European hostel chain a&o Hostels has announced the purchase of two large hotel properties in central Manchester, marking a significant expansion of its UK footprint. The buildings, located on Portland Street and Dickinson Street, were acquired from Ares Real Estate Funds and EQ Group.
The four adjacent buildings cover 13,000 square meters and were previously operated as Ibis and Novotel hotels under a franchise agreement with Accor.
Conversion and Renovation Plans
Following the acquisition, a&o plans to invest €9.4 million in a comprehensive renovation program. Once complete, the sites will offer a combined 1,218 beds across 303 rooms. The room layout is designed to cater to various traveler types, with a mix of:
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30% Private rooms
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30% Family rooms
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40% Dormitory-style rooms
Renovations are expected to be finished by the first quarter of 2027. The buildings will remain operational throughout the construction period.
Strategic Growth in the UK
The Manchester acquisition is part of a broader €500 million investment program backed by StepStone Group and Proprium Capital Partners. In the last 18 months, the group has expanded rapidly, acquiring properties in London, Brighton, Brussels, Antwerp, and Heidelberg.
“We have long viewed Manchester as a key strategic market,” said Oliver Winter, CEO of a&o Hostels. Winter noted that the city attracts nearly 2 million visitors annually, driven by its status as a tech hub, its Premier League football teams, and its music scene.
Record Numbers for the Budget Sector
The move comes as the European hostel market sees steady growth, fueled by an increase in price-conscious travelers and school groups. In 2024, a&o reported a record 6.2 million overnight stays. This momentum carried into the first half of 2025, with the chain recording 3.1 million overnight stays and an average occupancy rate of 73%.
By converting mid-range hotels like the former Novotel and Ibis into high-capacity hostels, a&o continues its strategy of targeting central urban locations with high connectivity to public transport.
