Inside the decision to close Virgin Hotels Glasgow and the shock news for staff

Staff at Virgin Hotels Glasgow were told today (December 19) they no longer have jobs during a meeting with Virgin Hotels CEO, James Bermingham, just a week after being told their jobs were secure. Now staff are uncertain whether or not they will be paid for work completed this month, just six days before Christmas Day.

For the full story so far, you can read our reporting of the administration announcement last week and the announcement today.

The Glasgow staff have lost their jobs today due to a monumental fallout between a labyrinthine network of companies and legal entities behind the opening of a new landmark hotel in Glasgow city centre in August this year. Last week, despite financial difficulties for the owner of the building, Virgin Hotels said it was business as usual. Today the doors were shut and staff were told to leave the building through the back door.

The owners of the building occupied by Virgin Hotels Glasgow is Lloyds Development Ltd, registered in Guernsey, which in turn is part of a limited liability partnership. When that partnership entered into administration, Virgin Group offered to buy the building in Glasgow or share the costs of trading for the next six months. That offer was made yesterday.

When the approach was rebuffed, V Hotels Glasgow Ltd was placed into liquidation with the loss of all jobs at the hotel. This was the operating company for the Glasgow hotel. Virgin Group and Virgin Hotels state they have no relationship with this company and have no investment in the hotel beyond a hospitality management agreement.

James Bermingham, the CEO of Virgin Hotels, addressed staff for V Hotels Glasgow before they were dismissed and sent an email to employees talking of his hopes of reopening the hotel in the future, giving them priority on regaining their Virgin Hotels jobs under a new owner of the building and a new employer company. Unraveling that map of potential future ownership is for another day, today the story is about hospitality staff losing their jobs in the week before Christmas.

The hotel employed around 150 staff and many of them congregated at the Hootenanny pub today after the announcement. GlasgowWorld joined them just off St Enoch Square around the corner from the Virgin Hotels site on Clyde Street as they processed what had happened to their jobs over the course of this week.

A worker, who wishes to remain anonymous told GlasgowWorld, told the story of how their job had disappeared.

”We all got an email last night for a meeting this morning around 10 o’clock, which got postponed to 12 noon.

“The CEO of Virgin Hotels, James Bermingham, flew in from Miami - but he wasn’t bothered really, he was acting so false - he said it was ‘so sad’ that the hotel had been cut off by critical suppliers and was forced to close.

“I’m not sure which critical suppliers he meant, it wasn’t clear - not that I think he cares anyway, he’ll be away home with a big paycheck. At the end of the talk he asked if there were any questions, the first question that was asked was about pay, that’s when all hell broke loose.

“We were told that we would find everything out tomorrow in a meeting with administrators and liquidators. We don’t know what’s going to happen, but it’s not sounding good for us. We were escorted from the building, regional managers restricted access to the rest of the hotel while they took keys back.

“We knew it was coming - they weren’t paying bills, we had no answers. The place is shutting down and we need to find out from the liquidators what’s happening.

“I don’t know what the point of the meeting was, probably just to show face - they just kept speaking round in circles. Most of the staff joined back in October 3 of last year before the opening was delayed - when it was busy it was such a great place to work. We have a meeting with the administrators tomorrow afternoon, we still don’t know if we’re going to be paid.”

The liquidator, FRP Advisory, is responsible for organising payments due to employees and will hold a meeting tomorrow regarding this process. GlasgowWorld understand that Virgin and the owners of the hotel have indicated they will ensure payment for days worked in December irrespective of the obligations of the operator company. Tips and other payments due would be outside of this commitment and a matter for the liquidator of V Hotels Glasgow.

Staff were as shocked to hear that the hotel would close as Glaswegians were, the hotel had been open for four months, with future plans for suites on the upper floors and a whisky bar. While many had seen the writing on the wall and the seriousness of the situation emerging this week, most had assumed their jobs were safe.

Upon arriving at the meeting this morning, they were told that they would no longer be in employment, their keys that allowed them access to the building would no longer function and staff were then asked to leave through the back of the building rather than the front.

Another worker spoke to GlasgowWorld, they said:“I started working in September, then two weeks ago I was called into a meeting and told all our jobs were secure and that we were finding new buyers - I thought that was fine, I had been through it before with other hotels that I had worked for.

“We were told that everything would be business as usual, last night we were sent out a meeting request for 10am this morning, it was postponed to 12 - which we were angry about as people had turned up on the days they were off.

