Texan group TPG Real Estate buys German hostel chain A&O
The giant Fort Worth-based private equity group TPG Real Estate has bought a majority stake in A&O Hotels and Hostels, the largest privately-owned hostel platform in Europe, for an undisclosed sum.
The deal sees TPG (Texas Pacific Group) acquiring 31 leased and owned hospitality assets from the Berlin-based budget hotel investment, development and management group with about 22,000 beds, mainly located throughout Germany.
A&O was founded in 2000, since when it has expanded by about 20% annually, and last year booked 3.2million overnight stays, generating €97m in turnover. It now has hostel location in German cities including Berlin, Dortmund, Dresden, Dusseldorf, Frankfurt, Hamburg, Karlsruhe, Cologne, Leipzig, Nuremberg, Aachen, Weimar, Stuttgart and Munich. It also has a number of assets in neighbouring countries including the Czech Republic, the Netherlands and Austria, with new hostels coming on stream this summer in Italy and Denmark.
Key members of A&O's management team, including CEO Oliver Winter, will continue to head up the company after the sale. According to Winter, “We founded A&O almost twenty years ago in Berlin, and it has grown into one of the leading German budget hotel operators. With TPG's global presence and expertise in buying and building platforms, I believe it is the ideal partner to strengthen and expand our business across Europe.”
Anand Tejani, partner at TPG Real Estate, commented, “A&O is a strong operator that is well positioned to capitalize on favorable global and European travel trends. Over the last number of years the sector has experienced rapid growth, particularly due to an increase in travelers in search of affordable, reliable, lodging options. Oliver has built a great business that addresses this demand.”
Michael Abel, managing director at TPG Real Estate, added, “Given A&O’s impressive business track record, we see an opportunity to create a pan-European company of scale in a fragmented market that continues to experience robust growth.”
TPG Real Estate, comprising of equity investment platform TPG Real Estate Partners and debt origination platform TPG Real Estate Finance Trust, currently manages assets of more than $7bn.