WORDS JAMES WILKINSON
Sir Richard Branson is no stranger to the hotel market – his Limited Edition by Virgin brand has been operating exclusive resorts such as Necker Island in the Caribbean and Ulusaba in South Africa across the globe for decades – and it should come as no surprise that the billionaire entrepreneur plans to give the mid-scale segment a shake up.
Branson revealed his desire to operate hotels in America during September 2010, when parent company Virgin Group signed a deal with US investors Alberto Beeck and Diego Lowenstein to create a new Virgin-branded product that would offer 4.5-star hip boutique hotels at 4-star prices.
Initially, Virgin Hotels has targeted the United States cities of New York, San Francisco, Miami, Los Angeles, Boston and Washington DC and plans to buy as much as USD$500 million worth of properties over the next three years.
According to the company, Virgin Hotels is seeking “authentic and high quality 150-400 room properties in appealing neighbourhoods that will meet the expectations of our guests, a target group that seeks engaging and differentiated experiences”.
“Once ready for business, Virgin Hotels properties will feature contemporary style, great functionality, an efficient yet personalised experience, ample communal space and a signature restaurant,” Virgin Hotels says on its website.
“Virgin Hotels will define its communal spaces by building on experience the brand has gained in operating award-winning Clubhouses around the world – unique spaces where our guests can get work done, nourish and refresh themselves, meet other interesting people, or just take a break from the hustle and bustle of the city.
“Our target guest is more than comfortable with technology and craves customisation and efficiency – so our properties will provide simple yet intuitive systems to help them get the most out of their stay (both in-room and throughout communal spaces),” the company says.
Alongside the acquisitions, Virgin Hotels also plans to operate as third-party managers and partner with owners.
Attacking the mid-scale segment in the United States should prove to be a smart move for Virgin Hotels, given the brand’s strength in that segment – particularly thanks to the positioning of Virgin America, which has all the hallmarks of a boutique and hip airline at low-cost carrier prices.
The Virgin Hotels brand could then grow in the segment globally with the aid of V Australia, Virgin Atlantic, Virgin Blue and other Virgin-branded companies that are chasing the current wave of tech-savvy, 25 to 40-year-old hip travellers.
In an interview with HM magazine in late 2010, InterContinental Hotels Group CEO Andrew Cosslett said Branson’s move into the four-star hotel segment was a smart play.
“The mid-scale segment is attractive and clearly Sir Richard agrees,” Cosslett said. “The midscale represents the lion’s share of the global hotel market so it is a sensible place for him to start.”
While Australia might be some years away for a Virgin-branded hotel, the company is expected to make strong in-roads with the United States market during 2011 – the same year Branson’s Virgin Galactic is scheduled, albeit tentatively, to take-off on sub-orbital space flights for the first time.
To find out about what else Branson and Virgin – a company that recorded revenues of USD$18 billion globally in 2008 – has planned, HM sat down exclusively with the entrepreneur during a visit to Melbourne in the last quarter of 2010.
Richard, Virgin Blue celebrated ten years of flying late last year – what are you expecting for the next decade?
SRB: We have got a fantastic team of people that work there and thoroughly enjoy their jobs – and as long as the regulators don’t upset our plans, we hope that the next 10 years will go even better and even stronger and we’re looking forward to try and take on Qantas on a lot of routes that we don’t fly to and doing even better on the routes that we do fly to.
Which routes would you like to target?
SRB: There are quite a lot of new international routes that we would like to fly to over the next 10 years – Pacific routes and routes to Europe – but it does slightly depend on whether the regulators tip the balance in Qantas’ favour or keep a balanced playing field, and if they keep a balanced playing field we will expand on a lot more routes.
That’s obviously great news for Australian travellers.
SRB: The fact that we took Qantas on across the Pacific with V Australia, fares have come down by nearly 40 per cent and a lot more people are travelling from Australia to America and from America as a result. So, the more places that Virgin can fly, the better it is for the travelling public.
What cities in Europe would Virgin / V Australia like to fly to?
SRB: I don’t think I can give specific names of cities at this stage, because if we do you’ll find that Qantas will double their frequencies and we’ll never get on. But there are cities in Europe we are looking at as well.
