Dallas’ Motel 6 Buys Santa Ana’s Sixpence Inns

Motel 6, the nation’s largest chain of economy motels, has acquired Santa Ana-based Sixpence Inns of America in a deal valued at about $210 million.

Under the agreement signed Monday, Sixpence’s 49 motels in six states will be converted to Motel 6 outlets, ideally by early next year, said Hugh Thrasher, an executive vice president with Motel 6.

Thrasher added that he does not believe that any Sixpence motels are so close to Motel 6 outlets that they will have to be closed. “It’s our intention to operate every Sixpence,” he said.

The Sixpence chain was started 18 years ago by Donald E. Sodaro, an accountant. Today, Sodaro is president and a majority shareholder, along with his brother-in-law, William Caine Jr., an executive vice president with the company. Together, they own close to 80% of Sixpence Inns.

Under the agreement, Motel 6 will pay roughly $210 million for Sixpence, including $40 million in limited partnership interests and the rest in cash.

Sixpence’s 49 motels--including 36 in California--contain 6,139 rooms, which had an average occupancy rate of 82% last year. The industry average is about 65%, said James E. Burba, senior principal in Irvine with Pannell Kerr Forster, an accounting and hotel consulting firm.

Motel 6 is traded on the New York Stock Exchange and is one of the world’s largest chains that owns and operates its own properties, according to the Dallas-based company. The acquisition will bring the chain to more than 500 motels with 58,000 rooms in 41 states.

The chain has credited a series of folksy radio ads featuring Tom Bodett for turning around a 5-year pattern of declining occupancy at the chain. Motel 6 ended 1987 with a 72.7% occupancy rate, Thrasher said.

The purchase allows Motel 6 to move toward aggressive national expansion while not oversaturating markets.

“Buying an existing chain gives (Motel 6) entree into a market without adding net new rooms there,” said Burba, who added that the purchase price “sounds in the ballpark for the type of product (Motel 6) is buying.”

The 40 to 50 corporate employees in Santa Ana--including those in the accounting, finance and real estate departments--will have to move to Motel 6’s Dallas headquarters to remain with the acquiring company, said Ernest Doe, Sixpence’s vice president of finance.