TALK: CEO Virgin Hotels Raul Leal

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The Virgin brand is already somewhat of a force to be reckoned with, so when it finally launched its first foray into the hotel market, it was almost guaranteed to be a showstopper. Zoe Monk had an exclusive chat with CEO Raul Leal, Branson’s right-hand man, to reflect on the brand’s monumental few months entertaining guests.

The launch of the hugely-anticipated first every Virgin Hotel is already up there with the hot topics of the year, and it’s still only February. Five years after the announcement from the Branson camp that hotels were next on the brand’s agenda, Virgin Hotel Chicago was born and already its impact on the market has been substantial.

This was inevitable with such a strong driving force and loyal following behind it, but from the get-go Branson himself was very aware of how competitive the boutique hotel market is and was determined to make his offering stand out from the crowd. One month on and he is confident that the Virgin brand’s presence has been felt, despite the project taking longer to come to fruition than he originally anticipated. At the time of launch he said: “There are still a lot of very crappy hotels out there,” he said. “The big chain hotels are completely impersonal. As long as we’re in the best 10% of the sector, we can do very well.”

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As Virgin Hotel’s development drive advances full pelt, we had the chance to speak exclusively to CEO, Raul Leal, Branson’s right hand man, to discuss the core values that are crucial to the brand’s growth.

From acquisition to launch
From 2010 to 2015, the Virgin team were working tirelessly to bring its first project to market, and while sourcing the right building was an integral part of the process, it was other complications that caused the initial hold up.

Leal explains: “We actually acquired the building in 2010 – it was a landmark 1928’s building in Chicago – which only took 6-7 months to complete on, but converting it from what it was the difficult part. It wasn’t straight forward and took much longer than expected.

The building was originally constructed as a bank so converting this into a hotel took time to get right. Even after purchase, some of the sitting tenants have up to 12-month leases in situ, which obviously had to elapse before we could properly take over. The nature of the building also meant that the restoration process had to be exact, and these factors cost us about two years initially.”

Despite the setbacks, the Virgin team had a clear vision and aim – Leal describes how initially the target was seven key cities, typically in the US, including New York, San Francisco and Miami, before efforts stepped up into London – and reinventing the boutique and independent sector was key for the brand.

Leal says that the main aim was to launch 20 hotels within the next 10 years into the lifestyle segment, and something that was a world away from the typical Hyatt or Marriott offering. Boutique hotels were certainly a major inspiration for the brand, with influences coming from Andre Balazs (of Chiltern Firehouse fame) while creating a legacy through comfort and a vibrant food and beverage offering.

Leal continues: “We aimed to target the four-star segment definitely – the experienced traveller, looking for something new and the real creative class, into film, fashion and the arts, hence why Chicago fitted so well for us. We wanted to provide guests with a real feel of the city; if they didn’t want to leave the hotel they wouldn’t have to.”

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Comfort over design
Virgin Hotel Chicago prides itself on the experiences it endeavours to provide everyone who steps foot through the doors, not just those booking a room for the night. The creative aspect is mirrored in the spaces that have been designed for a real trendy crowd – The Commons Club, a dynamic hybrid of a bar and lounge, with a private-members-club vibe; a rooftop bar; Two Zero Three coffee area and Miss Rickys, a classic American diner.

Aside from the vibrancy of the public areas, there is more to the model than a desire to be popular among the ‘it crowd’. The main consistency is the room offering and the comfort that is provided in each of the hotel’s 250 bedrooms, an element that Leal believes many other hotels lag behind on. While the group hasn’t indentified one particular competitor group within the lifestyle sector, Leal says that comfort and ease of use is missing from the lifestyle space and guests shouldn’t have to suffer in the bedrooms for good design.

“A lot of the major hotels still forget that the consumer ultimately want a beautiful room,” Leal explains, “they tend to focus on shining F&B offerings when the emphasis should start with the bedrooms.”

The female factor
Since the launch, there has been speculation surrounding the hotel’s target clientele. While the female traveller is a hugely important core sector for the brand – a study in the US revealed that the amount of female business travellers had doubled in the last 20 years – Leal is clear to stress that the entire hotel is designed to make the guest experience better for all. Despite this, the brand has still gone to some lengths to make sure they look after their female guests. Specific feminine features such as room dividers, extra closet space and larger showers with benches for guests to shave their legs all aim to make things more convenient for the female traveller.

Virgin subsequently held focus groups with frequent female traveller, who cited convenience and safety as two of their main preferences. Hence why rooms have closing doors that divide the room in half and corridors are well lit with strong lighting.
Leal says: “While the female traveller has become much more discerning in their choices and we’ve realised a real growth in this sector, we’ve found that targeting this specific group makes for a better room offering all round. There are no ‘female only’ floors here; every room is improved for men and women. Ultimately Virgin Hotels is a lifestyle brand appealing to all those who seek new experiences.”

Branson’s involvement
Since the brand’s inception, eliminating fees and surcharges have been top priority – hidden charges are particular bugbears of Branson himself, says Leal – along with creating an experience that allows guests to feel that Virgin Hotels is their place in the city.

With such a strong figure at the helm, it could be said that Virgin Hotels was destined for success from the outset, given Branson’s past record of bringing new ventures to market. Even though he was adding another string to his bow, Leal describes how he was still an integral part of the development process.

“Branson was involved throughout and we would run everything past him to make sure he was happy; of course some suggestions were met with a yes and others with a no, but it was vital that everything stayed true to the core of the Virgin brand. One of his pet peeves is hidden charges on check-out, so we eliminated all of those that caused frustration for travellers; there are no room service delivery charges, every area of the hotel has free wifi all round, and the guest will have no surprises on check out.”

What’s next for the Virgin empire?
Virgin originally announced plans to operate up to 25 hotels by 2017 but since the project hit delays, it is currently on track to reach just three by that date. In 2016 it will open a Virgin Hotel in Nashville, followed by a property in New York the year after. But, despite the initial setbacks from announcement to launch in the early stages, the Virgin Hotel train is full steam ahead on the right tracks to world domination. The US and UK remain the primary countries of penetration for the brand and the speedy development of new projects remains a critical factor for the growth of the portfolio.

“With New York and Nashville already under construction, we are still targeting major cities in the US and aim to open 2 or 3 every few years,” explains Leal. “We are currently very active in London and looking for a site there; it’s such a dynamic market at the moment and critically important to us, but we want to make sure we get the right site and we know this takes time. We hope to announce something in London later this year, that’s if we do at all.

“The sites we look for really have to be like a blank canvas – buildings that give us a great opportunity to go in and create exactly what we want. Our aim now is to have 20 hotels by 2025, giving us 10 years to find the best sites.

“So far from the great feedback we’ve had from the visitors to Virgin Hotel Chicago, we are definitely on the right track; it’s gone even better than expected.”

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