Oliver Winter is excited about the progress being made at A&O Hostels, the business he co-founded with a single hostel in Berlin 26 years ago.
The StepStone and Proprium Capital-owned company recently acquired a former office building in central Berlin for conversion into Europe’s largest hostel. What’s more, A&O has completed, ahead of schedule, an initial €500m expansion programme – comprising a mix of around €200m of equity from StepStone and Proprium, plus debt, and has commenced another €500m programme with the same investors.
A&O said it plans to spend €40m transforming its latest Berlin asset into a 2,500-bed hostel. The 31,300sqm building is in Rudi-Dutschke-Straße, in the heart of Berlin’s Kreuzberg tourist district, close to Cold War landmark Checkpoint Charlie.
Winter, CEO of A&O Hostels, says: “One of our main drivers is to democratise access to prime urban destinations, like Berlin’s Kreuzberg tourist district. This is a core pillar of our strategy. Leveraging our in-house development capabilities will enable us to deliver another highly sustainable, modern hostel, and the largest in Europe.”
From its humble beginnings, A&O now has 46 hostels in 32 cities across Germany, Austria, Belgium, The Netherlands, Denmark, Czech Republic, Poland, Hungary, Italy and the UK. The portfolio comprises 22 converted offices, 15 repurposed hotels, former factories and warehouses and four ground-up developments.
In 2025 A&O recorded 6.6m overnight stays, up from 6.2m in 2024, and hosted 2.8 million guests, generating revenues of £215m, a rise from £192.7m a year earlier. More than a third of its revenues (37%) come from school trips, booked well in advance, enhancing A&O’s revenue visibility and helping cover most of its yearly operational costs. Winter says: “We already have 40% of our revenue for 2026 in the books. The scope of our business means it’s booked a very long time in advance.”
Another key pillar is sustainability. With an average carbon footprint of 3.32kg of CO2 per overnight stay, A&O claims that it offers the most sustainable hostel accommodation in the sector.
Private investment firms StepStone and Proprium entered the room when A&O’s previous backer TPG decided to exit the cheap beds provider in 2023, having snapped it up for around €250m in 2017. The new owners paid around €800m and there are no signs that they are ready to sell.
A&O’s latest Berlin acquisition followed hot on the heels of its December 2025 purchase of Berlin-based Schulz Hotels.
Josh Cleveland, head of EMEA real estate at StepStone, says these two deals represent “another demonstration of how we are delivering on our growth strategy ahead of schedule, in one of our high conviction commercial real estate sectors”.
A&O stated that the acquisition of Schultz will support its growth strategy in its core markets and enable it to further diversify its offering as it looks to accelerate its pan-European growth ambitions.
The founders of Schulz – Nizar Rokbani, Oskar Kan and Sacha Gechter – are joining the A&O management and advisory team as it plans a brand and offering expansion.
As well as Schulz Hotels, other acquisitions have included assets in London, Brighton, Brussels, Antwerp and Heidelberg, while a near-term pipeline of further transactions in other leading European cities in progress.
Cleveland explains that StepStone remains committed to A&O because of the compelling business model that the hostels sector provides. He says: “Hostels, one of travel’s most resilient and underappreciated segments, sit at the intersection of affordability, experience and sustainability, delivering strong returns with deep consumer relevance. We also take existing real estate that’s underutilised by the existing owners and convert them into a hostel business that actually is delivering social good, by making city centres more affordable, whether that’s for the students to experience cultural activities, or for families who may not otherwise be able to afford to be based in expensive tourist areas. And this, to me, is quite compelling.”
So compelling, in fact, that Cleveland anticipates StepStone will remain invested in A&O for at least the medium-term. Cleveland says: “I’m thankful that we made the investment 24 months ago. I’m thankful that we’ve had the opportunity to invest the capital, and we plan on doubling or reloading the growth available to Oliver and his team over the next 36 months.
“I would be surprised if we weren’t owners of this business in 36 months. And I’d be happy to be an owner in five years. We’re a traditional private equity fund in terms of a 10-year life. We probably anticipated owning this for three or four years because 2023 wasn’t the right time to sell. But the business model, and Oliver, proved so successful we want to retain [our holding]. We are fortunate to have the best business and the best management team [in the hostels sector], so I’d rather continue to grow it than sell it to someone else to grow.”
This likely comes with a sigh of relief from Winter, who freely admits that he could not have scaled the business without the help of external institutional investment. He says: “It is not only about the capital that StepStone and Proprium have invested. It’s also the great network and great resources they bring. I learned this with TPG, that it’s more than money that private equity brings, and it’s even more when we have people around helping this company to grow.
“I’m focused on whatever it takes over the next four or five years to build this company as big as we can, and as successful as we can, by accelerating our pan-European growth to allow as many people as possible to participate in travel. That’s the mission.”
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