billion.
The Blackstone affiliate just sold a 100-room Motel 6 at 3208 El Camino Real in Santa Clara for $13.5 million. The buyer was a Texas-based group led by Jagmohan Dhillon, principal executive with DMC Hotels and Dhillon Management.
It sold a 127-room Motel 6 at 6110 Monterey Road in Gilroy for $10.5 million. The buyers were Jayesh Patel and Hemaben Patel, based in Los Angeles.
A 76-room Motel 6 at 2081 North First Street in North San Jose sold for $8.5 million. The buyer was Temple Santa Nella, a group headed by Ravi Patel based in the Merced County city of Gustine.
The Blackstone unit also sold a 19-room Motel 6 at 1240 Camden Avenue in Campbell for $7.8 million. The buyer was San Francisco-based Ambika Enterprises, headed up by Devendra Patel.
The transactions involving the Motel 6 properties are happening at a time when the lodging market is attempting to recuperate from an array of coronavirus-inflicted economic maladies.
“Leisure and resort markets in the Bay Area have recovered strongly and many are seeing record revenue,” Reay said.
[San Jose Mercury News] – Dana Bartholomew