London-based private equity firm Queensgate Investments is in advanced talks to sell its European hostels business to a private equity firm for €650M (£569M).

Queensgate has entered exclusive talks to sell Generator’s European assets to French private equity firm PAI Partners, React News reported. If the deal completes, it will be one of the largest European sales since interest rates rose dramatically in the third quarter.

Generator has 13 operational hostels across Europe in London, Dublin, Paris, Amsterdam, Hamburg, Stockholm, Madrid, Barcelona, Copenhagen, Rome and Venice, as well as two in Berlin. The aim of the company has been to shake up the hostel sector by making it more appealing, with design-led rooms and good-quality communal areas, including bars.

Generator has assets in Miami and Washington, D.C., as well, and will soon open an outpost in New York through a management agreement. Those properties are not part of the sale, React said.

Queensgate first put Generator up for sale in late 2019, but the pandemic meant  the sale was put on ice. The recent revival of leisure travel has reinvigorated the process. The firm is on track to produce revenue of €80M in 2022, 25% ahead of what it predicted at the start of the year.

PAI is not a property specialist, but has invested in pan-European hospitality businesses that own their properties before, like holiday park company Roompot and B&B Hotels. PAI sold those two companies for €1B-plus.