a&o Hostels expands into Manchester with hotels acquisition
The European hostel chain acquired former Accor properties for freehold ownership, converting them into 1,218 beds across 303 rooms by Q1 2027.
Photo by a&o Hostels
- Adjoining ibis and Novotel hotels located between Deansgate and Piccadilly
- Following an £8.2m refurbishment, scheme will total 303 rooms and 1,218 beds
- Manchester is a&o’s fourth UK asset, taking its European exposure to 44 properties across 10 European cities
a&o Hostels, Europe’s largest and fastest growing hostel chain with 30,000 beds under management, announces the freehold purchase of two hotel assets, located on Portland and Dickinson Streets in central Manchester, from Ares Real Estate funds and EQ Group.
The four storey, adjoining properties, totalling 13,000 sqm, were previously operated under a franchise agreement with Accor, trading under its budget and mid-market hotel brands ibis and Novotel. In a prime city-centre location between Deansgate and Piccadilly, they benefit from excellent connectivity, just 15 minutes’ walk from the main train station.
a&o Hostels will shortly progress an £8.2 million refurbishment programme across both properties to deliver a scheme comprising 1,218 beds across 303 rooms, a mix of private rooms (30%), family rooms (30%) and dormitories (40%). Works are expected to be concluded by Q1 2027, with the property remaining fully operational throughout.
The acquisition is further evidence of a&o’s growth strategy in its core markets, as it progresses its €500 million investment programme. a&o seeks to continue capitalising on the compelling demographic tailwinds driving the rapid growth of what has become an increasingly institutional-quality asset class. Underpinned by increasing inbound tourism, a rise in budget-conscious travellers and technological advancements, the European Hostels Market is projected to grow at a CAGR of 5.8% from 2025 to 2030[1].
a&o has been successfully executing on its growth strategy to bring its budget friendly offering targeting families, school groups and backpackers to more European cities by acquiring 8,500 beds, both operational and being developed / refurbished, over the past 24 months.
StepStone Group and Proprium Capital Partners sponsored the management led acquisition of a&o at the end of 2023 and together they have invested circa €500 million into the platform’s expansion over the last 18 months. Recent acquisitions have included assets in London, Brighton, Brussels, Antwerp, and Heidelberg, as well as the Schulz Hotel platform, while a near term pipeline of further transactions in other leading European cities continues to be progressed.
As one of the UK’s best performing hotel markets outside of London, attracting over 1.9 million visitors annually, we have long regarded Manchester as a key strategic target, and are therefore really pleased that we can now establish a significant footprint through this freehold acquisition.
The transaction concludes a highly successful year for a&o Hostels which has seen us deliver c. 5,500 new beds across four new cities, as well as bring the Schulz Hotel platform into our group. Oliver Winter, CEO of a&o Hostels
Founded in 2000 by Oliver Winter, a&o is now one of the largest budget hostel chains in the world. 2024 saw a&o Hostels welcome a record 2.8 million guests and 6.2 million overnight stays. This momentum was sustained in the first half of 2025, with a&o recording 1.4 million guests, 3.1 million overnight stays, and an occupancy rate of 73 percent.
Manchester is widely regarded as major tech and media powerhouse. It attracts over 1.9 million visitors annually ranging from overseas leisure travellers and domestic city breakers to student groups and budget conscious tourists who are attracted by its year-round demand drivers including premier league football fixtures, headline music events, a vibrant nighttime economy and club scene, art, culture and business events.