On January 26, 2022, the San Francisco Business Times reported that a San Francisco Superior Court judge denied Virgin Hotels’ request to rule on some of its allegations against the owner of the former Virgin Hotels San Francisco, clearing the way for the case to go to trial.
The reporting also observes that the Virgin Hotels brand, launched with great expectations, is only affiliated with five properties.
The article reported that Virgin was suing and being sued by the property owner, which had terminated the hotel management agreement with Virgin in April 2020.
“In our clients’ view, this prized hotel asset fell victim to false promises, fraud and mismanagement,” said William Brewer III, a partner at Brewer, Attorneys & Counselors who represents the hotel owner in the case, clients 250 Fourth Development L.P., Paradigm Hotels Group, LLC, et al., in an emailed statement. “They believe that not only has Virgin Hotels failed to deliver on the ‘brand’ it promised, it mismanaged the San Francisco property in an effort to boost its own bottom line. Our clients look forward to this trial.”
The Business Times reports that in an amended cross complaint filed in August 2020, the owner accused Virgin of breach of contract and fraud, and alleged that Virgin overstated gross hotel revenue to inflate its management fee and misrepresented bonus amounts due to employees. The owner claimed it lost tens of millions of dollars in unrealized hotel profits and lost value of the property.
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