Raul Leal, CEO, Virgin Hotels
As CEO of Virgin Hotels, Raul Leal has taken on the immense task of helping bring Virgin’s distinct, cheeky vision to life. The first hotel in Chicago was “a labor of love,” he says. He’s helmed the company since 2012 (joining in 2010 as president), but the Cuban-born veteran hotelier has long been drawn to lifestyle hotels, starting Tecton’s boutique division Desires Hotels before making the switch to work for Richard Branson.
Stacy Shoemaker Rauen: Hi I’m Stacy Shoemaker Rauen, editor in chief of Hospitality Design magazine. Welcome to our inaugural podcast What I’ve Learned. After interviewing tons of fascinating people for the magazine and our conferences, we decided we’d bring those conversations to life to delve deeper into how and why these hotel CEOs and design veterans have gotten to where they are today. They have some incredible stories to share and at least I know I’ve learned a lot and been inspired by them.
My conversation today is with my dear friend Raul Leal, CEO of Virgin Hotels. Raul has been a force in the lifestyle industry for 30 years, way before he met Richard Branson. Now with one hotel open and 12 more in the pipeline, he’s on track to shake up the industry once again.
SSR: We’re here with Raul Leal, CEO of Virgin Hotels, for our inaugural podcast. Thanks so much for being here.
Raul Leal: Hi Stacy, always a pleasure to be with you.
SSR: It’s good to have you in New York.
RL: Yup, awesome, weather’s great.
SSR: So let’s talk a little bit about you Raul. Did you always know you wanted to go into hospitality? If not, what did you want to be when you were growing up?
RL: You know, I actually didn’t, but then my dad who had migrated from Cuba, was a restaurant manager at a hotel called the Everglades Hotel in Miami. And he came from Cuba, took that job, and was there for 40 years before he retired. When I was about 15 or 16, I took a summer job there. And I fell in love with the business, because mostly through the eyes of a 15 year old, I used to see the general manager come in every day, entertain, sign the tab, and I said, ‘I want that job.’ So, that was my rationale. So, I made the decision that summer that I was gonna stay in the hotel business.
SSR: Nice, and so did you then go on to college for hotel business administration?
RL: I did, even though I got my degree actually later in life, because I actually worked all the way through college and what forth. But I was lucky enough to land with some really great companies, and had some really great mentors. But always had at the forefront of what I wanted to be.
SSR: Did you always work in restaurants, or did you work in different hotels?
RL: No, it’s both. I started off in a restaurant, but inevitably I moved over to the front desk to learn that side of it. And then, I went back to food and beverage to learn more about it. Back then, you really had to understand food and beverage to become a general manager. And I wanted to be a general manager. So, I spent a lot of time in F&B for a long time. I was very fortunate to be involved in probably one of the hottest clubs and restaurants back then in Miami, in the ’80s and ’90s, which was called Daphne’s. And this was before South Beach.
SSR: What did you do at Daphne’s? Were you running the show?
RL: I was the nightclub manager. I started off as the restaurant manager, then I was the nightclub manager. And the hours were not a lot of fun: four in the afternoon until four in the morning, six days a week with Tuesdays off, which was lovely. But it was a great experience, especially given what I do today in the lifestyle segment.
SSR: Is there anything from that experience that you’ve learned or things that you still consider?
RL: Yeah, I think I learned a piece of the business that most people don’t understand today, which is the food and beverage side of it. But specifically, the nightclub side of it, and understanding how that works, and the dynamics between that and actually an active hotel. So, I learned a lot of things in advance that I was going to not use right away, but certainly am using now, and got to use during Desires Hotels.
SSR: So, before we get to Desires, you did make it to be a general manager.
RL: I did, I was a general manager for 10 years for a variety of different companies, including Interstate Hotels [& Resorts], Lane Hotels , Carnival Hotels. And traveled all over the country from the West Coast, all the way back to Miami almost in different capacities. I was in San Diego, Denver, Chicago, Cleveland, New York, and then back to Miami as a GM.
SSR: What do you think having all that experience as a GM is the most important lesson you take away now when you’re building a brand or at Desires?
RL: I think just relating to the challenges that they have day-to-day on property, and how difficult it is to be on 24/7 and deliver a great experience, and motivating the team at the property. Letting them know that they work with someone that understands what they’re going through. So, I can acknowledge their issues and hopefully help them solve it.
