When Virgin Hotels opened its then second property in San Francisco in February 2019, Sir Richard Branson said that the US city was “a perfect fit for Virgin’s next chapter with Virgin Hotels”.
But just a year later the group has filed a lawsuit against the owner of the property Jay Singh, who, Virgin Hotels claims, intends to “prematurely and unlawfully” terminate Virgin Hotels’ management agreement for the hotel.
In a statement 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,” continued Leal. “Virgin Hotels has not breached any of its contractual obligations, and we are confident the law is on our side.”
Leal added that “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.”
The lawsuit claims that Singh “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”.
Virgin Hotels opened its first property in Chicago in 2015, before adding hotels in San Francisco in early 2019, and Dallas late last year.