a&o Hostels Expands with Acquisition of Two Hotel Properties in Manchester

a&o Hostels has purchased two hotel properties in Manchester and plans to convert them into hostel accommodations by 2027.

a&o Hostels has acquired two hotel properties in central Manchester, marking its expansion in the UK market. The properties, located on Portland and Dickinson Streets, were purchased from Ares Real Estate funds and EQ Group. Previously operated under Accor’s ibis and Novotel brands, the buildings will undergo a £8.2 million refurbishment.

The properties, totaling 13,000 square meters, are situated between Deansgate and Piccadilly, approximately a 15-minute walk from Manchester’s main train station. The refurbishment aims to create 1,218 beds across 303 rooms, including private rooms, family rooms, and dormitories. The renovation is expected to be completed by the first quarter of 2027, with the properties remaining operational throughout the process.

This acquisition is part of a&o Hostels’ broader growth strategy, which involves a €500 million investment program. The company aims to capitalize on the increasing demand for budget accommodations driven by inbound tourism and budget-conscious travelers. The European hostel market is projected to grow at a 5.8% compound annual growth rate from 2025 to 2030.

In the past 24 months, a&o Hostels has acquired 8,500 beds through various acquisitions and refurbishments. Recent expansions include properties in London, Brighton, Brussels, Antwerp, and Heidelberg, as well as the acquisition of the Schulz Hotel platform. The company continues to explore opportunities for further transactions in other major European cities.

The management-led acquisition of a&o Hostels by StepStone Group and Proprium Capital Partners in late 2023 has enabled the company’s expansion. Approximately €500 million has been invested in the platform’s growth over the last 18 months.

Manchester is considered a key strategic location for a&o Hostels, given its status as one of the UK’s top-performing hotel markets outside of London. The city attracts over 1.9 million visitors annually, including international tourists, domestic travelers, and student groups. The demand is fueled by events such as Premier League football matches, music events, and various cultural and business activities.

The Manchester acquisition concludes a year of significant growth for a&o Hostels, which added approximately 5,500 new beds across four new cities and integrated the Schulz Hotel platform into its operations.