a&o Heidelberg: Europe’s largest hostel group expands in Germany, with further growth planned across Europe

The a&o Heidelberg will be a new five-storey building, with 118 rooms and 320 beds. Scheduled for opening at the end of 2026, construction work will be starting in spring 2025. The associated property at Speyerer Strasse 5 was acquired from BHB Heidelberg GmbH, a subsidiary of Heureka Real Estate GmbH, as part of a forward sale.

Together with its owners, Proprium Capital Partners and StepStone Group, a&o has over 500 million euros available to invest in the expansion, conversion and modernization of existing and new properties.

Oliver Winter, CEO and Founder of a&o Hostels, said: “Last year, we set out some of our goals for a carefully accelerated growth strategy across 2024 and beyond, and with four new great locations acquired in just six months, we are well positioned to deliver on these.”

Philipp Westermann, Partner at Proprium Capital Partners, said: “We remain very confident in the huge opportunities for continuing long-term growth at a&o Hostels across Europe, which we look forward to continuing to support. a&o Hostels has a best-in-class business and brand, with enormous further potential that a&o are well on track to delivering on.”

“Germany remains a very exciting market”

With a population of 162,000, the city on the Neckar is considered one of the most beautiful cities in Germany and attracts approximately 14 million visitors every year.

“Heidelberg has been a dream location for a long time, so we are delighted with this acquisition”, said Winter.

Robert Waidhaas, Managing Partner of Heureka Real Estate, adds: “We are delighted to realize this ambitious project together with an experienced partner like a&o and to contribute to the revitalization of Heidelberg's Weststadt.”

Expansion across key cities in Europe...

a&o has a strong and growing pipeline of attractive hostel investment opportunities across Europe and the UK. In February this year, a&o Firenze Campo di Marte (Florence) will be the second hostel to open in Italy with 121 rooms in a former municipal administration building.

In line with its sustainability drive, a&o predominantly seeks existing buildings to convert into hostels such as former office and commercial properties. In addition to ownership, renting also remains an attractive option, emphasises Winter: “With the support of our owners, we now have the firepower to accelerate our expansion in key locations across gateway cities in Europe. We are really well positioned to take advantage of the significant opportunities we see in this hugely attractive and dynamic market environment and to take our budget hostel product to a new level.”

About a&o Hostels

The Berlin based budget group a&o was founded in 2000 by Oliver Winter and currently operates 42 properties in ten European countries. The a&o guest mix is diverse: backpackers are just as much a part of the a&o target group as solo travellers, families, school groups and clubs. The number of business travellers and senior citizens is also increasing. With 6.1 million overnight stays (2022: 5.55 million), 2.7 million guests (2.2 million) and a turnover of 217 million euros (172 million), a&o recorded its most successful year in the company's history to date in 2023. With almost 3 million overnight stays and a total turnover of 111 million euros, the first half of 2024 also set another record. As part of the sustainability strategy, CO2e emissions per overnight stay will be reduced to less than three kilograms, with the remainder being offset. More information at https://www.aohostels.com/de/ and overview of a&o locations at https://www.aohostels.com/de/alle-standorte/

About Proprium Capital Partners

A spin out of the Morgan Stanley Real Estate Special Situations team, the Proprium principals have been investing in real estate operating companies since 1996, focusing on scalable themes with experienced local partners and platforms. Proprium’s strategy of platform investing seeks to deliver private equity returns in the real estate industry. Proprium manages funds on behalf of institutional investors across the globe, including government and private sector pension and retirement funds, banks, family offices and sovereign wealth funds. Today, Proprium has grown to over USD$4 billion of net assets under management with a global platform of six offices across the US, Europe, and Asia Pacific. Further information can be found at www.proprium.com.

About StepStone Real Estate’

StepStone Real Estate (“SRE”) is a global private markets investment firm and provides liquidity solutions to real estate managers. In 2024, SRE’s team of 68 investment professionals held more than 900 manager meetings and oversaw ~$15 billion of real estate commitments to funds, secondaries, recapitalizations, and co-investments. As of September 30, 2024, SRE was responsible for over $185 billion of total capital allocations, including ~$17 billion in assets under management. The SRE Partners have significant experience as real estate investment professionals through multiple market cycles, averaging 27+ years average experience in direct real estate investment and advisory services