Virgin Hotels vies for first link in accommodation chain
A hotel chain backed by Richard Branson's multi-billion-dollar Virgin Group could be launched in the Australian market within months as Virgin Hotels teams up with private equity group Archer Capital to buy Mantra's $400 million accommodation business, according to a source. If successful, Virgin Hotels would manage 105 serviced apartment buildings, hotels and resorts held by the Mantra group or leased from private investors.
The move would also fulfil Virgin's previously flagged intentions to establish a hotel presence in Australia as part of its expansion further into the hotel and leisure sector.
Virgin's global chief executive Stephen Murphy told The Australian in 2010 that the group had conducted preliminary work in Australia with a view to eventually offering a 4 1/2-star hotel at four-star prices.
In September of that year, Virgin Group formed a partnership in the US to buy as much as $500m worth of properties over three years for a new high-end hotel venture.
The partnership with US investors Alberto Beeck and Diego Lowenstein involved Virgin Hotels operating as a third-party manager, teaming with owners or acquiring properties directly.
In 2010, Virgin founder Richard Branson said the Virgin brand was as "hot as ever" in Australia and well respected.
He said at the time that the concept for an upmarket fun boutique hotel group would be very "Virginesque" and that Australia was "high up on the list for it".
Also in Australia is the Virgin Money venture, which was relaunched in 2010 and offers credit card and online banking products in association with US banking giant Citibank.
The group also has a 51 per cent share in Virgin Atlantic Airways, which plans to establish a joint facility at Sydney Airport with Virgin Blue and V Australia.
Virgin Hotels is headed by managing partner Anthony Marino, according to the website, which says it is seeking property opportunities in North American cities such as New York, San Francisco, Miami, Los Angeles, Boston and Washington DC.
"Our ambitions are global but as a first move we are focusing on North America," the website said.
Archer Capital has been named as one of several private equity groups interested in the Mantra business.
US private equity companies Starwood Capital and the Carlyle Group are both believed to have looked at the accommodation company.
The International Hotel Group, an underbidder for Mirvac Group's $327m hotel business behind French hotel giant Accor, is also believed to be competing with Archer Capital to buy Mantra.
According to sources, price expectations of $520m for the Mantra business are too optimistic. The business is being sold by CVC Asia Pacific and UBS.
Yesterday, Mantra chief executive Bob East said the sale process was continuing.
Colonial First State's Commonwealth Property Hotel Fund sold three five-star Marriott hotels, in Sydney, Melbourne and Brisbane, to Malaysian conglomerate YTL for $415m this month, and the Singapore Government Investment Corporation was this week said to have sold Sydney's Shangri-La Hotel for $330m.
Source: The Australian, 28 June 2012
