Backpacker operator Bounce snaps up Selina’s Australian hostels
Local backpacker developer and operator Bounce has struck a deal to take over the operations of three former Selina hostels in Melbourne and Brisbane and is in talks to add a fourth property on Magnetic Island near Townsville to its portfolio.
The deal, which includes a debt for equity swap with private lender Dorado Capital, will instantly double the existing Bounce network, which operates backpacker-style accommodation at Noosa, Cairns and Airlie Beach. Bounce is also developing a new 460-bed “hybrid hostel” at Budds Beach, near Surfers Paradise on the Gold Coast.
Selina burst onto the global hospitality scene a decade ago with its offering of jazzed up backpacker-style accommodation complemented with co-working spaces, funky food offerings and social events targeted at digital nomads and budget-conscious Millennials.
It opened its first properties in Australia in 2021 and had plans to roll out many more before its London-based parent company, which once had a market cap of $1.8 billion, collapsed in July after cash flows dried up following the pandemic.
Dorado Capital, which had provided a multimillion-dollar loan facility to fund the upgrades of the Australian properties, appointed receivers in August to protect its investors’ interests.
“Bounce has committed substantial capital to partially repay Dorado, cover Selina’s creditor obligations, employee entitlements, and administration and receivership costs. Dorado has rolled over the remaining balance of its debt into the Bounce business,” explained Dorado director Tim Moore.
Bounce, led by Mark Baldwin and backed by private investors, will take charge of a former Selina hostel opposite Flinders Station in the Melbourne CBD, a hostel in the beachside suburb of St Kilda and another property in the Brisbane CBD.
These had been operated as Roamer hostels following the collapse of Selina.
“Our plans is to rebadge and rebrand the [former Selina] hostels and tidy them up a bit,” Mr Baldwin told The Australian Financial Review.
“Our development at Surfers is just coming out of the ground,” he added.
Bounce (not to be confused with the popular Bounce indoor trampoline parks) started with a hostel in Sydney before that building was compulsorily acquired.
“We’re doing extremely well. Our hostel in Noosa has been outstanding. It was named best hostel in Oceania [by Hostelworld],” Mr Baldwin said.
A fourth former Selina hostel on Magnetic Island near Townsville was not part of the transaction with Bounce. But it is understood there are plans to incorporate this property into the Bounce chain.
Despite the wider problems experienced across the hostel group, Selina’s Australian business was profitable at the time of the collapse.
