Branson sells hotels to develop luxury resorts

Sir Richard Branson has sold two hotels, Le Manoir Aux Quat' Saisons, with its Michelin-starred restaurant, and the luxury La Residencia in Majorca, as well as his 50 per cent stake in a restaurant group run by the chef Raymond Blanc, for about £28.5m.

Sir Richard says he will invest most of the proceeds in luxury resorts. The Virgin boss is buying a castle, called Tamadout, in the Atlas Mountains in Morocco, as well as an island near Antigua in the Caribbean. He will also develop a 10,000-hectare game reserve, Ulusaba, that he owns near the Kruger National Park in South Africa.

The buyer, Orient-Express Hotels Ltd, which owns the 21 Club in New York and the Orient Express train, is expected to invest further funds in the hotels. Mr Blanc will continue to run Le Manoir and will retain a share of his brasseries in Oxford, Cheltenham, Birmingham and Manchester.

Le Manoir, in Oxfordshire, became one of the most renowned restaurants in Britain after winning its Michelin star, as well as one of the more expensive, with lunch costing about £125 for two. La Residencia, set in 30 acres of ancient olive and citrus groves near the north coast of Majorca, with views across the Mediterranean, charges £670 a night for a suite.

Sir Richard still retains the Kensington Roof Gardens, a private nightclub and restaurant in west London, valued at £5m, where he held a banquet for the former New York mayor Rudolph Giuliani, last week. He also owns Heaven, a nightclub in central London, and Necker, a Caribbean island.

Will Whitehorn, a Virgin director, said: "Richard wants to plough the money back into top-of-the-range leisure. The castle in the Atlas Mountains will be a Necker-type resort for Europe, and the game reserve in South Africa is proving extremely popular after 11 September, with fewer people going to the States. The deal made good economic sense."