“We were told within the first couple of minutes we didn’t have a job and there’s a possibility we’re not getting paid for work to date. All of our wristbands that would let us into the staff rooms were cut off - there’s people here now that are still waiting to get their belongings from their lockers and they’re not sure when they’d be able to get them.

“Of course the work erupted, there was about 80 of us there, the answer to absolutely everything was ‘we’ll find out tomorrow'. We were all outraged, we told them we needed to know right now - we put in the work already.

“We’d been hosting the owners and higher-ups for the last two weeks - free stays, free dinners - we’re the grafters that are serving you, we don’t get free food - where’s our thanks? And now we’re being told we’re possibly not getting paid.

“The tips we’ve accrued so far as well are up in the air as to whether we’ll get them or not. Not to mention the staff that have been underpaid for their overtime.

“All the managers have been having their secret meetings behind the scenes, which we’ve heard - but no one has confirmed what’s been happening until today - days before Christmas.

“Over the last couple of weeks we’ve been pushing to get as many sales as we can to get as much money as we can, with no thanks, there’s been nothing from upper management, we’ve had nothing in writing saying our jobs may be at risk.

“As far as we know now, the managers have been told to shut off their phones and not answer anyone.

“A lot of our staff are with Unite union, so we’re going to do everything we can to get the rights that we deserve. With the union now, from the first time since we started working there, we’re finally being heard.”

Workers at Virgin Hotel Glasgow were paid on the last working day of the month, in this case it’s December 29 - many of the workers who have made their career out of hospitality fear losing all money tips, overtime, and contracted hours at such an expensive time of year.

The crowd of workers were accommodated kindly by the staff of Hootenanny’s, who were initially more than a little shocked to see such a massive group arriving in the early afternoon, some of them visibly upset.

We spoke to another member of staff who shared their experience with Virgin Hotels, they said:”In terms of the actual experience working there, it’s been good with staff and management, it’s been the best job in hospitality I’ve had actually, but the problem was with mismanagement from above.

“A lot of the issues were put forward as teething problems, but saying we don’t have credit with most of our main suppliers isn’t teething problems.

“The bar ran out of draught beers and spirits, all because the management weren’t doing their jobs. We were told not to let anyone know, we were told to say it was a problem with the lines - it wasn’t a problem with the lines, we just didn’t have kegs.

“There was a point when no one could order supplies at all because we didn’t have credit with anyone.

“A lot of us thought we would be open until Christmas and we would wrap up after that as many people had bookings for Christmas dinner or even that Virgin would buy over the hotel.

“Instead they told us we no longer had jobs, they couldn’t tell us if were getting paid, or even when we were getting our P45’s.”

Everyone we spoke to had nothing but good things to say about the people they worked with - by all accounts the work culture was great, friends were made and connections were fostered.

Former staff we spoke to lambasted the lack of communication from upper management, oftentimes saying that nearly no promises made to staff were made in writing, and clerical issues often arose around contracts, personal licences, and more administrative issues.

A spokesperson from Virgin Hotels said: “Lloyds Developments Limited – the owner of Virgin Hotels Glasgow, which Virgin Hotels has a management contract with – has financial problems and on 1 December its lenders put it into administration.  As a result, the directors of V Hotel Glasgow Ltd, the employer and operating company in respect of the hotel, are being advised by FRP Advisory LLP as they place that company into liquidation. These financial issues mean that the hotel cannot continue operating and now has to close. 

"Virgin Group tried to find solutions, including offering to purchase the hotel in order to keep the hotel open, keep the team in employment and ensure the completion of the development of the hotel, creating something the City of Glasgow could be proud of. Unfortunately, the lenders have not accepted Virgin's offers and intend to pursue a sales process with the hotel closed. Virgin Hotels is very disappointed by this decision after the hard work everyone has put into the hotel and because of the impact it will have on the team that works there.

“Virgin Hotels' heartfelt thanks and gratitude are to those employees, suppliers and guests who have been integral to the hotel’s launch in the City of Glasgow. Virgin Group and the owners are committed to ensuring employees are paid for every day they have worked this month.  

“The Virgin Hotels team continues to have great ambitions for managing the hotel in Glasgow and looks forward to re-opening once a new owner is in place.  No other Virgin hotel is impacted – all other Virgin Hotels remain open and operating as normal as all Virgin Hotels are independently owned.” 

