Madrid-based Room00, known for its hostels and compact hotels, has secured €400 million (about $450 million) to accelerate its European expansion and buy properties outright for the first time.
“This capital will change our business model just a bit,” says the CEO and founder Ignacio Requena Skift. “At first, we had very few assets. This capital gives us the chance to purchase properties.
Room00 relies on hotel management agreements and leases to expand throughout Southern Europe. Requena stated that the company could now purchase 30-40 properties and possibly more from banks with the new financing.
Room00 has several brands that are aimed at urban travellers, such as Room00 Hostels and TOC Hostels.
London Expansion
Room00 will expand beyond Southern Europe to London, and its first property is expected in the city by year’s end.
Requena said that his goal was to achieve 20 assets in London and approximately 1,000 rooms within the next three-year period.
Requena believes that despite London’s overcrowded hospitality industry, which includes global brands, hybrids and independents of all kinds, there is an opportunity to reach millennials and Gen Z travellers, a group he feels is underserved.
In four years, the growth from 50 to 200 properties will require much more than just capital. Requena stated that the challenge was to maintain consistency and adjust to each market.
Requena has stated that it does not intend to expand its market or reinvent itself. It wants to replicate the early success in new locations.
Requena stated, “We don’t wish to change much.” “If you ask our customers, it’s clear that they are increasingly looking for experiences that are authentic and design-oriented. Hostels, independents, or hybrid operators such as us are best suited to provide these experiences.”
Room00, in collaboration with the local real estate company Kryalos SGR, has launched a property investment vehicle that it can replicate as it grows.
The company will expand through select acquisitions. He said, “Our segment is fragmented.”
That includes Room00’s 2024 acquisition of TOC Hostels for €20 million (about $22 million), a move that added 30 properties and another 20 under development across Spain, Portugal, and Italy.
U.S. investment company brings fresh capital to the table King Street Capital Management.
