LVMH goes five star

LVMH is expanding its grip on the luxury goods market with a move into the five star hotel business.

The new hotels will come under the Cheval Blanc brand, the name of a ski resort opened by the group in 2006 within the upmarket French Alps destination of Courchevel. As with this existing destination, the hotels will also feature a retail showcase for some of the luxury brands within the company’s extensive portfolio.

Last week LVMH announced a partnership with Egyptian firm Orascom Development Holdings to build the first two Cheval Blanc resorts in Oman and Egypt, due to open in 2012. The Egyptian venue is located on a private island in Aswan, while the Oman project will include 32 private villas on the island of Al Sodah.

This inital programme is set to cost US$100 million, of which Orascom will provide $40m, while the rest of the funding will come from other investors. LVMH revealed that its own involvement involves “minimum capital commitment”, but will see it manage the hotels and take a percentage of sales and profits.

The group described the establishment of LVMH Hotel Management, which will consist of a five to ten strong team, as a “natural extension of activities in luxury hospitality”. The move follows steps by other luxury brands such as Armani, Bulgari, Versace and Ralph Lauren to diversify into the hotel business.

Although unwilling to offer further details at this time, LVMH said that it is currently examining a large number of other potential hotel developments.

Gabriel Savage, 13.04.10