Private equity real estate fund manager Queensgate Investments has agreed to buy chic hostel owner and operator Generator Hostels for €450m (£395m).

The design-led hostel owner, which operates a total of 8,639 beds in London, Paris, Copenhagen and elsewhere, was owned by Patron Capital and co-investment partner Invesco Real Estate.

Generator Hostels currently earns revenues of over €70m with 14 predominantly freehold assets, two of which are under development. It aims to attract millennial travellers with its focus on capital city addresses, artfully designed interiors and appealing shared social spaces.

Jason Kow, chief executive of Queensgate Investments, said Generator is an attractive lifestyle brand and a scalable opportunity.

“Generator Hostels plays to Queensgate’s strengths of working with incumbent management to improve the customer experience, to streamline operations and to bolt on additional assets to this impressive platform,” Kow said.

Queensgate plans to invest around €300m into adding more hostel assets.

Keith Breslauer, managing director of Patron, said “Generator has performed strongly under Patron’s ownership, during which time we have expanded the business significantly from just two hostels to 14, and have redefined the hostel concept into the design-led hospitality experience that today’s guests want.

We are very pleased to have sold Generator to Queensgate, and are confident that the business will continue to grow and thrive under their stewardship.”