UK-based contemporary hostel firm Safestay is taking over a rival with properties in Spain and France.

Safestay is spending €3 million to acquire U Hostels which has two properties in Madrid and one in Paris.

The deal is first step in establishing a pan-European network of hostels.

Safestay chairman Larry Lipman said: “The U Hostels concept of what makes a modern luxury hostel is similar to ours, in terms of providing guests with the opportunity to stay in unique, stylish buildings, located centrally in gateway European cities.

“The U Hostels portfolio is therefore an excellent fit with us and will increase the Safestay portfolio to six hostels and the number of beds we offer to 2,012.

“I am particularly delighted that we are starting with sites in Madrid and Paris, two of the most visited cities in Europe. Interestingly, Paris in relation to the number of visitors it attracts each year, has the fewest number of hostel beds available.

“Going forward, we will be able to offer guests the ability to transfer seamlessly between Edinburgh, York, London, Paris and Madrid. All great cities and we expect this network to be expanded as we have further transactions under advanced negotiation and the capital in place to complete them.