A little more than a month since acquiring two adjacent hotel properties in Manchester, Germany’s A&O Hostels is investing more than €40 million of capital expenditure into a site in Berlin to create Europe’s largest hostel.
The freehold purchase is a 334,000-square-foot vacant office building in a central Berlin location, and the seller is PIMCO Prime Real Estate on behalf of Allianz, according to a news release.
The release added that, “in line with its adaptive reuse strategy, A&O will leverage its in-house development arm to undertake a €40 million conversion program to deliver Europe’s largest hostel, with [circa] 2,500 beds.”
Of the A&O Berlin's 610 rooms, 31% will be private.
No acquisition price was disclosed for the new Berlin location, but with the aforementioned CapEx amount added to the property and management acquisitions, the owners and their funds have seen transactions totaling almost €700 million.
The property is located in Kreuzberg, a major tourism area of Berlin. When opened, the A&O Berlin will be A&O’s fifth asset in the German capital, where it will then have approximately 8,000 beds.
The project has a target opening date of the first quarter of 2027.
Back to Berlin
Berlin was the site of the A&O’s first hostel in 2000. In total, the company now has approximately 32,500 beds under management.
The hotel-hostel group’s principal owners, StepStone Group and Proprium Capital Partners — which acquired A&O in November 2023 — said the acquisition funds come from their previous expansion fund totaling approximately €500 million.
That fund has already seen activity in European cities such as Antwerp, Brighton, Brussels, Heidelberg and London. In December 2025, the two owners acquired the operations and sole hotel of Berlin-based Schulz Hotels, with its assets, management and operations rolled into A&O.
A&O CEO Oliver Winter said Berlin continues its upward trajectory in travel demand.
“[It] is one of Europe’s leading leisure and tourism hotspots, welcoming 13 million visitors in 2024, a 7.5% increase on 2023. It’s also the city that is synonymous with A&O, having opened our first hostel in Berlin Friedrichshain over 25 years ago,” he said in the news release.
Recently, Winter spoke on CoStar News Hotels' Europe, Middle East and Africa podcast “The Upgrade” about the firm’s expansion plans and the health of the Gen Z travel market.
Philipp Westermann, partner at Proprium Capital Partners, added that Proprium and StepStone “continue to invest in new opportunities at pace and scale, benefitting in particular from the increasing obsolescence challenge facing owners of secondary office and hotel assets.”