Are you happy to see all of the Virgin airlines becoming so much closer together as far as onboard product is concerned?
SRB: We want to have a global alliance of quality Virgin airlines and I think since the regulators have made it harder for us to build other alliances (globally), then it’s going to become more important for us to build our own alliance amongst our own airlines.
Virgin Blue is about to take on Qantas on trans-continental flights with a full-service offering (on new wide-body, Airbus A330 aircraft). Are you proud about what’s been created?
SRB: We’re proud of what’s been created and we’re looking forward to taking Qantas on the Perth route, which is one of their most profitable routes. By creating a really good business class product there, with big seats and so on because it is quite a long route, I think we’ll give them a run for their money.
What desire do you still have to link Australia (Perth) and the UK (London) directly with long-range aircraft by V Australia or Virgin Atlantic?
SRB: I certainly think it is more likely than not.
What’s the latest with the aligning of the Virgin Blue names within the company here?
SRB: We have Virgin Blue, Pacific Blue and V Australia, and the Virgin name will be kept, but there will be a re-aligning that will be announced quite soon.
You have some amazing properties around the world, such as Necker Island in the Virgin Islands and Ulusaba in South Africa. Where is your ultimate destination for another Limited Edition by Virgin retreat?
SRB: I don’t know South America well but the little I do know of South America, I think it’s a very exciting continent – it’s very untapped, it’s home to tremendous people and I’d love to spend more time there.
Travel has changed a lot across the globe in the last 30 years – how are you expecting it to evolve going forward?
SRB: I think the most radical change in the future of travel will come from our spaceship company (Virgin Galactic). It will be sending people into space, but one day hopefully it will be sending people inter-continentally at a fraction of the time it currently takes.
It’s been a tough couple of years, especially in the UK. How has Virgin managed to stay afloat so well?
SRB: In any new business Virgin goes into, we are the challenging brand, but also a really good quality brand that offers very good value for money for the consumer. So, in times of recession, the consumer seeks us out and we seem to do well and the various Virgin companies have done pretty well during the recession and I think we are now in a position, with Virgin Blue to upgrade the planes and go after the business traveller as well as the leisure traveller.
On a personal side, what have been your biggest achievements throughout your career?
SRB: Surviving. We have had a few babies born over the years and I think going from the record company into the airline business – and really shaking up the airline business on a global basis – has made quite a difference for travellers around the world. That’s something that helped put Virgin on the map on a global basis and enabled us to do a whole lot of things.
Would you like to see your children get more involved in the family business?
SRB: My daughter (Holly), who is a doctor, has just started working with me and my son Sam is doing his own things – he’s making films – and if he wants to join one day, then there’s an open door. But Holly I think seems more likely to be the person, at the moment, if my balloon burst one day, to run the company.
Even though they are your children, would Holly and Sam have to prove themselves first in business or would they be given the job that they want?
SRB: They want to prove themselves to themselves. My daughter went off to become a doctor before joining Virgin to prove ‘I can become a doctor’. That medical training is actually very useful at Virgin as we have medical clinics and other things like the Foundation. But if they are not right for whatever job they do then it would be unfair on them to do it and unfair on other people. They are very personable, they love people, they’re bright, intelligent, they have been brought up knowing what it would be like to step into my shoes – and they would be very good at it.
What piece of advice would you give your younger self?
SRB: I wouldn’t change anything. I have had such a great life and if I had to start again I would do exactly what I’ve done. I have been very fortunate – I was born under a lucky star – and the best advice I was given was “to always look for the best in people”. I love people and hopefully that has ricocheted throughout the Virgin companies. As a result we have a happy company of people who are proud of what they are doing and everyone they come in contact with has a good experience.
When are you at your happiest?
SRB: I’m at my happiest when I achieve something that I am proud of as I suspect all if us are.
You own all of these different companies, but what are you most passionate about? Is it travel – when you fly, sail and soon, go in space?
SRB: I love learning and I love travelling. Love being able to go to Africa or places I’ve never seen before and extremely looking forward to going into space within the next couple of years. That will be the start of a whole new era of space travel and commercial space travel I think will open doors to space like never before.