a&o Hostels, Europe’s largest and fastest growing hostel chain with approximately 30,000 beds under management, has completed an €874 million refinancing facility provided by funds managed by Apollo (NYSE: APO), secured against its portfolio of 44 high performing hostels located across 32 of Europe’s leading business and leisure hubs. StepStone Group and Proprium Capital Partners sponsored the management led acquisition of a&o at the end of 2023, enabling a&o to undertake an initial €500 million platform expansion programme.
The senior multi-year loan replaces an existing facility with Apollo and will enable a&o to deliver on the next, €500 million phase of its ambitious growth strategy in its core markets. Over the past 24 months, the company has acquired approximately 11,500 beds, both operational and being developed / refurbished, in line with its mission to bring its budget friendly offering, targeting families, school groups and backpackers to more European cities.
a&o is seeking to capitalise on the compelling demographic tailwinds driving the rapid growth of what has become an increasingly institutional-quality asset class. Underpinned by increasing inbound tourism, a rise in budget-conscious travellers and technological advancements, the European Hostels Market is projected to grow at a CAGR of 5.8% from 2025 to 20301. Recent acquisitions have included assets in Manchester, London, Berlin, Brussels, Antwerp, and Heidelberg, as well as the Schulz Hotel platform, while a near term pipeline of further transactions in other leading European cities continues to be progressed.
Josh Cleveland, Head of EMEA, StepStone Real Estate, commented:
Owners and the management team have built something exceptional at a&o, growing the platform at pace while maintaining real discipline. Apollo’s commitment to extending this relationship on competitive terms is a strong endorsement of the strategy—and of the partner group delivering it.
Philipp Westermann, Partner, Proprium Capital Partners, added:
Despite its highly defensive characteristics and outperformance in recent years, underpinned by the attractive income profile, the hostels sector remains fragmented. This facility provides us with the firepower to capitalise on this opportunity and rapidly scale the platform, through both asset and corporate acquisitions, alongside a long-term financing partner with a shared conviction in the sector’s fundamentals.
Ben Eppley, Partner and Head of Real Estate Credit, Europe, at Apollo , added:
a&o has executed on its accelerated growth strategy ahead of schedule whilst remaining highly disciplined. This transaction, in a sector benefitting from attractive compelling demographic and technological tailwinds, continues our track record in Europe of providing scaled financing alongside leading sponsors seeking holistic portfolio solutions.
Founded in 2000 by Oliver Winter, a&o is now one of the largest budget hostel chains in the world. 2025 saw a&o Hostels welcome a record 2.8 million guests and 6.6 million overnight stays.
Author: Helen Leigh