SSR: So, we’ve mentioned Desires a little bit, but let’s talk about a good chunk of your career was at Tecton [Hospitality], and then launching Desires. Can you tell our listeners a bit about those companies, and how it came to be?
RL: Richard Millard, who’s the current CEO of Trust Hospitality with my partner, had a company called Tecton Hospitality. We did about 35 branded hotels at the time—a variety, every brand: Marriott, Sheraton, Hilton, limited service, full service. Then, in 1998, we saw the need, and we saw what was happening in the boutique hotel sector, given what [Ian] Schrager was doing, and a few other things that were happening. So, we launched a company in 2001 called Desires Hotels. And then, Desires went on to add another 20 hotels to that portfolio, and they were a combination of lifestyle hotels, 4-, 5-Star hotels in different locations. But also, it gave us a unique insight into marketing hotels without having a brand, which at the time was unusual. Because everybody was still relying on 1-800-325-3535 Sheraton or something, or whatever the central reservation [system was]. We learned in that environment how difficult and then easy, actually, it was to make distribution work for us without having a name brand. And that, as you know, the company did great.
SSR: Was there one hotel or project that you remember most fondly? Or one that was most challenging in your tenure there?
RL: We had a lot of favorites. Certainly, I think the first one that we took over, it was always had a fond piece of my heart, which was the Water [Beach] Club in Puerto Rico. We enjoyed that one. We didn’t design it; we didn’t conceive it. We took it over from a gentleman named David Kerlin who had designed it and had done a magnificent job. But we took over as the operating partner and helped him bring it to profitability. But, it was an amazing hotel. It was the first one for us, so we enjoyed that.
SSR: Is there one that was really challenging but exciting?
RL: I think they were all challenging in different ways. Because boutique hotels are a bit more personal than just for a developer who does a Sheraton or Marriott hotel, because they feel that, on some level, it kind of resembles what either they want be in life or what they want to aspire to, whatever else. So, dealing with the different developers was always an issue, but I think one of our best projects with a great developer who you know and was a good friend, was Tim Dixon, which we did the Iron Horse [in Milwaukee] with, and Tim is a great friend. And that turned out to be an incredible hotel and still is, you know, fairly iconic in Milwaukee.
SSR: It was one of the first for Milwaukee.
RL: It was actually the first real boutique hotel in Milwaukee in an interesting area, which everybody thought wasn’t a great area. And the hotel ended up hitting a home run, because it had a great experience.
SSR: And then Virgin. It might seem like a silly question, but what was it that attracted you to taking on this role and challenge of building a new brand?
RL: It’s really a silly question. No, I’m just kidding. No, actually what wound up happening is, we had heard at Desires that Virgin was building a hotel brand. So, Richard Branson happens to be staying one day at the Betsy Hotel [in Miami]. This is exactly the way the story happened.
SSR: This was one of your hotels?
RL: One of our hotels, which was the only 5-Star hotel in Miami Beach. And the general manager, who was a good friend, knew Richard. And he called me over, and he said, ‘Would you like to meet Richard Branson? He’s staying here. I’ve given him a room for the weekend. I hope it’s okay.’ I said, ‘Totally.’ So, I met Richard, and Richard was blown away by the Betsy. And he said, ‘Look, we’re launching Virgin Hotels, or we’re trying to launch a hotel company. Would your company be interested in speaking to us about the management?’ So, that’s kind of how it got started, and then eventually, we didn’t go down the route of them buying Desires Hotels, which was an option. But then somewhere along the line, they came back to me and they said, ‘Look, we need somebody to head this up.’ And I’d been helping them along the way, kind of on the side, kind of as a pet project. And I thought it would be interesting because I’ve seen so many launches of so many different brands to the industry. And I thought of it as if there’s one brand that can make a difference, this is it. And this brand will bring a different point of view. And I’d been with Desires like 13 or 14 years, and Richard Millard, who was my partner said, ‘You should totally do it, and if it doesn’t work out, you can come back.’
SSR: That made it a little bit easier.
RL: That made it easier, and then, we launched, what was it seven years ago?
SSR:And the first hotel, opened in Chicago … how long ago now?
RL: It’s almost three years.
