Shirayama Shokusan will spend pounds 150m converting County Hall - the erstwhile power base of 'Red Ken' Livingstone and the Greater London Council - into an upmarket hotel and leisure complex, replete with a wedding chapel, walk-in aquarium and virtual reality entertainment centre.
Virgin Hotels Group, the clubs and hotels arm of the Virgin empire, will invest just pounds 5m in a 50:50 joint operation to manage the 570-room project. As Greg Feehely, industry analyst at Kleinwort Benson, points out: 'Branson's exposure is quite small, although he's getting all the publicity.'
Many commentators believe the bearded balloonist is a token presence, more important for media appeal than money. Some also think he has been brought in to stem opposition from those who would have preferred to see County Hall in the hands of the London School of Economics, a rival bidder when the building was put up for sale two years ago. But one thing on which most are agreed is that Mr Branson has demonstrated his Midas touch yet again.
'The location's absolutely first-rate. Next to Waterloo, with its new international terminal where fast rail services should start this autumn, and overlooking the Thames,' says Mark Finnie, industry analyst at NatWest Securities. 'It looks like a quality operation at rather less than four or five star prices.'
''The location's good, although it's the wrong side of the river,' says Bruce Jones, leisure analyst at Smith New Court, 'and the number of people staying in hotels seems to be increasing strongly, although room rates haven't been dragged up.' He points to figures from Forte that showed occupancy levels in its London hotels rose by 9 per cent, while room rates fell by 6 per cent, in the year to January 1994.
Rival hoteliers concede that the project has been smartly marketed, with an emphasis on family facilities and a pledge to offer four-star accommodation at affordable prices. 'There might be some resistance, if the hotel were designed exclusively for Japanese tourists or for businessmen at pounds 300 a night. But it's not going to create much opposition if they stress its appeal to families,' said a spokesman for the Grange group of independent hotels.
Hoteliers also predict that Branson will use his links with Virgin Atlantic, the airline, to promote holiday packages. 'He might be able to attract new custom,' says Yvonne Sorensen, sales and marketing director at Securum Hotels. 'He's doing what all the airlines did 10 years ago,' she adds, 'although they're all trying to sell them now.'
But some hoteliers are more sceptical about the hotel's South Bank location, a long way from Oxford Street. Nor is this simply jealousy. Gerard Nolan, a director of Christie, the hotel auctioneer, has similar reservations. 'County Hall has one of the best possible outlooks, but the surroundings are not exactly consonant with a four-star hotel,' he noted, tactfully alluding to the nearby wasteland and Cardboard City - Waterloo's homeless.
Understandably enough, no hotelier would admit that the County Hall complex posed a threat. Nevertheless, it will almost certainly attract custom away from tired and faded establishments. It will be a still bigger threat if it is expanded to 1,200 bedrooms in a second phase, making it London's largest hotel. 'This will draw trade from the Victoria area. A lot of European trade comes into Victoria,' said Mr Nolan. It will also hit hotels that can only compete on price.
Yet 570 rooms is a lot to fill, even at a rumoured cost of less than pounds 100 a night for a family of four.
The sceptical manager of one large London chain reckoned that there are probably only 30 hotels in London that can consistently secure pounds 100 a room. He pointed to the plethora of special deals and holiday packages that mean that a family of four can, for example, make the return trip by rail from Glasgow, stay overnight in a four-star hotel and have breakfast, for pounds 182.
Such sceptics are in the minority. For most Mr Branson has pulled off another coup. But it is worth remembering that not everything he touches turns to gold. Virgin Radio, the national commercial rock station he launched last April, is fading along with its AM frequency; audience numbers have fallen well below target, and the station now has fewer listeners than Radio 3.
Then there was the ill-fated venture into pubs, which failed in the 1970s, Event, the listings magazine that flopped in the early 1980s, and the film version of 1984, an investment Mr Branson took years to recoup. Virgin Atlantic, his biggest gamble, is now breaking even, but that has also haemorrhaged money in the past. For all the publicity, the Branson name is not a cast-iron guarantee of success.
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