French luxury giant LVMH Moët Hennessy Louis Vuitton (also known as LVMH) has inked a US$2.6 billion (S$3.6 billion) all-cash agreement for London-based luxury hotel brand Belmond Group. Formerly known as Orient-Express Hotels, the luxury hotel group owns or has stakes in a distinctive portfolio of 46 hotel, rail and river cruise experiences around the world. It was first established over 40 years ago with the acquisition of Hotel Cipriano in Venice.
Dubbed as the world’s leading luxury group, it is the parent company of some of the world’s most prestigious brands such as Louis Vuitton, Givenchy, Rimowa, and Dom Perignon. The acquisition is one of LVMH founder Bernard Arnault’s biggest, rivalling the purchases of Bulgari and Loro Piana. At US$25 (S$34) cash per share, the transaction is LVMH’s largest since its acquisition of Christian Dior last year for more than US$7 billion (S$9.6 billion).
The deal is set to expand the French company’s high-end hospitality offerings after LVMH formed a hotel management group in 2010 to oversee its operations in the sector, which include properties under the Cheval Blanc name in locations like the French Alps.
Similarly, the group also owns Bulgari’s portfolio of six hotels, including Bulgari Shanghai that opened in July, as well as upcoming properties in Moscow, Paris and Tokyo in the next four years.
This timely move comes as luxury consumer tastes evolve and spending patterns shift toward experience-driven luxury, while interest towards shopping malls plummets. LVMH aims to offer extraordinary experiences with curated activities and understated personal service to a globally-diverse, highly refined consumer with some of Belmond’s most iconic properties such as Hotel Cipriani in Venice, Copacabana Palace in Rio de Janeiro, and Grand Hotel Europe in St. Petersburg, as well as legendary train Venice Simplon-Orient-Express and the Belmond Afloat in France fleet of cruises.
“The future of luxury will be not only in luxury goods as it’s been for many, many years but also in luxury experiences and we want to be in both segments, which is as simple as that,” LVMH Chief Financial Officer Jean-Jacques Guiony said on a conference call last Friday.
“Belmond delivers unique experiences to discerning travellers and owns a number of exceptional assets in the most desirable destinations,” said Bernard Arnault, Chairman and Chief Executive Offer of LVMH added in a statement released by the group. “Its heritage, its innovative services, its excellence in execution and its entrepreneurship resonates well with the values of the Group and is complementary to our own Cheval Blanc maisons and the Bvlgari hotels activities. This acquisition will significantly increase LVMH’s presence in the ultimate hospitality world.”
The transaction is expected to be completed in the first half of 2019 subject to the approval of Belmond’s shareholders and clearance by the relevant competition authorities.