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Virgin Hotels Glasgow closes suddenly with all staff fired

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Virgin Hotels Glasgow has closed with immediate effect.

Staff were reportedly told of the closure in a meeting on Tuesday morning.

The hotel is no longer bookable online.

Virgin Hotels Glasgow closes suddenly, goes into administration

Virgin Hotels issued the following statement:

“Lloyds Developments Limited – the owner of Virgin Hotels Glasgow, which Virgin Hotels has a management contract with – has financial problems and on 1 December its lenders put it into administration.   As a result, the directors of V Hotel Glasgow Ltd, the employer and operating company in respect of the hotel, are being advised by FRP Advisory LLP as they place that company into liquidation.  These financial issues mean that the hotel cannot continue operating and now has to close. 

Virgin Group tried to find solutions, including offering to purchase the hotel in order to keep the hotel open, keep the team in employment and ensure the completion of the development of the hotel, creating something the City of Glasgow could be proud of.  Unfortunately, the lenders have not accepted Virgin’s offers and intend to pursue a sales process with the hotel closed. Virgin Hotels is very disappointed by this decision after the hard work everyone has put into the hotel and because of the impact it will have on the team that works there.

Virgin Hotels’ heartfelt thanks and gratitude are to those employees, suppliers and guests who have been integral to the hotel’s launch in the City of Glasgow. Virgin Group and the owners are committed to ensuring employees are paid for every day they have worked this month.  

The Virgin Hotels team continues to have great ambitions for managing the hotel in Glasgow and looks forward to re-opening once a new owner is in place.  No other Virgin hotel is impacted – all other Virgin Hotels remain open and operating as normal as all Virgin Hotels are independently owned.” 

Virgin Hotels Glasgow

The hotel opened in August after substantial pandemic-related delays.

Set on Clyde Street it had 242 rooms, a ‘Commons Club’ restaurant and a cafe. Many rooms had panoramic views of the river – see above.

Pricing was always punchy, with rooms being priced around the £300 mark at opening.

Virgin tells us the hotel was performing as expected, and that the closure was “caused by the financial problems of the owner …. not underperformance by Virgin Hotels as the manager or brand.”

Virgin Hotels Glasgow closes suddenly, goes into administration

I would expect, given the excellent condition of the hotel, that it will be swiftly bought out of administration by a new owner. That said, nothing seems to be in hand.

Geoff Jacobs, managing director at Interpath Advisory said:

“We will focus our efforts on working with stakeholders to facilitate a sale of this significant and attractive property for the benefit of the creditors of Lloyds Developments Ltd.

“Although the property is not actively on the market as yet, those with an interest should get in touch with the Joint Interim managers to register their early interest.”

Whether it retains the Virgin Hotels branding under new ownership is a different question. Even if it does reopen soon, it is likely that anyone who has prepaid a stay will lose their money. With no sale process in hand, a reopening would seem some months away.

In an email to staff, Virgin Hotels CEO James Bermingham said:

“We plan to re-open the hotel once a new owner is in place and we hope we can work together to give you priority on jobs as before.”

All of Virgin’s hotels are owned and managed separately, and this closure doesn’t affect any other Virgin Hotels site. Our review of Virgin Hotels Edinburgh is here and our review of Virgin Hotels New York City is here.

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Comments (66)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • sigma421 says:
    19 Dec19 December 18:07

    Presumably there are guests who were booked to stay last night and tonight who found themselves chucked out this morning?

    Agree that it was probably overpriced for what Glasgow can command outside of concerts at the Hydro. There’s definitely a slackening in U.K. hotel prices underway and missing out on most of this summer may have been the fatal blow.

  • Chrism20 says:
    19 Dec19 December 18:44

    Second hotel in Scotland to go in the last week. Delta Aberdeen closed with immediate effect last week as well.

    As for Glasgow unless there is an event on there is serious over-provision in the market regardless of the rates. The amount of hotels that have opened over the last ten years is unreal.

    • tw33ty says:
      19 Dec19 December 19:24

      To be fair, delta Aberdeen was an absolute dump of a hotel, the writings been on the wall for a while there, I wouldn’t be surprised if more delta branded are struggling vs when they were marriott branded.
      Marriott knew what they were doing shifting chuff to the delta brand.

      • Axel says:
        19 Dec19 December 19:27

        Edinburgh next?

        • ianM says:
          19 Dec19 December 21:25

          Edinburgh prices at least double Glasgow so less pressure on premium rooms

        • Peggerz says:
          19 Dec19 December 22:04

          If you mean ‘is Virgin Edinburgh hotel next’ then I doubt it, but who knows. Accepting different owners etc as acknowledged here, it does seem a busy place. I have clients staying there regularly and staff seem to confirm how busy it is. Edinburgh’s hotel market can more easily fill the £300 a night mark and there are many hotels asking for more….

          • Rob says:
            19 Dec19 December 22:27

            Edinburgh is a very impressive hotel and, whilst expensive, is nowhere near the top of the market (Balmoral, Caledonian, Gleneagles Townhouse to name a few who price higher). It would be a travesty if it failed. My only concern is that it’s ‘up the hill’ and possibly less attractive to corporate traffic.

          • tw33ty says:
            19 Dec19 December 23:13

            Virgin Edinburgh will be fine, the tourist market is crazy in Edinburgh, and with the city council looking at clamping down even more on air bnb it’ll put more business the way of hotels.

