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Dual-Branded Motel 6/Studio 6 Hotel in Galveston, TX – Image Credit HVS
The 114-key dual-branded Motel 6/Studio 6 in Galveston, Texas, is up for sale. Despite recent renovations, the property is underperforming, creating an opportunity for an experienced operator to increase revenue and net operating income.
The HVS Brokerage & Advisory firm has announced the sale of the dual-branded Motel 6/Studio 6, a 114-key limited-service, extended-stay hotel in Galveston, Texas. The property benefits from its strategically placed location along Avenue J of Interstate 45, close to Texas City refineries and numerous tourist attractions.
The property offers a significant opportunity for a potential investor to restructure the hotel’s operations and optimize revenue per available room (RevPAR) and net operating income (NOI). The hotel achieved an average gross operating profit (GOP) of 43% from 2022 through 2024. However, similar dual-brand hotels have shown the potential for a GOP margin between 46% and 52%.
In 2022/23, the property underwent extensive renovation under the Motel 6 brand’s “Genesis” design initiative. This included reconfiguring 50 of the 114 rooms under the Studio 6 brand, creating a dual-branded hotel property.
Despite these improvements, the hotel’s performance is lagging, with room revenue at the end of 2024 standing at $1,425,000. However, HVS’s pro-forma projections suggest that an experienced operator could raise combined stabilized rooms revenue to over $1.6 million, with an NOI flow-through of $530,000.
The property is available at $50,000 per key, significantly below replacement cost, presenting an excellent investment opportunity. Its location along I-45 makes it easily accessible for the approximately 21 million people residing within a four-hour drive of Galveston.
Tourism demand in Galveston has been on an upward trajectory, with 8.9 million visitors recorded in 2023, a 9.3% increase from 2022. These visitors spent a record $1.7 billion, positively impacting the local economy. Numerous festivals and special events throughout the year further boost the city’s strong lodging demand and robust tourism industry.
The property’s location along the frontage road of I-45 and its proximity to numerous dining, retail, and entertainment options make it attractive for business and transient guests. Corporate demand generators in the area include the University of Texas Medical Branch, Galveston College, Texas A&M University, and several petrochemical refineries in Texas City.
Future developments in Galveston, such as the $700-million Margaritaville Resort, the $90-million West Port Cargo Complex, and the $151-million cruise terminal complex at the Port of Galveston, suggest significant economic growth and job creation opportunities.
The hotel is being offered free of any management encumbrances, allowing an investor to install their preferred management company or self-operate.
Inquire at HVS.
