Apollo Backs a&o as Investors Chase Europe’s Hostel Boom

Apollo Global Management has provided a&o Hostels with a €874 million ($1.03 billion) refinancing package, providing the Berlin-based chain with fresh funding for its next phase of growth.

The deal closed in April 2026 and is secured against a&o’s 44 hostels and around 30,000 beds. The company said the financing will support a further €500 million ($587.6 million) expansion plan.

Apollo’s deal is part of a wider investment trend

Apollo’s refinancing is the latest in a series of major investments in European hostel platforms over the past 30 months.

In November 2023, StepStone Group and Proprium Capital Partners acquired a&o for around €800 million ($940.2 million). In May 2025, Brookfield Asset Management bought Generator’s European business for €776 million ($911.2 million).

The same month, King Street Capital committed up to €400 million ($470.1 million) to Room00 Group, which is expanding across Spain, Portugal, and Italy.

Hostels look more attractive now

One reason is fragmentation. JLL said in its July 2025 Beyond Bunk Beds report that the top five hostel operators in Europe controlled only about 8 percent of the total supply. That leaves plenty of room for larger brands to grow through expansion and consolidation.

The product is also changing. Many branded hostels now offer a mix of dorm beds and private rooms, better design, upgraded shared areas, and a more digital booking experience. That helps them attract a wider customer base, including solo travelers, groups, and so-called flashpackers who want hostel prices with better comfort and amenities.

Conversions and expansion are shaping the next phase

Another reason the sector is drawing interest is its fit with urban conversion projects. In some European cities, older office buildings have become harder to use or lease, creating opportunities for hostel operators to repurpose them into centrally located accommodation.

a&o is already using that strategy in Berlin’s Kreuzberg district, where it plans to convert an outdated office building into what it says will be the largest hostel in Europe, with around 2,500 beds. The property is expected to open in early 2027.

Branded accommodation groups are expanding through conversions rather than relying only on new construction. Hotel companies such as IHG, Marriott, and Hyatt are using rebranding and asset conversion to grow faster and at lower cost.

Photo by Andrea Davis on Unsplash