A&O Hostels secures €874M to fuel growth

BERLIN — A&O Hostels, Europe’s largest and fastest-growing hostel chain, is accelerating its expansion by completing an €874 million refinancing facility provided by funds managed by Apollo.

The refinancing facility, funded by New York City-based Apollo, is one of the largest ever in the European hostel sector and replaces an existing Apollo facility. The funds are secured against A&O’s portfolio of 44 properties and approximately 30,000 beds across 29 cities and 10 countries and will fuel the next €500 million of the company’s growth strategy.

A&O is backed by New York City-based StepStone Group and London-based Proprium Capital Partners, who acquired the company at the end of 2023 . Since that acquisition, the company 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.

“A&O has executed on its accelerated growth strategy ahead of schedule whilst remaining highly disciplined,” said Ben Eppley, partner and Head of Real Estate Credit, Europe at Apollo. “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.”
“Owners and the management team have built something exceptional at A&O, growing the platform at pace while maintaining real discipline,” said Josh Cleveland, head of EMEA for StepStone. “Apollo’s commitment to extending this relationship on competitive terms is a strong endorsement of the strategy, and of the partner group delivering it.”

The company said its target is to double its current 44-asset portfolio within five years, targeting families, school groups and backpackers across Europe’s leading business and leisure destinations.

“Despite its highly defensive characteristics and outperformance in recent years, underpinned by the attractive income profile, the hostels sector remains fragmented,” said Philipp Westermann, partner at Proprium. “This facility provides us with the firepower to capitalize 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.”

A&O said it achieved €215 million in revenue in 2025 and 6.6 million overnight stays, which surpassed 2024’s revenue of €6.2 million. The hostel sector has become an attractive alternative asset class for institutional capital, as its RevPAB (revenue per available bed) metrics and low refurbishment costs per square meter compare favorably with traditional hotels, and the European hostels market is projected to grow at a compound annual rate of 5.8% from 2025 to 2030.

The company was founded in 2000 by Oliver Winter.