Virgin Hotels, the lifestyle hotel brand, filed a lawsuit in the Superior Court of California, County of San Francisco against the owner of its Virgin Hotels San Francisco property.
Virgin Hotels manages the property for the owner, Jay Singh, under a long-term Hotel Management Agreement (HMA). While operations are temporarily suspended at the hotel in response to the COVID-19 pandemic, Virgin Hotels continues to manage the property and is planning for the reopening of the hotel and its highly successful food and beverage operations, including the popular rooftop bar Everdene, when public health authorities determine it is safe to do so.
Raul Leal, CEO of Virgin Hotels, said, “After our decision to temporarily suspend operations at our highly-acclaimed Virgin Hotels San Francisco in response to the COVID-19 pandemic, we were surprised to be informed by the property’s owner, Jay Singh, of his intention to prematurely and unlawfully terminate our 20-year hotel management agreement less than a year after fully opening this award-winning property. In the short time since opening, the hotel was successfully ramping up, already profitable and leading its peers in guest satisfaction.
“Mr. Singh’s action is unwarranted and has left us no choice but to protect our rights and take legal action,” added Mr. Leal. “Virgin Hotels has not breached any of its contractual obligations, and we are confident the law is on our side.
“Since agreeing on our contract in 2013, Virgin Hotels worked closely and faithfully with Mr. Singh to develop the hotel and agree upon a vision to achieve his long-term investment objectives. Now in the infancy of its ramp up, the hotel has quickly become a destination,” continued Mr. Leal. “In that time Virgin Hotels San Francisco has become an award-winning property, named one of the top 10 best new hotels by USA Today, and nominated for the Conde Nast Traveler Readers’ Choice Award. It also generated more than one billion media impressions in 2019.
“Strong, constructive partnerships are at the heart of how we operate at Virgin Hotels. Despite numerous starts and stops with the project construction, at no fault of our own, we have gone to great lengths over the years to support Mr. Singh and those involved with the San Francisco hotel. We are deeply disappointed that our partnership has taken this unfortunate turn and are hopeful to reach a resolution that serves the best interests of both parties,” concluded Mr. Leal.
The lawsuit – which is for anticipatory breach by the owner of the long-term HMA, among other things – states that the owner “is attempting to seize upon the disruption created within the hotel industry by the current COVID-19 pandemic as an opportunity to prematurely and wrongfully terminate the HMA upon manufactured and false grounds.”
In response to the devastating COVID-19 crisis, Virgin Hotels has been focused on taking the responsible steps to protect its teammates, guests and local communities. Since temporarily suspending operations at the San Francisco property on March 19th, 2020, Virgin Hotels has taken the lead in assisting the hotel’s teammates, including having funded continuation pay for furloughed workers and covering 100% of the cost of healthcare benefits.
Virgin Hotels San Francisco fully opened in May 2019. Following its opening, the hotel was named one of the top 10 best new hotels by USA Today and the hotel’s TripAdvisor ranking has rapidly improved to now being in the top 15% of 245 rated hotels in San Francisco. The hotel also leads its competitive set in guest satisfaction scores and TripAdvisor rankings.
