Armani has got one. Cavalli has got one. Missoni, Ralph Lauren, Christian Lacroix and, most recently, Moschino got one, so it seems only natural that mega-giant LVMH Moet Hennessy Louis Vuitton would opt to expand into hotels.
When a conglomerate is as big as LVMH, it’s hard to know where to invest their capital and expand (as I learned from the Harvard Business School case study on the Gucci Group, which anyone who is interested in growing a business should read). Oftentimes the conglomerates expand in ways that don’t utilize their capabilities and competitive advantages, and they end up losing money.
However, hotels seem like a natural progression for a giant like LVMH that has built an empire on fashion, beauty, wines, and spirits brands. Plus, the market for Louis Vuittion and Marc Jacobs – both owned by the giant along with such brands as Donna Karan, Fendi, Givenchy, Celine, and Emilio Pucci – has never been greater in Asia and the Middle East. LVMH hotels would make these products more readily available to a growing population of eager consumers.
To that end, the French luxury conglomerate has has created a Hotel Management division and partnered with Orascom Development Holdings to build two luxury resorts, which are expected to open in 2012. Named after the vineyard owned by LVMH, Cheval Blanc (“white horse”), the hotels’ construction will be financed by Orascom, while LVMH will run the hotels and earn a percentage of sales and profits. Egpyt and Oman will be where the first two luxury reports will be located and they will, of course, be key points of sale for LVMH brands including Louis Vuitton, Marc Jacobs, Loewe, and Guerlain.
Here’s to hoping Tom Ford follows suit and opens a branded hotel – now that would surely be a sleek luxury room worth traveling the globe for.
