Top 250 Franchise by Entrepreneur – Rank no.57 – Motel 6 – US
Products & Services: Economy lodging
Number of Locations: 1,050
Total Investment: $2.08M – 2.92M
Began Franchising: 1996
About Motel 6
The first Motel 6, opened in Santa Barbara, California, in 1962, got its name from its room rates: $6 a night. Though its prices have necessarily risen over time, that original location is still open. The hotel chain was acquired by Accor in 1990, and began franchising in 1996.
Startup Costs, Ongoing Fees and Financing
Franchise Fee: $25,000 – $35,000
Ongoing Royalty Fee: 5%
Term of Franchise Agreement: 10-15 years, renewable
Net Worth: $1,500,000
Liquid Cash Available: $300,000
10% of all franchisees own more than one unit. Number of employees needed to run franchised unit: 2 – 10. Absentee ownership of franchise is allowed. (70% of current franchisees are owner/operators).
How This Franchise Supports Franchisees
Franchise Ranking History
Motel 6 is a major chain of budget motels with more than 1,000 locations in the United States and Canada. Motel 6 also operatesStudio 6, a chain of extended stay hotels. In October 2012 the sale of the Motel 6 chain by Accor Hotels to The Blackstone Group for $1.9 billion was concluded.
Motel 6 was founded in Santa Barbara, California, in 1962, by two local building contractors, William Becker and Paul Greene. The partners developed a plan to build motels with rooms at bargain rates. They decided on a US$6 nightly room rate that would cover building costs, land leases, and janitorial supplies; hence the company name “Motel 6”.
Becker and Greene had specialized in building low-cost housing developments, and they wanted to provide an alternative to other major hotel chains such as Holiday Inn, whose locations were becoming increasingly upscale in quality and price in the 1960s, after starting out with a budget-oriented concept. Becker and Greene spent two years formulating their business model, and searched for ways to cut costs as much as possible. During the chain’s early years, Motel 6 emphasized itself as a “no-frills” lodging chain with rooms featuring coin-operated black-and-white television receivers instead of the free color televisions found in the more expensive motels, along with functional interior decor, to reduce the time it took to clean the rooms. The first location in Santa Barbara had no restaurant on-site, a notable difference from other hotels of the era; most locations to this day have no on-site dining, though there is usually a choice of restaurants nearby.
As the 1960s progressed, the Motel 6 idea became very popular in the lodging industry and other chains began to imitate the concept, as Motel 6 was slowly beginning to take a small share of the market away from the traditional hotels. In 1965 Motel 6 opened its 15th property, and first location outside of California, in downtown Salt Lake City, Utah. Realizing the need to move quickly, Becker and Green set out on an ambitious expansion program and had opened its 25th location in Gilroy, California, by 1966. The occupancy rate by then was about 85 percent, well above the industry average, and as a result of their success, Motel 6 became an attractive acquisition target. Becker and Greene sold the chain to an investment group in 1968.
In the early 1970s Motel 6 opened its largest location, Motel 6 Tropicana, in Las Vegas, Nevada. Additionally, the chain moved east and opened a location in Fort Lauderdale, Florida, in 1972. By 1980 Motel 6 had reached 300 locations. It was sold to Kohlberg Kravis Roberts in 1985, who moved the chain away from its “no frills” approach and began including amenities such as telephones and color television.
Market share declined throughout the 1980s, in part because of increased competition from other budget hotels. During this time span, it bought out the Sixpence Inn chain in the western U.S., and Envoy Inn (formerly Bargaintel) in the Midwestern United States and Pennsylvania. Regal 8 Motels were acquired in 1991. In 1990, the company was bought by the French-based Accor. In 1993, they opened their first high-rise location — Motel 6 LAX in Los Angeles, California.
Unlike the majority of motel chains, Motel 6 allows pets, and directly owns and operates most of its locations. However, in order to expand more rapidly outside of its traditional Western United States base, the chain did start franchising in 1994. Accor management also took over motels that had previously been franchised by other chains. Motel 6 also began to renovate all bedrooms, sold off under-performing locations, and upgraded door locks and other security measures. Newer properties, as well as acquisitions, have interior corridors. Its competitors include Budget Host, Econo Lodge, and Super 8 Motels. Then, in 1999, Motel 6 launched Studio 6 Extended Stay suites, which feature fully equipped kitchenettes and are designed for longer stays.
With the turn of the millennium came even more expansions. In 2000 Motel 6 went international by opening its first location outside the U.S. in Burlington, Ontario, Canada. Then, in 2002 Motel 6 celebrated their 40th anniversary at their first location in Santa Barbara, California.
A few years later in 2006, Accor and Motel 6 used their success for a good cause and invested more than $6 million in properties to help rebuild New Orleans and Gulfport following Hurricane Katrina. The Motel 6 founder William Becker died of a heart attack at the age of 85 the next year.
In 2009 Motel 6 introduced their first, newly constructed Phoenix prototype in Northlake, Texas, with energy-saving features and a modern, new design. Additionally, they opened up their 1,000th property in Biloxi, Mississippi, and introduced a new logo that reflected the modern look of the new room design.
Motel 6’s new room design won the 2010 Travel and Leisure Design Award for Best Large Hotel, and in 2011 Motel 6 opened its 1,100th location in Cleburne, Texas.
In October 2012 the chain was sold to The Blackstone Group for $1.9 billion.
Since 1986, Motel 6 has been advertised through radio commercials featuring the voice of writer and National Public Radio commentator Tom Bodett, with the tagline “We’ll leave the light on for you”. These ads were created by Dallas advertising agency The Richards Group. They feature a tune composed by Tom Faulkner, performed by him on guitar and Milo Deering on fiddle. The first spots were conceived and written by David Fowler. In 1996, the ads won a Clio Award. The campaign itself has won numerous national and international awards, and was selected by Advertising Age magazine as one of the Top 100 Advertising Campaigns of the Twentieth Century.
For its 50th anniversary in 2012, Motel 6 began using the motto, “50 Years, the Light’s Still On.”
A new look
In 2009, Motel 6 began a system-wide renovation program to update the look and amenities of all bedrooms. Features include: modern furnishings influenced by European and boutique hotels; flat-screen televisions; brighter paint accents and soft goods packages; wood floors; increased storage space; ergonomic workspace and Wi-Fi access; updated bathrooms with glass shower doors and granite countertops. The updated rooms will rent for no more than the cost of their older rooms. On January 30, 2009, Motel 6 opened their 1,000th location (property #1113) in Biloxi, Mississippi, which was the first to feature this new look. Locations with these updated rooms can be identified by the “Refreshed” logo located on the property’s page at motel6.com.
Studio 6 (extended stay)
Since 1999, Motel 6 also operates Studio 6, a chain of extended stay hotels that offer more amenities than a standard Motel 6 location, while also offering weekly and monthly rates. Studio 6 provides an expanded kitchenette area, including a full-sized refrigerator, coffeemaker, toaster, microwave oven, electric cooktop and a set of dishes/utensils, in all its rooms. Studio 6 allows pets with certain restrictions. Studio 6 hotels are located in 15 U.S. states and Canada. Its competitors include Extended Stay Hotels and Choice Hotels’ Suburban Extended Stay Hotels. Some Studio 6 locations have been converted from other brands, such as Homestead Studio Suites.