Virgin Group say no employee of V Hotel Glasgow Ltd was escorted from the building this afternoon following the meeting led by representatives of Virgin Hotels.

Geoff Jacobs and Blair Nimmo from Interpath Advisory were appointed Joint Interim Managers of Lloyds Developments Limited, the owners of the property at 246 Clyde Street, as part of an administration process on 1 December 2023.  

Today they told us: "There were third parties responsible for the trading and running of the hotel. Since their appointment, the strategy of the Joint Interim Managers was to understand the long-term intentions of these parties and other key stakeholders.

"The Joint Interim Managers have today been made aware that the Virgin Hotel Glasgow has unfortunately now closed, which will be immensely disappointing for all stakeholders.

Blair Nimmo, CEO of Interpath Advisory and joint interim manager, said: “As joint interim managers, we have not been involved with the trading or closure of the hotel but know that this will be a worrying and disappointing time for all concerned.  We would very much hope that the hotel - a superb development, right in the heart of Glasgow - can be opened and operational again under new ownership at some point in the future.”

Geoff Jacobs, managing director at Interpath Advisory and joint interim manager, added: “We will focus our efforts on working with stakeholders to facilitate a sale of this significant and attractive property for the benefit of the creditors of Lloyds Developments Ltd. Although the property is not actively on the market as yet, those with an interest should get in touch with the Joint Interim managers to register their early interest.”

Scottish Labour MSP for Glasgow Paul Sweeney said: "“It is atrocious that just a few days before Christmas, 150 staff at the new Virgin Hotel on Clyde Street have lost their jobs due to the firms behind the hotel, Lloyds Developments LLP and V Hotel Glasgow Ltd, going into administration.

“Former directors of both firms Rishipal Singh and Richard Diamond have serious questions to answer over their management of this hotel project. Lloyds Developments LLP made £20.3 million in profit in 2021 and a smaller loss of £3.9 million in 2022, whilst having a property valued at £77 million. With the firm now under the administration of Interpath, we need a clear explanation of the complex structure of the firms behind the hotel – all of them connected to Singh and Diamond – and why its operations have unravelled so rapidly after just four months of trading.

“I urge the administrators and Virgin Hotels to ensure that the payroll for December is honoured and fully support the Unite trade union to ensure that the obligations owed to all employees are honoured.

“It is immoral that unconfirmed creditors – which may include Siggis Capital and RM Funds as previously reported in relation to the development – have now closed the hotel and are putting it in limbo to pursue an open market sale, instead of accepting the off-market offer from Virgin Hotels to immediately buy it out of administration and to maintain it as a going concern. It is the epitome of unscrupulous, Scrooge-like behaviour and I hope that the creditors will reconsider their position, or failing that, that a new operating company can be quickly secured to reopen the hotel and re-employ the staff who have just lost their jobs.”

James Bermingham's letter to staff

Dear Virgin Hotels Glasgow employees,

Thank you for your time earlier today, I appreciate it was a very difficult meeting.  As explained, our priority has been to give you some answers as soon as we are able to do so and we already have an update for you.  As we discussed in the meeting, FRP is responsible for organising the payment to employees and the process that sits behind that but, in the meantime, we wanted to share an update from me and the Virgin Group about how we plan to support you.  The meeting tomorrow will also give you further information that I know you are all keen to hear.

You have been the heart of this hotel since it opened its doors and we never wanted it to come to this. Lloyds Developments Limited, the owner of Virgin Hotels Glasgow (which Virgin Hotels has a management contract with) has had financial problems and on 1 December its lenders put it into an insolvency process. As a result, the hotel cannot continue operating and now sadly must close.

Virgin Group tried to find solutions, including offering to purchase the hotel, to keep the hotel open, keep the team in employment and ensure the completion of the development of the hotel, creating something the City of Glasgow could be proud of.  Unfortunately, the lenders have not accepted Virgin's offers and intend to pursue a sales process with the hotel closed. Virgin Hotels is very disappointed by this decision after the hard work everyone has put into the hotel and because of the impact it will have on the team that works there.

We are grateful to all of you at Virgin Hotels Glasgow for all you have done to launch this hotel and make it a success. In the meantime, Virgin Group and the owners are committed to ensuring you are paid for every day you have worked this month.  The team will work through the details with you. We are also happy to connect you with other Virgin companies if and when job opportunities arise in the future.

We plan to re-open the hotel once a new owner is in place and we hope we can work together to give you priority on jobs as before. Thanks again.