Richard Branson eyes hotel, tech deals Down Under - March 2015

The strategists at Virgin Group want to wean it off its reliance on the 'big show' and explore new ways to keep the brand alive without the man himself.

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by Michael Smith

Richard Branson has never been one to step out of the limelight. The bearded British billionaire's playboy/entrepreneur/adventurer/philanthropist image has been at the heart of the Virgin Group business empire's success. Brand is everything at Virgin and it is no secret Branson spends most of his time marketing his businesses rather than actually running them.

Branson, 64, used to be a regular visitor to Australia where Virgin owns stakes in an airline, a chain of gyms, financial services and a mobile phone company. But don't expect a repeat of the big stunts of the past when he comes back next time.

The strategists at London-based Virgin Group want to wean the company off its reliance on the "big show" and explore new ways to keep the brand alive without the man himself.

While Branson has not been seen here for a while, Australia remains on Virgin Group's radar.

NEW OPPORTUNITIES

Virgin Group owns a 10 per cent stake in airline Virgin Australia, receives royalties from Bank of Queensland, which offers products under the Virgin Money brand, retains an interest in telecommunications through the Optus-owned Virgin Mobile network part of the Optus network, and has the Virgin Active health club chain.

Hotels and technology are now on Virgin Group's radar as it looks at new potential investment opportunities in Australia.

Branson wants to open 10 to 12 new hotels over the next decade. While the focus will be on major gateway cities in the US and possibly London, Australia is an option. It is understood Virgin Group has looked at a number of properties in Australia although it has not yet found the right deal.

Branson is also expected to focus more on Australian firms in coming years as part of a global non-profit initiative aimed at giving technology start-ups a kick start with a small financial loans and help with mentoring and writing business plans.

Virgin Group has been investing up to $US200 million ($260 million) in technology businesses such as Twitter and Halo for the past five years and is now eyeing opportunities in health and drug research and financial technology.

A VIRTUAL PRESENCE

Branson lives on his private island in the Caribbean and spends 60 per cent of his time on non-profit causes such as marine preservation. Rather than flying around the world in hot-air balloons he is building up a presence on social media to keep the Virgin brand in the headlines.

The real value of Virgin's Group's 80-plus branded businesses is unclear although the Financial Times says it owns 27 per cent of the 12 largest Virgin companies by revenue. The newspaper says Virgin companies made £15 billion ($29 billion) in revenue in the last financial year but this does not reflect the holding company's value. Virgin Group is more of an investment vehicle that rents out its name to everything from airlines, cruise ships and a string of media, entertainment and telecoms companies.

The company is divided up into five segments: travel and tourism; financial services; media and telecoms; leisure; and health and wellness.

There are no plans for any major investments in Australia although it still sees growth in the telecommunications and Virgin Money portfolio. Instead, it is focused on emerging markets where it wants to build the brand.

Space tourism is still Branson's other major obsession despite last year's Virgin Galactic spacecraft crash that killed one of its pilots. That venture has not been abandoned and Virgin Group is also investing in satellites.

(The Australian Financial Review)