SSR: And I know building that first hotel was—call it a labor of love. You really wanted to get it right. What were some of the early challenges of creating this brand and really thinking through what it should be? You know you don’t want to just come to market with just anything.
RL: Before we got to the hotel, before we got to the actual building, we already had a point of view. It took us like a year and a half or two to develop that point of view. That’s why we didn’t do any hotels in the beginning. Because everybody kept saying, ‘Why aren’t you doing hotels?’ I said, ‘We’re not really ready.’ So, I think it was a bunch of different, unique things. One, we wanted to have a point of view on the guestroom. We didn’t want to be the next lifestyle hotel that all they are is a club and rooms.
We wanted to have a point of view on the guest. We thought the consumer was changing enough at the time where by especially the female traveler, the amount of female traveler traffic had escalated almost 40 percent in, like, 10 years. So, the female traveler was becoming fairly dominant in the space. And we thought, wouldn’t it be great if instead of doing what other brands do, where they do a female-friendly floor, we did the entire hotel through the point of view—the eyes—of the female traveler. And that meant being a bit more discriminating on the product side of it, not just the design.
It wasn’t about the colors in the room. The key was, did the room work better? Was it more female friendly, but also would guys like it as well? And it turned out exactly like that. So, we went through six model rooms, where we looked at it, [and asked] does it work better? Does it feel better? Are the plugs in the right place? Is the lighting in the right place? Is the vanity in the right place? Is there a dedicated vanity area for the ladies? Is the shower incredible? Things like that. Is the bed different? So, we had a point of view on all those things. So, we got to Chicago—of course not knowing if any one of those would work—and then, we were validated almost instantly after we launched by I think it was Fast Company, [which] snuck into the hotel. [They] didn’t tell us, sneaky guys. And then, three days later they wrote an article saying, [24 Clever Ideas Inside Virgin’s New Hotel]. We thought that was great validation of the product. Then the consumer reviews for the hotel, they’re incredible. The hotel’s performing, financially, fantastically. They’ve given all the competition of Chicago. So, it’s been a great success story for us.
SSR: And can you share a little bit about how you rethought the guestroom, and the bed especially?
RL: We thought it in a couple different ways. One is we can’t go out to market with a 400-square-foot room because we’ll never find a hotel or conversion. That’s what we’d like to do. We’d like to have a bigger room, but forget it. So, we said, why don’t we just take a 300-square-foot room, which a 300-square-foot room could be a [Courtyard by Marriott] room. Why don’t we just white box it out, and just change it? When you walk in, you have your little corridor usually, with the little closet, and to your left your little bathroom? And that’s your typical hotel room no matter where you go into, right? So, we wanted it to feel maybe like a small pied-à-terre in the city, where you would be able to come into your apartment, unpack, unwind, drop off your stuff. There’s a place for everything. A plug here, there, before you went to the second half of the room. We divided the room through sliding doors, and the reason for the sliding doors was that the female travelers had said they hated the roomservice waiters standing in your door while they’re in some sort of disrobe or something and having to sign the bill.
SSR: I can agree.
RL: So, we said, well, why don’t we do this? If we divide the room in two, and have a second set of doors, that also has a peephole, the roomservice waiter can come into your room [and drop off your food]. You never see them, and you don’t have to sign the check. And everybody said, ‘Well, everybody makes you sign the check.’ I said, ‘Yes, but we believe that you’re already in the hotel, you’re not going to rip us off on a $4.50 burger,’ which hasn’t happened. So, that’s part of the experience inside the room that you can get service delivered to you without ever seeing anybody but you can see them. So, you could be sitting on the bed, on your app, you can also call it in but you could be on your app and you could say, ‘I want a burger and fries,’ and it’s delivered in the front of the chamber. So, they will actually knock, come in, deliver it, and you’ll never see them and when they leave you can go get your burger.
So, that was one piece of it. The other piece of it was, the bed. Virgin had a point of view, which was totally right on: Today, people were closer to the devices than anything else and they like to work and play in bed or sofas and things like that. So, what we tried to do was develop a bed that was ergonomic enough to do that, with the little corners and the little things and for two or three people. We thought a lot about bachelorette parties, when ladies get away and they’re all in one room and, you know, getting ready for the event. And we thought three people sitting around the room or family with two kids, where you could actually sit three people in that bed. They could all look at each other, play on their devices, and enjoy games or whatever else. And the bed has been incredible. That was also voted as Fast Company‘s most innovative products in the world [The lounge bed was a winner of Fast Company’s 2015 Innovation by Design Awards]. And it’s very comfortable. It’ll feel differently now at every hotel but the ergonomics will be the same.
