It has been confirmed that the luxury giants are to acquire upmarket hotel group Belmond for a cool $3.2 billion in an effort to reach “critical mass” in the ultimate luxury hotel segment of the hospitality industry.
Formerly known as orient-Express Hotels, Belmond currently owns or manages over 40 properties across 24 countries.
This latest acquisition is receiving plenty of attention from analysts, most of whom seem to view it as a canny strategic move.
With the number of high net worth individuals growing globally, it makes a lot of sense, according to Thomas Chauvet, a top researcher from Citi. Meanwhile, according to Grand View Research, a consulting firm, the global luxury hotel market was worth at $83.1 billion in 2017 and is expected to grow to $115.8 billion by 2025.
“Bernard Arnault [CEO of LVMH] was one of the first to think hard about how best to attract and retain an increasingly volatile luxury customer,” says Thomas Chauvet, analyst at Citi. “Over the past decade, LVMH has expanded its reach beyond its traditionally boundaries with continued expansion of travel retail, the rollout of high-end hotels and spas.
“While these activities have a limited impact on LVMH’s overall profit, these have been among the group’s fastest growing businesses over the past few years.”
The purchase of Belmond boosts the hotel portfolio of LVMH, which already has Cheval Blanc hotels in Courchevel, the Maldives, Saint-Barthélemy and Paris as well as owning Bulgari Hotel and Resorts.
Other luxury brands owned by LVMH include Louis Vuitton, Christian Dior, Bulgari, Zenith, Hublot, Tag Heuer, Veuve Clicquot, Célin, Fendi, Givenchy, Acqua di Parma, Dom Pérignon.
LVMH was formed by the merger of fashion house Louis Vuitton with Moet Hennessy, a company formed after the 1971 merger between the champagne producer Moët & Chandon and Hennessy, the cognac manufacturer.