Hotel companies are going to have to get creative amid COVD-19: Virgin Hotels CEO

Raul Leal, Virgin Hotels CEO, joins Yahoo Finance to talk about expanding his hotels amid COVID-19 and how Virgin Hotel layouts allow for social distancing.

Video Transcript

JULIE HYMAN: The hotel industry has been one of those hardest hit amidst the coronavirus pandemic, but we are seeing a lot of travel reopen now, particularly within the United States. We're joined now by Raul Leal. He is Virgin Hotel CEO, and he's joining us from Miami.

Raul, thanks for joining us. So Virgin has hotels in Dallas, Nashville, Chicago. You're slated to open more coming soon. And it seems as like one of the biggest challenges, if not the biggest challenge right now when you're trying to welcome people back to hotels, is making them feel safe. So how are you doing that at your hotels? How are you sort of reassuring people? What policies do you have in place, et cetera?

RAUL LEAL: Yeah, well, thank you so much. It's great to be here. Thanks for having me. So I mean, look, we're fraught with challenges, like everyone else. We-- you know, we really, of course, have been following the strictest of, you know, CD-- CDC guidelines, and local protocols, and what forth.

I think what-- what helps us a little bit different than most of the brands out there is that our hotels are set up a little bit differently. We-- you know, we opened the first hotel about five years ago. And first of all, the public areas are all segregated into, you know, what I call little interesting living rooms everywhere. So organically, we were really set up for social distancing even before.

Then when we launched our first hotels a few years ago, we thought we had a-- you know, we thought we had a genius set up in the rooms. And now I think we really do for the pandemic. We had designed the rooms for primarily the female traveler who wanted lots of security, and wanted ample dressing rooms, and whatever else.

And you know, the Virgin guest room is pretty interesting. When you walk in, you have this ample, you know, dedicated dressing room, but the room can be closed off in the first section. So it means that you can really order room service, or service, or anything else.

It's delivered in the first half of the room. You never really come in contact with a team member who delivers room service or anything else. And you can see them, but they can't see you.

Then I think what we've done is even enhance our technology even further. We have a proprietary app that we affectionately call Lucy, and you're able to control everything inside the room. You don't have to touch the remote control, the lighting controls, the AC controls. It actually controls everything for you.

And you can also set preferences inside the room. So if you decide that you don't want any service inside the room, we certainly have those preferences in advance. So I think we're pretty well-equipped during this period of time, and we're taking all the, of course, you know, mandatory, you know, requirements in each community. And you know, taking them seriously, not just for our guests, but you know, obviously our teammates as well.

MELODY HAHM: Raul, I actually, on one of my last work trips to San Francisco, stayed at a Virgin Hotel room and kind of what you're laying out is pretty spot-on. It was a great experience. The room service was great. Everything felt very Virgin branded, so it had some great appeal there.

But I was trying to search to see if the hotel had reopened, but I see that you guys did file a lawsuit against the owner of that property back in May. Can you give us an update on what's going on there? Is the hotel still in operation? What's the plan?

RAUL LEAL: Well, the hotel is still closed because of COVID, obviously. I really-- I really can't comment on any situation there, unfortunately, between, you know, Virgin Group and the ownership group. But hopefully we're making progress.

RICK NEWMAN: Hey, Raul. Rick Newman here. What do you know about what travelers want? You know, what is on their mind as they contemplate what it will take to get them traveling again?

Are they afraid of touching stuff with their hands? Are they afraid of encountering other people? Is it something altogether different? What-- what do you know about what you have to do to get people to leave their homes?

RAUL LEAL: Well, we-- look, we've had-- we've had lots of different experiences. I think-- you know, obviously, you know, cleanliness and sanitation are the new luxury now. But I do think that people do want to get out of the house. They do want to mingle. We have very active food and beverage at all of our hotels, and that's actually been significantly higher for us this year because people do want to get out, right?

So I think in the future, I do think that you're actually going to see hotels as office options, where, you know, the lines of work and play continue to be blurred. And you know, before I think what you used to do is, you used to go in for a few days and do some business midweek, and then stay over for the weekends. Now, it could be a little bit different. Now, you may go over for the weekend first, and then maybe stay over and do a little business midweek if, in fact you need to. But I do think that destinations that are leisure-based and hotels that offer a variety of options so people don't have to leave the hotels are really going to be with travel in the future.

JULIE HYMAN: Raul, you can only control what you can control, of course. And one of your hotels is in Nashville. I saw some pictures from over the weekend of streets in Nashville, I think it was Broadway in Nashville just packed with people, and not necessarily mask-wearing people. So what do you do, particularly for your employees, to reassure them that they're being protected in some of these very busy areas where, perhaps, guests are not following the rules outside the door? I mean, do you require your guests to wear masks in the common areas, for example?

RAUL LEAL: We do require our guests to wear a mask inside the hotel, obviously, to protect our teammates. We're only operating Nashville, really, at 50% capacity, according to the local ordinance. So we've had plenty of ample time to move around the furniture and make sure that there's distance between-- whatever the original designs were have now been moved around to accommodate this COVID scenario.

But look, our teammates are our first, really, priority. They have to take care of our customers. They have to feel safe. So everybody has to wear a mask in the hotel. There's obviously lots of disinfectant stations that are set up throughout the property to provide it. But we really don't-- don't tolerate anything but, you know, conformance to those rules, I mean, for everybody's safety at this point.

MELODY HAHM: And Raul, just thinking about this work from anywhere, live from anywhere campaign that Airbnb has really been doubling down on during this time, what are your thoughts here? You know, it's not a new competitor per se, but they seem to be really encapsulating hey, come to a tree house or a cabin and stay here for three months and kind of stay for this-- for the short-term rental approach. Do you feel as though you can offer something similar? Curious your take.

RAUL LEAL: Well, look, I think that Airbnb is definitely a competitor for the hotel business. I think it depends on what the consumer's looking for. So our brand is very high on the entertainment side, as Virgin would be, right? So we're going to offer lots of activations, lots of interesting activations, not just music and entertainment, but also events geared towards entrepreneurship, female traveler events, all kinds of different things like that.

I do think that Airbnb will be a tough competitor during these times, because you're able to-- to go somewhere. And in these times where technology now can-- you can work from anywhere else, why wouldn't you go somewhere lovely like that if you can, work from there, and then have ample spaces like some of the larger spaces that Airbnb does rent in some of the cities?

So I think it is going to be a trend for the future. I think hotel-- typical hotel companies are going to have to really get creative for midweek corporate group in the future. And I think that designs inside hotels are going to have to change to accommodate more fluid public areas.

JULIE HYMAN: Very interesting stuff. Raul Leal is Virgin Hotel CEO. Thank you so much. Appreciate it.

RAUL LEAL: Thank you. Good to be here. Have a good day.