SSR: And how did you achieve that?
RL: Well it wasn’t easy. So, Virgin had gone out to a bunch of different designers and that was the wrong decision because what we needed was a furniture manufacturer. We could never get it right. They were ready to say, ‘No, no let’s give up on the bed.’ I said, ‘No, no. It’s a great idea. We just have the wrong designer. We need a furniture manufacturer that will give us the frame, the ergonomics, and then the designer can cover it in whatever we want to do.’ We went to a manufacturer, actually a company called Quality & Company out of Canada, who does furniture on a mass scale and they nailed it and it’s incredible. And so, we get the best reviews on that bed of any bed and part of the premise was, with all due respect, we didn’t want to be the Heavenly Bed with 27 pillows on top of the bed and having them tossed. We figured the bed should stand on its own ergonomically with or without the pillows. If you need the pillows you use them, but the odds are you won’t use the pillows to lean back on the bed.
SSR: So, there’s almost an extra seat on one angle?
RL: Yeah, it’s ergonomic on both ends and it lays back in a certain way where you can just sit back and you don’t need any back support.
SSR: Virgin already had, what some might have thought a brand with the airlines and, you know, with the record label. What do you think most surprised the guests about the Virgin hotel because it wasn’t exactly like the other Virgin brands?
RL: think, one, that it existed.
SSR: That it finally opened.
RL: That it finally opened, right? And what are the others? I think what surprised people is that our intent was to make sure it doesn’t feel like the airline. You know, Virgin has 30 global businesses. It’s a $22 billion global company with businesses some people have never even heard of, like Virgin Active has 300 health clubs throughout Europe. They’re fabulous, they’re like Equinox here. So, I think we wanted it to be warm and comfortable, and still have a little bit of a buzz, but in the end, it was all about comfort. And we were guided by that. We had it on the wall that, I think it was Coco Chanel that said, “A luxury isn’t luxury unless it’s comfortable,” [The quote is “Luxury must be comfortable, otherwise it is not luxury.”] so we were guided by that because, otherwise, had we not been involved with that it may have turned out to look, like, Yotel, which is fine. It’s just not what we wanted for the brand.
SSR: What’s next for Virgin, and what locations are you guys looking at? How are you continuing to evolve?
RL: Look, we learned some lessons in the first hotel but not many. I mean, frankly a lot went right. So, we’ve continued to take those lessons and incorporate them to other hotels. The first hotel doesn’t have enough meeting space, that’s a big lesson. We need more meeting space because we’re getting the kind of meetings that come to Virgin but won’t go to a Marriott. They’re more entrepreneurial, they want to stay in a different place, a place that’s not cookie-cutter.I think we’ve learned that piece of it. What’s happening is we have 12 hotels that will be opening within the next 24 months. There’s a lot of openings after a while. So, the next thing is San Francisco in the fall. San Francisco was delayed because of the subway system in front of the building 100 feet away where they had to carve underneath the building. That stopped the construction. That’s why it’s so delayed. Everybody said ‘Why is it delayed?,’ and I said, ‘Look, it’s the subway.’
Next thing that opens after that is Dallas, which will open in April or May. Followed by Nashville fairly quickly. Then followed by New York, which will be massive and a big, big opening. Probably the biggest opening in the world, I think, that year, will be New York. The reopening back of Vegas because we just took that over. We’re going to start shutting it down next year to start renovating. We’re in the middle of the designs right now. Edinburgh, which is our first international project. And, hopefully, we’ll make an announcement about London later on this year. We also have underway one that will open Silicon Valley [in California], which is just spectacular. New Orleans, Palm Springs [California], and I’m not sure if I’ve left anybody out, but there are 11 hotels underway. And we’re doing about two a year so we’ll make a couple more announcements this year and usually because they’re either retrofits or new builds, it takes 24 months to get them done.
SSR: Is there a number goal?
