Virgin Hotels CEO James Bermingham is about to have more fun, as only Virgin Group Founder Sir Richard Branson would want it, because development of the now 10-year-old hotel brand with only five hotels open is expected to kick into a higher gear – not galactic mind you – but it has opened four hotels over the last two years, will open three more this year, and has a new plan to focus more on resorts and residential opportunities.
Hotels in Edinburgh and Glasgow are set to open this spring, while a milestone, 460-room ground-up New York City property opens this summer with multiple F&B outlets as well as a rooftop bar. At the same time, a mixed-use deal is done in Miami and Bermingham said two more deals should be announced soon. Among the markets Virgin is actively exploring are Boston, Los Angeles, Austin, Seattle and London. There is now a bigger focus on Europe and Virgin would love to add Cape Town and Johannesburg, according to Bermingham.
The day HOTELS interviewed Bermingham in mid-February marked his first anniversary with Virgin after spending more than 20 years with Montage Hotels & Resorts. “My time with Virgin has greatly exceeded my expectations,” he said. “I grew up in Dublin and spent 10 years in London watching Sir Richard disrupt business after business… I was a happy camper at Montage and living in Southern California. So, any opportunity had to be something really extraordinary to get my attention, and Virgin was it… It has been fun. It has also been rewarding and enriching. I’m having a great time.”
Having a great time during a pandemic is no easy feat, but Bermingham attributes it to the Virgin teams and efforts made to persevere cashflow while maintaining the guest experience, which he said lead to substantial increases market penetration at stabilized hotels.
During the pandemic, Bermingham said the Virgin Hotels portfolio showed year-over year-growth in market share of 38% in 2020 and 40% in 2021. He added that Virgin Hotels’ F&B revenue per occupied room was 190% of the brand’s comp sets on average, which really helped with cashflow during the pandemic.
“We’re super sensitive to our owners and work very closely with them to mitigate the losses (reducing hours of operation, suspending some brand standards) and maximize cash flow,” Bermingham added. “It is something that our team did extraordinarily well.”
Performing for and listening to owners is also critical to Virgin because they want to do additional deals with them, Bermingham said, citing The Buccini/Pollin Group, which developed hotels in Nashville, Tennessee, and New Orleans, Louisiana, and is looking at a third Virgin project not quite ready to be announced.
The other way forward for the next three to four years, as Bermingham mentioned, is through resort development in North America and Europe, which generally tends to mitigate market volatility. “We’re looking at the beach, coastal, mountain and desert resorts,” he adds.
More specifically in Europe, Bermingham said, Virgin is actively looking in London, where “fingers crossed we are very close.”
Spain (Marbella, Malaga, Ibiza) are preferred destinations, as well as Madrid and Barcelona. Portugal and the south of France are also on Virgin’s radar. “We have a development team engaged full time – one based in London and the other in Madrid,” Bermingham added.
The other opportunity first recognized for the brand last year in Las Vegas is conversions. “We are thrilled how Vegas turned out. So, conversions are a priority for us, as well,” Bermingham said. “We have a couple of things working now.”
Never having enough bullets in the arsenal, the other opportunity for growth that Virgin is adding is residential. “If you want to be a serious player, you have to have a branded residential platform, and we’re developing that as we speak,” Bermingham said.
The first residential development is with a developer in Miami in the heart of Brickell with over 300 residences to go along with a 200-room hotel with multiple food and beverage operations, co-work space and more. Bermimgham added that two additional residential projects are also in the offing.
“Richard [Branson] doesn’t distinguish between work and play – it’s just life,” Bermingham said. “That has really inspired three projects that we’re working on right now. Within those three projects, there is potential for a membership club and a social club component – those have probably been the biggest changes in consumer behavior that we’re responding to in a pretty big way.”
While Virgin is an asset-light, branded management company, Bermingham also pointed out that it has put minority equity in several hotels and can continue to do so moving forward.
The other big news coming in 2022 is the enhancement of Virgin’s Lucy app, where consumers can already make reservations, check-in, use keyless entry, control guest room TVs, order room service, control the air conditioning and lighting, as well as check-out. It is adding cashless tipping and, most importantly, this fall will launch a Virgin-wide rewards program called Virgin Red.
To make it as cost-effective as possible for owners, Virgin is laser-focused on controlling the cost of distribution. “And again, we want to meet the guests where they are, and we want to integrate and automate the redemption model,” Bermingham said. “It should be as easy as making a hotel reservation.”