            Good hotels in Edinburgh will thrive, chuff hotels will still make money as well.

            The only way virgin Edinburgh will close, is if the buildings owners do the same as Glasgow.

      • numpty says:
        19 Dec19 December 20:00

        Delta Aberdeen on its own looked ok ish, but with a bunch of shiny new hotels nearby, and with some pretty cheap rates Delta would be at the bottom of the list to stay in. Used to get some bargain rates for the Crowne Plaza, and then as a Diamond member get free breakfasts and free access to the TV room (I mean ‘lounge’)

        • tw33ty says:
          19 Dec19 December 21:53

          Even if the new hotels at the airport and the ac and Hilton at p&j live didn’t exist, the Britannia hotel on the roundabout or the oyo would be a better pick than the delta Aberdeen, it really was that bad.

          Bad hotels like the delta Aberdeen only have themselves to blame, hopefully more terrible hotels will follow (like cp Sheffield)

          The delta Edinburgh is a bit shabby, but it’ll plod along with zero investment due to the nature of the Edinburgh tourist market.

          The lounge at cp really changed since covid.

          • Andrew says:
            20 Dec20 December 10:46

            “the Britannia hotel … would be a better pick than the delta Aberdeen”

            Yee-gads!

  • Lady London says:
    19 Dec19 December 19:57

    The tail of covid is still affecting businesses negatively that struggled through but were impaired. 2 good businesses I was happy to buy from closed this year and a 3rd has been bought. If a business was exposed covid opened up the fault lines.

    People too.

  • David says:
    19 Dec19 December 20:07

    If it moves into new hands. Wouldnt the staff be moved over into Mondays roles? Disgusting behaviour is an understatement, feel sorry for the poor staff.

    • tw33ty says:
      19 Dec19 December 21:56

      Virgin hotel were only the renters, the building owner went bust and Lloyds banking group refused virgins offer for the hotel and ended the lease.

      With no building to rent, there was no other option.

      I’m sure it’ll open back as another hotel very shortly, as it’s almost a turn key set up.

      • Rob says:
        19 Dec19 December 22:29

        Remember that Canopy by Hilton SanFran, which Rhys reviewed earlier in the year, was once a Virgin Hotels.

        For a chain with under 10 properties it isn’t very lucky. They REALLY need to pull this one back though. If you’re only opening one hotel per year on average you can’t afford to lose one so easily.

        • tw33ty says:
          19 Dec19 December 23:15

          I think virgin hotels will be gobbled up and join one of the big four as a sort of funky hotel indigo

    • BA Flyer IHG Stayer says:
      20 Dec20 December 05:36

      If the hotel had been sold the yes the staff would have had their employment maintained under the Transfer of Undertakings and Protection of Employment (TUPE) laws.

      But the hotel hasn’t been sold and the staff have already been dismissed so TUPE doesn’t apply

  • ianM says:
    19 Dec19 December 21:24

    I stayed in the central Glasgow Doubletree last night for £76 for two people inc breakfast and access to the Executive lounge. Very comfortable part of a last minute run to keep Diamond.
    I’d say Glasgow hotels are at least 50% cheaper than Edinburgh in general.

  • Chris says:
    19 Dec19 December 23:19

    Prices had come down since opening – I stayed last Thursday for £185. One of the better places I’ve stayed in Glasgow, hopefully it’ll be back soon!

  • Ivan says:
    19 Dec19 December 23:22

    Curious to understand exactly what has happened here. I would have thought the lenders have security over the property, so why couldn’t they take ownership of it, to allow the hotel to continue to trade uninterrupted?

    • jj says:
      20 Dec20 December 00:49

      @Ivan – short answer: most likely, the hotel’s trading performance was so terrible that the lender decided to change the management company, necessitating short-term closure.

      The company owning the hotel is seemingly in administration. Administration allows a business to continue to trade where the administrator believes that to be in the best interests of the appointing creditor(s). In this case, the relevant creditor(s) appear to be the mortgagee bank(s).

      The fact that the administrator has terminated the management contract therefore suggests that the hotel is more valuable with vacant possession than as a Virgin branded hotel. In the short term issue, the hotel presumably is not expected to generate positive operational cash flows through the long Scottish winter, even with costs slashed and investment stopped. Longer term, it will have been a strategic decision based on severe underperformance by the management company compared with market norms.

      If, as Virgin says, the closure was, “caused by the financial problems of the owner …. not underperformance by Virgin Hotels as the manager or brand”, a rational lender would have allowed the hotel to continue to trade. The lender clearly believes that another management company would generate higher revenues than Virgin Hotels, and presumably Virgin Hotels’ offer to buy the property was uncommercial.

    • pauldb says:
      20 Dec20 December 06:54

      You might assume that V Hotel Glasgow Ltd is a Virgin entity that leased the hotel but actually it’s owned by two random guys in Islington. The administrators of LDL must have decided they couldn’t afford the lease and it was better to pull the plug.

  • BajiNahid says:
    20 Dec20 December 04:36

    OMG Can someone think of the staff so close to XMAS! How Awful is this.?

    And to think that the CEO flew in from the US to tell the staff about closure and then tell staff that he has no idea when staff will get paid is just disgusting.

    Profit (well losses) over people’s livelihoods is disgusting. I feel for the staff

This article is closed to new comments. Feel free to ask your question in the HfP forums.

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