RL: During my regime, it’s 20. The next guy or girl could do whatever the heck they want to do, but the original plan was 20 hotels in 10 years. We’re in year seven so, we’re three years away. We should be close to it at least, to the original plan. It started off a little slower than we thought because we had to craft all the product from the start. Everything had to be written but now it’s gaining traction and people love the hotel.
SSR: You know, you talk about your F&B background and your nightclub background. How have you brought that into the hotels? I know there’s the Commons Club, I don’t know if you wanted to talk about that a little bit.
RL: I think we want the hotels to be about choices. We don’t want the hotel just to be a nightclub. Yeah, there is a nightclub inside the hotels or whatever else but really, at the end of the day, there’s lots of choices inside the building. The Commons Club is like a social club where guests, specifically, have special privileges. So, there’s a bit of an all-inclusiveness inside the hotel where you get certain privileges and you get drinks and things. A lot of programming going on meaning lots of events that guests can participate in or they don’t have to and it’s not always about film, fashion, entertainment. There’s a lot of educational stuff going on, on the entrepreneurial side, a lot of people and planet stuff happening. So, it would be something like Soho House but without being a member. And then, it’s open to the public. So, there’ll be a Commons Club in every single hotel within the system. They’ll all look and feel differently. The privileges will not, the privileges will stay the same, but there’ll be curated locally by different chefs in that city. So, our plan is not to bring in celebrity chefs from other markets. We think there’s enough local talent in every market that we go to.
SSR: And then it brings the local community in.
RL: Totally. Very locals-oriented. Everything that we do is locals marketing and everything else.
SSR: And we just saw you on Instagram with Mr. Richard Branson and Edinburgh. What is it like to work for this company for an icon for at least this century and what he’s done?
RL: I think it’s a lot of fun. I mean, it’s as advertised. I mean, the CEOs run their own businesses. We report to a board. The brand values are very clear, and it’s exactly as advertised. It’s fun, it’s irreverent. We challenge ourselves. We’re always going to be thinking and looking at different businesses. The Virgin brand will continue to evolve, but I think it’s very entertaining and everybody works hard but it is very independent as well, in our office, particularly. People come and go at the hours that they need to be there. There’s no set scenario. There’s plenty of personal time off, lots of benefits, but everybody protects what they have because they love it.
SSR: And you just have new renovated offices as well. Is that right?
RL: We do in Miami. Yeah, which are filling up fairly quickly.
SSR: You must be growing with your team as well.
RL: Yes. So we’re starting to add a few more people on the operations side, especially as the hotels start to open.
SSR: And how involved are you on the design side?
RL: Very. So, I’m the keeper of the brand as they say. So, even though Teddy Mayer is our head of design at the end of the day, I have to sign off and make sure that I’m okay with it as the head of the brand. So, the design background comes in great to be able to understand design. I’m not a designer, but I understand it really well.
SSR: I mean, you work with a lot of different design firms, right? So, what would be your advice to design firms coming in to do presentations, not only for you but other owners or to be a great collaborator because that’s really what it’s all about?
RL: I think the most important trait is just to be a good listener, especially in our perspective. We provide a lot of information, but unfortunately, people have their mindset about what Virgin is, like you said, about the airlines. So, it’s about listening and doing a little homework, not a lot but enough homework to understand what it is that we’re trying to accomplish. And I just think in design, from what I’ve seen over all these years being involved in all these projects and working with multiple designers, the best designers are the ones that really listen to the client and, maybe, not 100 percent of everything. They may have a point of view on something else creative, which is great. But listen to the ethos of what the client’s trying to create, those are the best designers.
SSR: Flipping it back to you. Over your couple of decades of experience, what has been your greatest piece of advice ever given to you that you take with you?
RL: There’s been so much advice and so many mentors, I don’t know what to say. I think staying consistent is really the most important thing in business. I think consistency and style and the way that you treat your people.The number one thing is really how you treat your people. And I think people flourish in an environment where they know that the leader has a certain amount of stability and treats them well. They know what to expect day in and day out and then you lay out the expectations. So, I think that’s what I’ve always been told, which is very true, is be consistent with your people even when you’re not feeling it because however you go, the rest of the team goes. It’s very true.
SSR: How did you learn about design, Raul?
