The Business Times

Branson says his luxury travel empire will thrive during slump

Published Fri, Nov 4, 2022 · 12:15 AM

Richard Branson said his Virgin Group’s focus on luxury travel is likely to prove resilient during an inflation-fuelled cost-of-living crisis – unlike the company’s experience of the coronavirus pandemic.

The British billionaire’s empire looked close to collapse when Covid-19 all but halted global travel in early 2020. Restrictions curtailed the debut of cruise-ship operator Virgin Voyages, shuttered fast-growing Virgin Hotels, delayed launches at the Virgin Galactic space tourism arm and grounded flagship brand Virgin Atlantic Airways.

Yet that same premium exposure is proving a boon as spending in the sector continues to thrive amid economic turmoil, he said, with those who can afford it sticking with vacation plans.

“Now we’re through Covid we’re in a stronger position than maybe some other companies,” the 72-year-old said in an interview. “There is no question that some people are going to have tremendous difficulties and are not going to be able to afford to travel. But there is enough pent-up demand from others who can.”

A strong rebound in bookings for flights between the US and Europe in particular shows no sign of easing, according to Branson, who spoke in Tampa, Florida, after the launch of London-based Virgin Atlantic’s latest US route.

While there are questions around inflation, the Ukraine war and high fuel prices, the desire to fly post-pandemic is such that “if I were a guessing man I think the airline industry is going to have two or three good years ahead,” he said.

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Virgin Atlantic chief executive officer Shai Weiss, speaking at the same event, said people are prioritising spending on experiences over more mundane concerns such as a new refrigerator.

Ed Bastian, CEO of Delta Air Lines, which owns 49% of the UK carrier, said the rebound in the North Atlantic “is like nothing we’ve ever seen” and “it’s not stopping.”

Virgin Cruises is meanwhile “getting great demand” and the hotels arm is “doing great,” Branson said, with its biggest property set to open in New York in the next few months.

The entrepreneur said Virgin Galactic’s ticket price of US$450,000 per trip is “completely sustainable,” and won’t be cut. The venture’s aim now is to “bed down into regular flights” after a refit of its Eve launch vehicle delayed commercial services to the second quarter of 2023.

Branson said he’s concerned for the UK after a crisis in the ruling Conservative party led to a succession of prime ministers and finance ministers in the past few months. Rishi Sunak, the present leader, took the helm in October. 

“I don’t think any company would benefit from the kind of high turnover of leaders that’s been seen in Britain,” he said. “Some stability seems to be there finally which is, I think, positive.”

The country’s split from the European Union continues to rankle with Branson, who said the damage to business has been “massive,” and that the country needs “somebody brave” to step forward and take it back into EU single market.

“Britain is just continuing to shoot itself in the foot unless it does that at a minimum,” he said. “It’s sad to see but it just seems to be a taboo subject.” BLOOMBERG



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