Virgin’s hotel venture takes it closer to becoming a lifestyle travel brand

The news that Virgin is plotting a hotel brand has led to speculation about not only where the company would pitch such an offering, but also the brand’s future direction.

As Sir Richard Branson’s bid for beleaguered bank Northern Rock loses momentum and Virgin Media fails to make the impact he had hoped for, observers believe the launch of a hotel venture could signify an acceptance by Virgin that its future lies in being a lifestyle travel brand.

Furthermore, since Virgin already runs several airlines and holiday companies, a UK rail franchise and a chain of gyms, observers feel it should have more of an interest in the hotel industry than a handful of branded resorts in the Caribbean. “It is such an obvious brand extension,” says one expert. “It is amazing Virgin hasn’t tried something like this before.” Virgin Group plays down its plans, but confirms that it is investigating a city centre hotel concept. Former Virgin Trains marketing director Craig Inglis has been consulted, as has former RKCR/Y&R chief executive James Murphy, who is setting up his own ad agency.

According to Virgin, business analysts, including Paul Clark, a former Virgin employee who has worked on the Orient Express hotel brand, are looking at “the viability of this as a business.” However, the company stresses that it is “still looking” into whether this is a market that it wants to enter.

Virgin the ‘cartel buster’
Most observers believe that such a brand would work, but questions about positioning, finding suitable properties and funding the project need to be addressed. Yet, in a sector where the main brands can be difficult to differentiate, Virgin will stand out. Rita Clifton, chairman of Interbrand, describes Virgin as a “cartel buster” that could shake up the whole hotel category.

Richard Cope, senior travel analyst at Mintel says: “Virgin is one of the few brands that has a real identity and is seen as quite rock-and-roll and, in Branson, has a face. The travel industry lacks that strong branding, and hotels are included in that.” He adds that the sector has stagnated in recent years. “At the moment you are really only seeing innovation at the budget end of the market, for example with Yotel.” He believes that Virgin could prosper among those who see a hotel as more than just a place to sleep. “There is definitely room for someone to come into the industry and make it more of an experience,” says Cope. “It’s a great opportunity for self-branding and self-expression.” 

A helpful reputation
Clifton says Virgin Atlantic remains the group’s best brand and its reputation would help with a hotel venture. “Virgin’s innovation and sexiness could translate well into hotels. People don’t think Virgin is going to rip you off,” she says.

But she urges caution: “It must be done in a way that builds brand equity – too many recent Virgin projects have hung off the brand rather than built it.” Cope, among others, is also intrigued by the fact that the possible venture comes after the group has offloaded its Megastores. “Now they have divested themselves of their Virgin Megastores, it seems to confirm that we are moving towards a more experience-based economy,” says Cope. “People are interested in experiences more than physical products.” With Virgin in need of a boost, a hotel venture could focus the brand on lifestyle and leisure – and develop an offering that builds Virgin’s reputation rather than lives off it.