RL: Interesting story. So, I was the assistant general manager of a hotel, and this is like 1989, a resort hotel [Sheraton Royal Biscayne]. The general manager, interestingly enough, was a lady, which back then was not common to have a lady general manager. And I was kind of a young kid, an operations guy, and we had a massive renovation of this 45-acre resort. Her name was Mary Ellen St. John. In her past, she had been a classically trained interior designer and she took me by the hand and she said a couple of things. She said, ‘I’m going to need you to work closely with me on this. The hotel’s only half open anyway so focus on this, and I’ll help you understand a lot about design,’ which at the time I really didn’t care about.
Then we went through a painstaking process for about 30 months of redesigning this old 1910 hotel. I remember sitting there with her and her saying, ‘This is why we should use this fabric versus this fabric.’ It was an incredible education that I didn’t realize I was getting. I owe it to her until this day that I learned so much from her. Later in my life, I’ve used it quite a bit because now I’m so attuned to those details that I’m able to really participate and provide relevant commentary on the design side when I see things aren’t exactly the feel it should have or the lighting’s not right. It’s all going to work together. That’s my story. I felt like I went to design school for two and a half years with [Mary Ellen]. At the time I didn’t appreciate it, but now I do.
SSR: Do you have a big pet peeve when it comes to design, if something doesn’t work? Is it the lighting, the flow?
RL: There’s so many things. It takes a lot of things coming together at the end of the day. I think I have a pet peeve when people don’t understand all the components that it takes to make a great design. For example, hire a great designer, but hire a lousy lighting consultant. Those are two things that are a recipe for disaster no matter how great the first design is. Without the proper equipment in lighting, it doesn’t work. It’s just people’s misunderstanding of how design works and that’s why you get some products that don’t seem to have what I call love. They don’t feel like anybody really put any effort into them, but there are lots of details on the design side you have to pay attention to.
SSR: There are so many changes happening in the industry, but is there something you’re really excited about that’s happening in the industry today that you’ve seen change or evolve since you started out?
RL: No. I am not. I am excited about the things that we’re doing because we are going to push the envelope further. I think as an industry we still are delivering a bunch of homogenous products with no identity and no real branding proposition and just adding them and adding them for the sake of adding them. Then we wonder why occupancy and average rate doesn’t really grow. Then, we have to deal with the challenge of Airbnb today, which appeals to a lot of different generations today and different points in time in their history. I think that all the brands need to have a point of view on what their brand proposition really is and how is it different than just the building being a different brand name.
SSR: That’s a good point. Are you guys doing anything to combat Airbnb or just kind of watching it like most people.
RL: We’re just kind of being ourselves, and I think that’s enough. I think for us all the things that we’re doing inside the hotel, programming the hotels and having so many different points of view, whether it’s on technology or People and Planet or our teammates and how we do different things, I think that all comes together to provide a great experience. The product will continue to evolve on that. I think you need to do all that to combat Airbnb. I think if you’re some homogenous hotel sitting somewhere, just any normal brand somewhere, and you don’t have an experience inside that building, you should be scared of Airbnb.
SSR: What’s the People and Planet that you just mentioned?
RL: People and Planet is the way inside Virgin we refer to our social and environmental conscious about how we do things. What do we do? What do we actively do to help the communities? Generally, our teammates and the rest of the planet, how are we responsible? Are we looking at our supply chains? Are we doing business with the proper vendors that, at the end of the day, are making sure that things like slavery and are they using the proper, gow’s that all working inside our supply chain? The brand is very driven on that because of Richard, of trying to save the planet as much as we can. It starts with just being responsible. Our teammates and consumers want to, one, work for a company that’s responsible, and also they want to stay at hotels that are responsible. I think if you don’t have a point of view as a brand, I think you’re losing out on a tremendous demographic.
SSR: Technology is another hot topic that no one seems to be able to figure out in our industry where we lag a little bit behind. That’s partly due to the process of building a hotel, but is there anything you guys are doing differently or hope to do differently in the future?
RL: Look, we’ve kept it simple, but we have an app, which we affectionately call Lucy like the movie, but it’s not why we call it Lucy. Our point of view is that the consumer today can be away from their husband or wife or whatever for a few days and no problem, but if you lose you device, you flip out. We think that the consumer experience inside the hotel should be within their own phone.
