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 changes our business model a little bit,” founder and CEO Ignacio Requena told Skift. “At the beginning, we were an asset-light company. With this capital, we have the opportunity to buy properties.”
Room00 has relied on leases and hotel management agreements to expand across Southern Europe. Requena said the company can now acquire 30 to 40 properties with the new funding and potentially more from banks.
Room00 operates several brands aimed at urban travelers, including Room00 Hostels, TOC Hostels, Room Select Hostels, and Letoh Letoh, ranging from budget-friendly design hostels to boutique hotels.
London Expansion
London will be Room00’s first expansion beyond Southern Europe, with a goal of year-end for its first property in the city.
“Our goal is to reach 20 assets and around 1,000 rooms in London in the next three years,” said Requena.
Despite London’s crowded hospitality scene of global brands, hybrids, and independents, Requena sees an opportunity to target millennials and Gen Z travelers, a demographic he believes is underserved.
Growing from 50 properties to over 200 in four years will require more than capital. Requena said the challenge is maintaining consistency while adjusting to each market.
Requena said the company has no plans to broaden its appeal or reinvent itself. Instead, it wants to replicate its early success across new locations.
“We don’t want to change a lot,” Requena said. “When you check our customer, they are growing the demand for authentic, design-oriented experiences that larger hostel chains, independents, and hybrid operators like us are better suited to meet.”
In Italy, Room00 is working with local real estate firm Kryalos SGR to launch a property investment vehicle, a model it could replicate in other markets as it grows.
The company will continue expanding through selective acquisitions. “Our segment is really fragmented,” he said.
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.
The fresh capital comes from U.S. investment firm King Street Capital Management.
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