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Development churning for Virgin Hotels
June 3 2013

With a second U.S. opening announced, Virgin Hotels also is looking at global expansion in countries such as England, France and Spain.

Highlights
  • Virgin Hotels’ New York property is scheduled to open in 2016.
  • New York leads the U.S. in number of properties and rooms under construction.
  • Global expansion could include London, Paris and Spain.

NEW YORK—Virgin Hotels is continuing forward with its development push in the United States and has an eye on global expansion, too.

The company on Monday announced plans to open a new-build property in New York on the northwest corner of 29th Street and Broadway Avenue in Manhattan. The 300-plus-room hotel will be managed by Virgin Hotels* and is scheduled to open in 2016.

Raul Leal, Virgin’s CEO for North America, said primary markets such as New York are the No. 1 focus for the company. “New York has always been one of the top five markets we have wanted to get in,” he said during a break on the opening day of the 35th Annual New York University International Hospitality Industry Investment Conference.

New York has been a hot spot for development in the U.S. hotel sector. There were 54 hotels comprising 9,694 rooms under construction in New York at the end of April, both of which were the highest in the United States, according to data from STR, parent company of HotelNewsNow.com. Through April, New York had an existing supply of 575 hotels comprising 104,893 rooms.

Leal said the supply numbers aren’t yet a threat to demand.

“I think the market continues to absorb (supply) fairly well,” he said. “For the most part, we don’t have any near-term supply concerns even though there is a lot of select-serve development going on.”

Pipeline
Virgin in 2010 stated its intentions to enter the hotel space. A year later, it picked Chicago as the site of its first market.

The Chicago development was slowed a bit because it is a conversion of a historic office building, Leal said, meaning more approvals were needed but is on pace to open during the second quarter of 2014.

In addition to New York and Chicago, Virgin is also looking to break into other cities, such as Dallas, Los Angeles, Miami, San Francisco, and Washington, D.C. There is no specific timeline for the openings in those cities, Leal said.

“It’s about being opportunistic relative to the opportunity in the market,” he said.

Virgin’s development will be a mix of conversions, such as with the Chicago project, and new build, as is the case in New York, Leal said. The Chicago market was 100% financed by Virgin and the company will look at completely financing other projects, too. Leal said the company is also willing to consider sliver equity and key money as well.

Global expansion is also in the cards, too, with the company looking at sites in London. Leal added that Paris and Spain could be included in the global development push.

“London is the top priority because Virgin is the No. 1 brand in (England) obviously,” he said.

*Correction, 4 June 2013: The original article stated the Virgin Hotel in New York would be managed by The Lam Group. It is not; it's being managed by Virgin Hotels.

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