LVMH Eyes Vacancies in Hotels

Discussion
Apr 19, 2010
Tom Ryan

By Tom Ryan

LVMH, the owner of fashion names such as Louis Vuitton, Gucci, Puma and Donna
Karan, announced plans to open a series of luxury hotels starting in Oman and
Egypt. The hotels will incorporate LVMH brands such as Vuitton and Dior boutiques
and Givenchy spas.

The French company has created a new division, LVMH Hotel
Management, to “oversee
the group’s activities in the luxury hotel sector” and “maximize
the value of its brands,” according to a company statement.

The two new
hotels, named Cheval Blanc after one of LVMH’s Bordeaux vineyards, are slated
to open in 2012. The move follows the successful 2006 opening of the LVMH-backed
Cheval Blanc hotel in Courchevel, France.

The first Cheval Blanc resort would
sit on a desert island in the Indian Ocean off Oman and consist of 32 villas,
complete with private beach and swimming pool. The other consisting of 40
suites will be located on an island on the Nile.

“Other projects are currently under study in exceptional destinations,” LVMH
said in a statement.

The company won’t own the real estate or finance construction. Similar to
models embraced by other high-end chains such as The Ritz- Carlton, it runs
the resorts under management contract.

A Wall Street Journal article noted that a few other luxury brands
have dipped their toe into the hotel business. Jeweler Bulgari SpA has two
resorts, in Milan and Bali, run by Marriott International. Giorgio Armani recently
opened his first hotel in Dubai.

Among other consumer brands, Hard Rock Café appears to be the most successful.
Disney also operates hotels around its resorts and Nickelodeon has a hotel
in Florida. Bass Pro Shops is opening a hotel next to its flagship store in
Springfield, MO. Although its legendary diners are all closed, Howard Johnson’s
still has a sizable hotel business.

Discussion Questions: What do you think of LVMH’s move into hotels? How
would you rate the opportunity to showcase its brands at its hotels? Can you
think of other consumer brands ideally suited for the hotel business?

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9 Comments on "LVMH Eyes Vacancies in Hotels"


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Dan Desmarais
Guest
Dan Desmarais
11 years 28 days ago

Themed hotels have got to be a tough business. One does not do this for the innkeeper’s profit. The brand needs to have a serious upside benefit that can be exploited across the globe.

LVMH has some excellent brands well suited to outfitting a top-end hotel. Their cost structure is minimized to a licensing deal at this point so the downside is not that far down.

Perhaps BCBGMaxAzria could pull this off.

Bob Phibbs
Guest
11 years 28 days ago

Smart, they can control the brand and let their clientele enjoy their exclusive brands.

Marge Laney
Guest
11 years 28 days ago

If customer experience is the new marketing, then this is an ideal way for some retailers to promote themselves as lifestyle brands. Giving people a way to interact with a brand in a non-traditional environment allows the customer to interact with the brand and make a connection that can form a foundation for future purchase and brand loyalty. Execution is everything, though, so the experience better deliver the expectation advertised, or more harm than good will be the result.

Eliott Olson
Guest
Eliott Olson
11 years 28 days ago

The real money has enough self confidence that while they like luxury they don’t want to be a billboard for it. It won’t draw them. Using the name will draw the pretenders, the “housewives of New York” and end up cheapening the brand but perhaps allowing them to try and mass market it for a while. Remember what General Mills did to Izod.

Mark Baum
Guest
Mark Baum
11 years 28 days ago

Moving luxury brands into adjacencies can be a tricky business. When done successfully, usually the company builds on the already established cache of the existing brand: example: Bulgari…from jewels, to fragrances, watches, eyewear, spas, etc. Same with Ralph Lauren. LVMH is a holding company, the world’s largest stable of luxury brands, in a patch-quilt of categories and products. I am not so sure that the name, Cheval Blanc, resonates much beyond wine aficionados, but ultimately the quality of the product and/or service offering will be as or more important than the brand identity per se.

Gene Hoffman
Guest
Gene Hoffman
11 years 28 days ago

To be quite “fronk”
About Cheval Blanc
Going to Egypt and Oman
With luxury brands in hand …

It appears they’ll be roamin’
Into the desert rich gloamin’
Trusting that their thrust
Will answer an unserved “must.”

Is this top strategy or folly,
Or a new world full of jolly?
The answer will be writin’ in rhyme
In the desert on the sands of time.

Stacey Silliman
Guest
Stacey Silliman
11 years 28 days ago

How much can one brand diversify? This will be for the jet-setting, celebrity crowd who carry Louis Vuitton luggage…not for the majority of people on this Earth!

Ryan Mathews
Guest
11 years 28 days ago

It works for Armani, doesn’t it?

Doron Levy
Guest
Doron Levy
11 years 28 days ago

High-end retailing at high-end hotels? Whodathunkit? I guess we are pioneers here in Toronto because luxury retailers have populated all the finer establishments in the downtown core for quite some time.

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