Brookfield Asset Management has acquired Generator Hostels’ European portfolio for €776 million. This acquisition is a significant step in Brookfield’s strategy to expand its presence in the hybrid accommodation sector across Europe, specifically targeting the growing demand for flexible, affordable lodging options.
Brookfield’s growing presence in the European hostel market
Brookfield’s acquisition of Generator’s European assets marks a key milestone in its hospitality investment strategy. Generator Hostels, known for its combination of hostel and hotel accommodations, operates 13 properties across major European cities, including Berlin, Paris, Rome, and Madrid.
With the purchase, Brookfield strengthens its portfolio in Europe, where it already has significant investments in various hospitality sectors.
“The acquisition of Generator’s European assets presents a unique opportunity to further scale the brand in key European markets. We are excited to expand Generator’s reach and continue driving growth through acquisitions and third-party management agreements.” – Lauren Okada Young, Managing Director, Real Estate at Brookfield
Strategic growth plans for Generator Hostels
Generator Hostels has been part of Brookfield’s growth strategy in Europe, particularly within the budget and hybrid accommodation sector. The brand’s European properties include over 2,800 rooms in cities like Amsterdam, Berlin, Barcelona, and Stockholm.
With this acquisition, Brookfield aims to further enhance Generator’s business by expanding through additional acquisitions and establishing management contracts for new locations. Brookfield’s acquisition follows a series of strategic moves by Queensgate Investments, which initially bought Generator in 2017 for €450 million and has worked on enhancing the brand’s footprint.
The sale of Generator’s European assets was part of a broader market shift toward hybrid accommodation, a growing trend in the hospitality sector.
A broader shift in hospitality investment
The sale of Generator’s European assets reflects a growing interest in hybrid accommodations, where the flexibility of hostels is combined with the amenities typically found in hotels. This trend has gained traction, particularly among travelers seeking affordability without compromising on comfort.
Brookfield’s acquisition also coincides with a broader uptick in hotel investments across Europe. As noted by industry experts, 2024 marked a significant turning point in hotel investments, with transaction volumes surging by 62% year-on-year.
The hybrid accommodation model, represented by brands like Generator, is expected to continue attracting attention from investors looking to capitalize on the demand for flexible travel options.
Future outlook following the acquisition
With plans to expand Generator’s footprint, Brookfield aims to strengthen the brand’s presence in major European markets. In addition to the European acquisition, the company is positioning Generator as a key player in the hybrid accommodation space, responding to changing consumer preferences.
“The hybrid accommodation model is gaining momentum, and we are excited to be part of this growing sector. Generator offers a unique blend of affordability and flexibility, making it an ideal choice for both short-term and long-term stays across Europe.” – Shai Zelering, Managing Partner of Real Estate at Brookfield
While Generator Hostels’ presence is concentrated in Europe, the group also operates 6 establishments across the Atlantic under the Freehand Hotels banner after acquiring the company in 2019. The Brookfield takeover therefore only concerns Generator’s European portfolio, as Queensgate Investments wishes to keep the American branch in its fold.
In addition, Alastair Thomann stepped down as CEO of Generator Hostels in February this year to take the helm of edyn, a hotel group owned by Brookfield Asset Management.
An avalanche of takeovers in the sector
Recently, there has been a flurry of acquisitions in the hospitality sector on an international scale. The most recent of these was the acquisition of EasyHotel by Tristan Capital Partners, which intends to expand the group’s hotel portfolio to 44 establishments in 11 countries. Future growth will be concentrated on the European market, with a particular focus on the Iberian Peninsula.
A few months earlier, Ruby Hotels joined IHG’s portfolio of brands, officially becoming the British group’s 20th brand. The €110 million deal has a clear ambition: to increase the number of hotels from the current 20 to 250 by 2045. It’s an ambitious gamble, and one that will be supported by a franchise model.
In the second half of last year, OYO completed the acquisition of G6 Hospitality, franchisor and owner of the Motel 6 and Studio 6 brands, from Blackstone Real Estate for €525 million.A way for the group of Indian origin to strengthen its presence on the American market with the acquisition of a portfolio of over 1,500 hotels, with plans to add 150 this year alone.
