Generator Hostels' Forecasts 50% Jump in Earnings as Budget Travelers Seek Deals

Generator Group, which owns or runs 21 hotels, gave a financial update on Monday that underscored the post-pandemic boom in travel.

London-based Generator Group forecasted that it's on track to produce revenues of about $238 million (€225 million) this year — which would represent a 25% jump over the company's revenue in the pre-pandemic year of 2019.

The privately held company anticipates this year it will produce earnings before interest, tax, depreciation, and amortization of about $80 million (€75 million). That would represent a 50% jump in earnings compared with 2019 — highlighting strong pricing power in so-called "compression," or high-demand, markets.

PE-Backed Hostels

Private equity firm Queensgate Investments bought Generator for $480 million (€450 million) in 2017, and the group's flagship brand is Generator, a set of premium economy hostels. Queensgate spent about $400 million in 2019 to acquire Freehand Hotels, which operates properties in New York, Chicago, Los Angeles, and Miami, and folded that into the group.

Generator said it has nearly 12,000 beds in ten countries. It told the Financial Times, "in the next year, it is planning to launch 10 more sites worldwide under an asset-light model where it does not own the long-term lease, including a new hostel in Bangkok."

Queensgate is a part or whole owner of nine Generator-run properties. Generator also acts as a management company for other hostels.

For more context on Generator's strategy, watch the interview with its CEO from last year's Skift Global Forum East (below) or read Skift's piece Generator’s Takeover of Paramount Hotel in Times Square Is Part of Broader Hostel Reboot.