Skift Take

While the sale from one private equity firm to another isn’t necessarily the most exciting news, the promise of further funds for expansion by the new owner shows a commitment to the budget model. The hostel landscape is very different than it was 10 years ago and by focusing on design, Generator managed to evolve the product.

London-based Queensgate Investments bought Generator Hostels from private equity firm Patron Capital for $480 million (€450 million).

The new owner said it wants to keep the budget operator for the “long term” and intends to invest more than $320 million (€300 million) into adding more hostel assets.

Generator Hostels, which has 14 properties spread across Europe, is at the forefront of a new wave of design-led budget accommodations. It has also looked to establish itself as a recognized name in an industry that has traditionally been incredibly fragmented.

Generator Hostel’s revenue at increased 23.5 percent to $74.6 million (€70 million) in 2016 compared with the previous year.

Last year the company opened three new hostels in Amsterdam, Stockholm and Rome.

Keith Breslauer, managing Director of Patron, said: “Generator has performed strongly under Patron’s ownership, during which time we have expanded the business significantly from just two hostels to 14, and have redefined the hostel concept into the design-led hospitality experience that today’s guests want. We are very pleased to have sold Generator to Queensgate, and are confident that the business will continue to grow and thrive under their stewardship.”

Jason Kow, CEO of Queensgate Investments, said: “Generator Hostels represents high-quality freehold assets, robust revenues, an attractive lifestyle brand, and material scalability opportunities. Generator Hostels plays to Queensgate’s strengths of working with incumbent management to improve the customer experience, to streamline operations and to bolt on additional assets to this impressive platform.”

Last year Generator Hostels CEO Fredrik Korallus appeared at the Skift Global Forum to discuss the hostel model.


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Tags: generator hostels, hostels

Photo credit: The Generator Hostel in Paris. London-based Queensgate Investments bought the company for $480 million. Generator Hostels

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