Virgin Hotels files lawsuit against owner of San Fran property

By Travel Weekly

Virgin Hotels has filed a lawsuit in the Superior Court of California against the owner of its San Francisco property over his plans to terminate their management agreement.

Virgin Hotels manages the property – which is temporarily closed due to the COVID-19 pandemic – for the owner, Jay Singh, under a 20-year hotel management agreement (HMA).

However, following Virgin Hotels’ decision to suspend operations at its San Fran property on 19 March, CEO Raul Leal claims Sing notified the company of his intention to “prematurely and unlawfully” terminate the agreement less than a year after fully opening.

“In the short time since opening, the hotel was successfully ramping up, already profitable and leading its peers in guest satisfaction,” Leal said.

“Mr Singh’s action is unwarranted and has left us no choice but to protect our rights and take legal action. Virgin Hotels has not breached any of its contractual obligations, and we are confident the law is on our side.

“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.”

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”.

Since temporarily suspending operations at the San Francisco property, Virgin Hotels has funded continuation pay for furloughed workers and covered 100 per cent of the cost of healthcare benefits.

Featured image supplied by Virgin Hotels

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hotel management agreement Jay Singh Lawsuit Raul Leal San Franciso Superior Court of California Virgin Hotels Virgin Hotels San Francisco