a&o Hostels seals €874m Apollo refinancing to double its European portfolio

Europe's largest hostel chain is accelerating its expansion with one of the biggest financing deals the sector has ever seen, backed by a lender that believes the best is still to come.

a&o Hostels, Europe's largest and fastest-growing hostel chain, has completed an €874m refinancing facility provided by funds managed by Apollo, secured against its portfolio of 44 properties with approximately 30,000 beds across 32 cities. The deal, one of the largest financings ever seen in the European hostel sector, replaces an existing Apollo facility and provides the firepower for the next €500m phase of a&o's growth strategy.

Backed by StepStone Group and Proprium Capital Partners, who acquired a&o at the end of 2023, the chain has added approximately 11,500 beds over the past 24 months through acquisitions in Manchester, London, Berlin, Brussels, Antwerp and Heidelberg, as well as the acquisition of the Schulz Hotel platform. The target is to double the current 44-asset portfolio within five years, targeting families, school groups and backpackers across Europe's leading business and leisure destinations.

For investors and developers, the opportunity may be more compelling than the headline numbers suggest. With approximately 30,000 beds managed across roughly 120,000 m² of operational space, a&o achieved €215m in revenue in 2025 and 6.6 million overnight stays, a record that surpassed the prior year's 6.2 million. Crucially, the hostel sector's RevPAB (revenue per available bed) metrics and low refurbishment costs per square metre compared to traditional hotels make it an increasingly attractive alternative asset class for institutional capital seeking inflation-linked, operationally intensive real estate with strong demographic tailwinds. The European hostels market is projected to grow at a compound annual rate of 5.8% from 2025 to 2030.

"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."

Josh Cleveland, Head of EMEA, StepStone Real Estate

"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."

Philipp Westermann, Partner, Proprium Capital Partners

"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."

Ben Eppley, Partner and Head of Real Estate Credit, Europe, Apollo

Founded in 2000 by Oliver Winter, a&o has evolved from a single Berlin hostel into a pan-European platform with assets spanning 10 countries and 29 cities. With a near-term acquisition pipeline already in progress and institutional appetite for the sector deepening, the company's ambition to become the defining budget accommodation platform in Europe looks firmly on track.