Global private equity giants are investing heavily in Europe's fast-growing hostel market, which is outpacing mainstream hotel growth. Over the past 18 months, firms including Brookfield and Apollo have made major investments in the sector. Brookfield acquired London-based Generator Hostels' European business for €776mn last year, while Apollo provided €874mn in financing to A&O Hostels in April. Both chains plan to double their estates.
Andrew Heath, a vice-president at real estate adviser JLL, noted that hostels are "the last space of the lodging sector that hasn't really been touched [by institutional investors]." The appeal lies in lower staffing costs and budget pricing that offers resilience during economic downturns.
However, some fear that the rise of standardized "chain hostels" will undermine the local, authentic atmosphere that travelers cherish. Evan Tzeng, founder of travel platform Stay Altered, warned that "what you compromise is that local, authentic atmosphere that so many travellers love."
Despite these concerns, growth continues. In the 12 months to August, large European hostels (over 100 guests capacity) grew 13% to 83 properties. Generator's "poshtels" blend low costs with modern design and boutique amenities, targeting Gen Z travelers who want to travel but have less income. The company aims to expand to 30 hostels by 2030.
Source: Financial Times Companies · Summarized by HeadlinesBriefing