We have an app that allows you to do a variety of different things inside the hotel. One is check in seamlessly in advance, the whole thing. We haven’t gone to a mobile key yet because we think there are lots of security issues with that. The app allows you to turn on your lights in the room, turn off your temperature in the room, even if you’re outside the room. If you’re downstairs, for example, you thought your room was too cold, you just change the temperature. They’ll bring roomservice to your location wherever it is in the hotel. If you’re sitting downstairs in the Commons Club and you want a cheeseburger, they’ll just deliver it to your location.
All the service can be delivered through the app. It’s a convenience more than anything else, but no 33 button phones that you can’t figure out or light switches that you can’t figure out, just like a regular switch with a regular dimmer. I stayed at a wonderful hotel the other night, but I woke up in the middle of the night and wanted to go to the bathroom. I could not, except for opening the shades, which I didn’t want because all the controls were on the right. I think keeping it simple is the way to go because I can’t imagine with a company like Marriott that has 5,000 hotels, there’s no way they can integrate one seamless platform across all those 5,000 hotels. Your experience at Marriott is going to vary no matter what on the technology side. We’re trying to do from scratch is integrate it now since we’re opening new hotels and have the experience be very consistent.
SSR: We have a motto here, KISS: Keep It Simple, Stupid, so we agree. Looking back now, what would you tell your 20-something self if you knew what you now back then?
RL: That’s a good one. Party more. No, that’s not it. I think I was naive about the real estate side of it. I think I would’ve probably delved into it more. From my end of it, I think I probably would’ve done a little studying on things that probably I wasn’t too familiar with. Now I am familiar, but it took me a long while to get there. I think it’s always good just to educate yourself on areas that you’re not comfortable with, just to know, just for the hell of it. That’s what I would say is, at the end of the day for anybody. I think it’s a good lesson. I think I was comfortable in what I was doing and understood it and had fun and whatever, but I didn’t have the time to educate myself.
SSR: Is there one project that you’re really … I mean they’re all your babies, I understand. Is there one you’re most looking forward to that’s really going to represent the brand or take the brand to the next level? I know with Chicago it was a retrofit. Is there any build out there that you’re really going to be able to showcase what you can do?
RL: I’m excited about Dallas. San Francisco I’m excited about too, which opens now as well. It’s just taken so long, unfortunately. I think San Francisco and Dallas. The Dallas project has very large rooms because we had the space there to do it, in that particular hotel, and incredible points of view on the pooldeck and things that are going to be different there. I’m excited about t all of them. I think Vegas will have a different point of view than the typical Vegas hotel.
SSR: You’re taking over the Hard Rock.
RL: We already have. We’ve taken over the Hard Rock. We’re operating it and then we’ll begin in phases, shutting it down next year. At one point, there’ll be a shut down, and they’ll reopen with a big reveal.
SSR: Hopefully at HD Expo 2020, which would be amazing.
RL: I hope so. That’s about the right time, actually.
SSR: Do you think there’s room for Virgin in the tertiary kind of more secondary cities?
RL: It’s just what’s hindering today, what’s hindering us from going to this markets today is the cost of construction is so high. Unfortunately, the average rate in those markets isn’t commensurate with the cost of construction. The cost of construction here, average rate, should be like here but it’s here. We want to make sure that we’re successful in these projects, that we don’t have to struggle later with our partners, so we’re just taking a very cautious view about it.
SSR: Is there a Virgin 2.0 that could go in there?
RL: I don’t know. We’ve thought about it, but we don’t want to dilute what we’re creating now because I think once we have 10 to 12 hotels opening in the next few years, people will get it. They’ll go, ‘Oh, we totally get that. We totally understand what the brand is and where’s it’s headed.’ A lot of people know about Chicago but that’s only one hotel. Once we get the firepower of all these hotels open I think New York will be a very special hotel. It’s got three or four floors of food and beverage verandas that are spectacular on the third and fourth floor, actually. That’ll be a little bit of a journey up there. You’ll have to know what’s going up there, but everybody who’s looking down will know what’s happening. Beautiful gardens outside, incredible pools, and it’ll be spectacular.
SSR: It’s a great location, right, in NoMad.
RL: Great location, yeah. We love location.
SSR: Thank you so much for joining us today, Raul. We really appreciate it.
RL:: Thank you. It’s great to be here. It’s always lovely to spend time with you.
SSR: We’ll talk soon.
RL: You bet. Bye.