Investment Firms Expanded European Hostel Portfolios
Large-scale institutional investors acquired major chains to drive growth across the European tourism market.
Updated on Oct. 3, 2026 in Hotels
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Between 2023 and 2025, major investment firms aggressively moved into the European hostel market to capture rising demand. Firms like Brookfield and L&G Proprium acquired established chains, fueling a thirteen percent increase in large-scale hostel capacity.
Why it matters
Institutional investors favor the hostel business model due to its high profitability and lower operating costs compared to traditional hotels. By eliminating services like room service, these companies achieve greater margins while expanding their footprint across major European travel hubs.
European hostel capacity for properties with more than 100 guests reached 83 units as of August 2026, marking a 13 percent growth period. Large-scale projects include an upcoming 2,500-bed hostel in Berlin backed by a 40 million euro conversion investment.
The players
Brookfield
This global asset management company based in Toronto manages over $1 trillion in assets and has expanded into the European hospitality sector.
Generator Hostels
Headquartered in London, this hostel operator focuses on high-capacity properties with a minimum requirement of 500 beds.
A&O Hostels
This major European hostel chain is undergoing significant expansion through institutional financing and large-scale property conversions.
Apollo
This global alternative asset manager provided 874 million euros in financing to support the growth of A&O Hostels.
L&G Proprium
This investment group expanded its portfolio by acquiring the A&O Hostels chain in 2023.
The details
Investors are converting large office buildings and struggling mid-tier hotels into modern hostels to maximize room density. Chains like Generator are scaling their European presence toward a target of 30 properties by 2030, while operators like A&O plan to double their current portfolios in the next five years.
Timeline
L&G Proprium purchased A&O Hostels in 2023.
A&O secured 874 million euros of financing from Apollo in April 2023.
Brookfield acquired the European business of Generator Hostels in 2025.
The count of large European hostels reached 83 in August 2026.
A&O expects to open a 2,500-bed facility in Berlin in mid-2027.
Travel Outlook
The move toward institutional-grade hostel ownership marks a departure from fragmented, independent operations that historically characterized the European budget lodging sector. This consolidation reflects a broader shift in tourism economics where investors prioritize high-density occupancy models to compete in popular urban destinations.
Travelers can expect a higher standard of amenities and standardized service levels as institutional chains modernize aging hostel properties. With new large-scale hostels opening, budget-conscious tourists may find more central lodging options in major cities like Berlin during peak travel seasons.
The takeaway
The rise of corporate-owned hostels indicates that travelers are increasingly choosing modern, efficient budget options over traditional, expensive hotels. Readers should monitor major hostel chains for new, high-capacity locations that offer reliable amenities in expensive European capitals.
Further reading
Learn more about evolving hospitality trends in our guide to Hotels.
Source note: This article includes information reported by Financial Times News.
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