Europe's hostel market is consolidating fast, and a&o Hostels just made its boldest move yet. The continent's largest hostel operator, managing 30,000 beds across 10 countries, has acquired Berlin-based Schulz Hotels as its first platform investment under a €500m growth programme backed by StepStone Group and Proprium Capital Partners.
The deal brings three hospitality veterans into a&o's fold: Nizar Rokbani, Oskar Kan, and Sascha Gechter, who previously built Meininger into a 20,000-bed pan-European hybrid hotel operator before founding Schulz in 2018. Their track record signals a&o's ambitions extend beyond traditional backpacker hostels into premium budget accommodation, a segment attracting institutional capital as traveller demographics shift. The trio will join a&o's management and advisory team to explore brand extension opportunities, potentially unlocking higher-yielding assets that appeal to both budget-conscious millennials and business travellers seeking design-led stays at competitive rates.
Schulz's flagship 929 sqm (1,000-bed) property at Berlin's Ostbahnhof will continue operating under its own brand, offering elevated food and beverage amenities that cater to more discerning guests alongside traditional hostel clientele. A second Schulz location is planned for Berlin's Heide Quarter near the main train station, positioning a&o to capture demand in prime transport hubs where land values and development costs typically favour budget hospitality models with strong operational leverage.
For real estate investors and developers, the transaction underscores a maturing asset class projected to grow at 5.8% annually through 2030, driven by inbound tourism growth and technology-enabled booking platforms that have professionalised hostel operations. a&o Hostels, founded in 2000 by Oliver Winter, welcomed 2.8 million guests and generated €226m in revenue during 2024, with occupancy rates holding at 73% through the first half of 2025. The company has deployed approximately €500m over 18 months, acquiring 8,500 beds across London, Brighton, Brussels, Antwerp, and Heidelberg, with further transactions in European capitals progressing.
"The combined know-how of a&o and Schulz amounts to 100 years of hostel expertise, the perfect prerequisite for further dynamic and creative growth in prime locations in European cities," said Oliver Winter. "With a supportive investor base, and ongoing market dislocation presenting attractive investment opportunities, we are well placed to maintain this momentum in a rapidly maturing sector benefiting from compelling demographic and technological tailwinds."
Proprium Capital Partners, managing €3.1bn in net assets as part of L&G's real estate investment arm, sees the platform investment model delivering private equity-style returns in budget hospitality. "Joining forces with the Schulz founders, who we have known for over a decade, will allow us to redefine what affordable travel can be," said Philipp Westermann, Partner at Proprium. The move positions a&o to capitalise on hostel operators' fragmentation whilst institutional investors seek scalable, cash-generative real estate strategies with defensive characteristics during economic uncertainty.
People mentioned:
Oliver Winter, Founder and CEO, a&o Hostels
Nizar Rokbani, Co-Founder, Schulz Hotels and Meininger
Oskar Kan, Co-Founder, Schulz Hotels and Meininger
Sascha Gechter, Co-Founder, Schulz Hotels and Meininger
Philipp Westermann, Partner, Proprium Capital Partners
Companies mentioned:
a&o Hostels, Europe's largest hostel operator
Schulz Hotels, Premium budget hotel operator
StepStone Group, Global private markets investment firm
Proprium Capital Partners, Real estate principal investing firm, part of L&G
Meininger, Pan-European hotel/hostel hybrid operator
