The London-headquartered business is on an expansion drive after securing an £18.5m funding package from HSBC UK earlier this year.
Safestay has acquired the freehold of a central Brighton property for £2.27m with plans to transform it into a 220-bed hostel.
The group said there was a lack of low-budget tourist accommodation in the city, providing an opportunity for it to fill the gap.
It has bought a Grade II-listed end of terrace building, located just 600m from Brighton seafront, from the University of East Sussex.
The 15,285 sq ft regency-style building is set over five storeys and is currently vacant.
Safestay will seek planning permission to convert the site into a hostel with 200 beds in dormitory-style accommodation and 20 in private rooms.
The conversion is estimated to cost £1m and should take approximately six months. In its first year of trading, sales and EBITDA at the hostel are projected to be £750,000 and £250,000 respectively.
Safestay Brighton will be the Company’s sixth hostel in the UK and the twentieth for the group across Europe.
The London-headquartered business is on an expansion drive after securing an £18.5m funding package from HSBC UK earlier this year.
Safestay made its first post-pandemic acquisition last year when it returned to Edinburgh with the purchase of a six-storey building for £4.3m.
It also signed a management contract to run the resort-based 120 bed Calpe Seafront Hostel in Spain in April and acquired a 100-bed hostel in Cordboda, Spain, last month.
Larry Lipman, chairman of Safestay, said: “Brighton has an excellent reputation in the UK as both a seaside getaway and a lively cultural hub, and there is growing demand for affordable tourist accommodation in the city.
“Safestay will help fill this gap in the market by offering premium hostel stays for visitors, in a grand property, at a low cost. I am confident that this will be another strong addition to our portfolio.”
Safestay saw its total revenues rise 18% last year to £22.5m while adjusted EBITDA rose 15% to £6.8m.
Occupancy rose from 63% to 71% while average bed rate increased slightly from £23.63 to £23.74.