he luxury goods company, is to enter the five-star hotel management business, initially through a partnership with Egypt’s Orascom Development Holdings to build two resorts in the Middle East. The hotels will be branded Cheval Blanc, after the Michelin-starred French ski resort opened in 2006 by Group Arnault, the family holding of Bernard Arnault, LVMH’s executive chairman. Paris-based LVMH, which already has a score of luxury brands ranging from leather goods, watches, fashion, wines and spirits, and duty-free stores, said the creation of LVMH Hotel Management was a “natural extension of activities in luxury hospitality”. The hotel management company will have a team of five to 10 people and will “minimise capital commitment” while retaining control over the development and design of the hotels. The hotels will also showcase some of LVMH’s other brands – the Cheval Blanc resort in Courchevel has Louis Vuitton and Dior shopping outlets as well as a Givenchy spa. A number of fashion and luxury brands have diversified into hotels, for the most part on a limited basis, including Armani, Bulgari, Versace and Ralph Lauren. “This looks at first sight an extravagant diversification but on closer inspection the move seems sensible,” said Luca Solca, analyst at Bernstein Research. “LVMH will control key choices in the development of these hotels but will commit no capex and retain no management risk. “It will take a royalty from its partners and have a chance to display its brands. If this is how it works, I see no downside and possibly some upside.” The first two hotels, scheduled to open in 2012 in Egypt and Oman, will be mostly financed by Orascom providing $40m and the rest coming from other investors, including the Sultanate of Oman and banks. LVMH said that a large number of other developments were being studied but it gave no timetable or pipeline for these. The group would not comment on whether the hotel that it has planned to open in its mothballed Samaritaine building in Paris alongside the river Seine, when the former department store reopens as a shopping centre with offices, would be a Cheval Blanc. The Oman hotel will be arranged as 32 private villas, of which the smallest will be 500 sq m, each with its own beach and swimming pool. In Egypt, the 40-suite hotel is be situated on an island in Aswan overlooking the Nile.
