Generator Hostels gets €60m from Invesco for expansion

The group’s owner, Patron Capital, completed a minority sale of Generator of up to 23 per cent in exchange for the capital injection.

Expansion will start in Paris, Rome and Amsterdam, where the brand plans to open in 2015.

Boutique hostels​

The deal reflects the appeal of a new generation of low-cost accommodation providers that combine stylish design with hostel-style rooms, and are set to grow exponentially​​ over the next few years.

Josh Wyatt, senior advisor at Patron Capital responsible for the Generator brand, and chief strategic officer at Generator said: “This transaction, via a global institutional capital partner, is a major proof of concept for hostels as an asset class. Since Patron acquired Generator in 2007, Generator has built a powerful global brand and revolutionised the hostel experience. The €60m of proceeds cement our valuation premium for Generator and will enable the company to accelerate its growth plans both in Europe and the US, where we believe there is significant potential.”

Generator’s executive chairman Carl Michel explained the transaction was proof that major capital investors recognised the growth potential of the hostel segment.

Investment​

Erik Jacobs, director, hotel fund management transactions of Invesco Real Estate, added: “Through Invesco’s opportunistic strategy we are now extending our commitment to the hospitality industry beyond the traditional lease model. We are excited to be investing in the Generator platform as we see strong fundamentals supporting the hostel segment, and Generator is a market leader in terms of product, design and brand recognition. As an organisation, we look forward to assisting Patron with Generator’s ongoing growth by utilising Invesco’s extensive global network.”

Generator currently has 5,200 beds in seven cities across Europe, including London, Dublin, Copenhagen, Berlin, Hamburg, Venice and Barcelona.

It operates on a model of unique, stylish and design-led spaces in central locations and at affordable rates.

Properties include a range of options from shared to private bedrooms, free Wi-Fi, bar and chill-out areas.