a&o’s adjoining ibis and Novotel hotels between Deansgate and Piccadilly will reopen after an £8.2M refurbishment with 303 rooms and 1,218 beds. Manchester becomes its fourth UK asset, bringing its European portfolio to 44 properties across 10 countries.
January 8, 2026 – a&o Hostels, Europe’s largest and fastest growing hostel chain with 30,000 beds under management, announces the freehold purchase of two hotel assets, located on Portland and Dickinson Streets in central Manchester, from Ares Real Estate funds and EQ Group.
The four story, adjoining properties, totalling 13,000 sqm, were previously operated under a franchise agreement with Accor, trading under its budget and mid-market hotel brands ibis and Novotel. In a prime city-centre location between Deansgate and Piccadilly, they benefit from excellent connectivity, just 15 minutes’ walk from the main train station.
a&o Hostels will shortly progress an £8.2 million refurbishment programme across both properties to deliver a scheme comprising 1,218 beds across 303 rooms, a mix of private rooms (30%), family rooms (30%) and dormitories (40%). Works are expected to be concluded by Q1 2027, with the property remaining fully operational throughout.
The acquisition is further evidence of a&o’s growth strategy in its core markets, as it progresses its €500 million investment programme. a&o seeks to continue capitalising on the compelling demographic tailwinds driving the rapid growth of what has become an increasingly institutional-quality asset class. Underpinned by increasing inbound tourism, a rise in budget-conscious travellers and technological advancements, the European Hostels Market is projected to grow at a CAGR of 5.8% from 2025 to 20301.
a&o has been successfully executing on its growth strategy to bring its budget friendly offering targeting families, school groups and backpackers to more European cities by acquiring 8,500 beds, both operational and being developed / refurbished, over the past 24 months.
StepStone Group and Proprium Capital Partners sponsored the management led acquisition of a&o at the end of 2023 and together they have invested circa €500 million into the platform’s expansion over the last 18 months. Recent acquisitions have included assets in London, Brighton, Brussels, Antwerp, and Heidelberg, as well as the Schulz Hotel platform, while a near term pipeline of further transactions in other leading European cities continues to be progressed.
Oliver Winter, CEO of a&o Hostels, commented: “As one of the UK’s best performing hotel markets outside of London, attracting over 1.9 million visitors annually, we have long regarded Manchester as a key strategic target, and are therefore really pleased that we can now establish a significant footprint through this freehold acquisition.
“The transaction concludes a highly successful year for a&o Hostels which has seen us deliver c. 5,500 new beds across four new cities, as well as bring the Schulz Hotel platform into our group.”
Founded in 2000 by Oliver Winter, a&o is now one of the largest budget hostel chains in the world. 2024 saw a&o Hostels welcome a record 2.8 million guests and 6.2 million overnight stays. This momentum was sustained in the first half of 2025, with a&o recording 1.4 million guests, 3.1 million overnight stays, and an occupancy rate of 73 percent.
Manchester is widely regarded as major tech and media powerhouse. It attracts over 1.9 million visitors annually ranging from overseas leisure travellers and domestic city breakers to student groups and budget conscious tourists who are attracted by its year-round demand drivers including premier league football fixtures, headline music events, a vibrant nighttime economy and club scene, art, culture and business events.
About a&o Hostels
Founded in 2000 by Oliver Winter, a&o Hostels currently operates 44 properties with around 30,000 beds in 29 cities across 10 European countries. A further two properties are set to open in the near future. The a&o Hostels guest mix is diverse, welcoming backpackers, solo travellers, families, school groups, and associations. The number of business travellers and senior guests is also increasing. In 2024, a&o Hostels achieved a record company performance, surpassing the record set in the previous year. Demonstrating strong year-on- year-growth, a&o recorded 6.2 million overnight stays (2023: 6.1 million), 2.8 million guests (2023: 2.7 million), and £192.7 million in revenue (2023: £179.9 million).
For more information, visit www.aohostels.com
About Schulz
Founded in 2018 in Berlin by Meininger founders Nizar Rokbani, Oskar Kan, and Sascha Gechter, Schulz Hotels represents the Premium Budget segment: design, comfort, and quality for cost-conscious travelers. With one property currently open at Ostbahnhof and another under construction, Schulz is pursuing a clear growth strategy in major European cities. The founders bring decades of experience in the international hostel and hotel market – and, together with a&o, are now shaping the next stage in the evolution of European budget hospitality.
About StepStone Group
StepStone Group Inc. (Nasdaq: STEP) is a global private markets investment firm focused on providing customized investment solutions and advisory and data services to its clients. As of September 30, 2025, StepStone was responsible for approximately $771 billion of total capital, including $209 billion of assets under management. StepStone’s clients include some of the world’s largest public and private defined benefit and defined contribution pension funds, sovereign wealth funds and insurance companies, as well as prominent endowments, foundations, family offices and private wealth clients, which include high-net-worth and mass affluent individuals. StepStone partners with its clients to develop and build private markets portfolios designed to meet their specific objectives across the private equity, infrastructure, private debt and real estate asset classes.
For more information, visit StepStone Group
About Proprium Capital Partners
Proprium Capital Partners, part of L&G, is an established real estate focused principal investing firm that strategically invests in proven real estate strategies, prioritizing those with potential for growth and scalability, as well as special situations.
A spin out of the Morgan Stanley Real Estate Special Situations team, Proprium’s senior management team has worked together for over 20 years investing in real estate operating companies, focusing on scalable themes with experienced local partners and platforms. In 2025, L&G acquired a 75% equity stake in Proprium to accelerate growth at a time of immense opportunity in the global real estate market, bringing forward new opportunities for investors.
Proprium’s strategy of platform investing seeks to deliver private equity returns in the real estate industry. Proprium manages funds on behalf of institutional investors across the globe, including government and private sector pension and retirement funds, family offices and sovereign wealth funds.
Today, Proprium has grown to $3.3 billion* of net assets under management with a global platform of six offices across the US, Europe, and Asia Pacific.
Further information can be found at www.proprium.com
*As of June 30, 2025