LVMH Moët Hennessy Louis Vuitton, owner of Dior, Givenchy and Louis Vuitton, is ramping up activity in the hospitality sector, eyeing three recently purchased properties on and around Rodeo Drive in Beverly Hills for the opening of a Cheval Blanc hotel, several sources confirmed to WWD.
In March 2018, LVMH bought a 6,200-square-foot empty retail space at 456 North Rodeo Drive for $110 million. Then, in September, the luxury powerhouse headed by billionaire Bernard Arnault purchased 468 North Rodeo Drive, the massive 22,250-square-foot, multistory building at the corner of Santa Monica Boulevard that was previously occupied by Brooks Brothers, for $245 million from the trust of the family of Margaret J. Anderson, who built the pink stucco Beverly Hills Hotel. In November, LVMH scooped up the 26,523-square-foot Paley Center for Media museum behind the store, at 465 North Beverly Drive, from New York private real estate investment firm Jenel Management for $80 million. Together, the three contiguous parcels create more than 50,000 square feet of real estate on which to build, with frontage on Rodeo Drive, Santa Monica Boulevard and Beverly Drive that could be connected into one hotel property.
A spokesman for LVMH in Paris declined to comment on plans for Beverly Hills, but confirmed the hotel division has tapped Christian Boyens, former manager of the Ritz Paris, to oversee operations of its urban properties throughout the world, including the opening of the first Cheval Blanc hotel in a city — Paris — set for the first half of 2020 as part of the long-delayed renovation of the landmark Paris department store La Samaritaine.
“To have [LVMH] with an upscale hotel would be a big benefit to the street,” said Chuck Dembo, a partner in Dembo Realty in Beverly Hills, which has handled many Rodeo Drive real estate deals, noting that the retail market is tough even on the famous thoroughfare because of changing shopping habits and brands going in and out of favor quickly. “With something like this and such a special brand, they are going to have an easier time getting through the city,” he said of the zoning process.
L.A.’s sprawling commercial real estate market is finicky, with Robertson Boulevard once a hot destination for Ralph Lauren, Tory Burch and Tommy Hilfiger stores, all of which have closed, and Melrose Avenue and Melrose Place emerging in the last decade as a Beverly Hills alternative for Marc Jacobs, Oscar de la Renta, Chloé, Isabel Marant and Balmain.
But in the last five years, Rodeo Drive has seen a renaissance, with Hermès, Chanel and LVMH purchasing their own buildings and “investing for the long haul,” said Jay Luchs, vice chairman at Newmark Knight Frank’s West Los Angeles office, who handled the 468 North Rodeo Drive sale to LVMH but would not comment on the buyer’s intent. “Rodeo Drive is better than it’s ever been,” he said.
“The real estate market is quite strong on Rodeo Drive,” said Kathy Gohari, president of the Rodeo Drive Committee, whose 60 members include retailers, hoteliers, boutique managers and property owners along the two-and-a-half block street. “There continues to be interest from brands and brand-holding companies to purchase their own real estate as well as significant investor evidence. There’s a lot of evidence — real and anecdotal — that business is strong, too, judging by the investments several brands are making, may make and will make.”
In recent years, Alexander McQueen and Balenciaga have both moved from Melrose to Rodeo, Saint Laurent added a second store (one for men and one for women), and Goyard opened a flagship. This week, MCM joins the retail roster with a flagship. Meanwhile, Gucci has an expansion planned, and Chanel, Cartier and Van Cleef & Arpels are all remodeling their stores to keep up with the pace of newness.
“L.A. has become a place everyone has to be, whether its ceo’s, designers or people looking to retire,” said Luchs, noting the convergence of the fashion, entertainment, art and influencer scenes.
There are two existing hotels on Rodeo Drive — the Beverly Wilshire at the intersection of Rodeo Drive and Wilshire Boulevard, and The Luxe Rodeo Drive Hotel at 360 North Rodeo Drive. LVMH is one of the street’s biggest real estate players, owning or leasing spaces for its Louis Vuitton, Dior and Fendi brands in addition to its new acquisitions. In August 2016, it paid $122 million for the House of Bijan at 420 North Rodeo Drive, a purchase at the time considered to be the most expensive on the street, at $19,405 per square foot, which beat out Chanel’s 2015 purchase of a Rodeo Drive store for $13,217 per square foot. Prices have only gone up from there.
The French luxury goods firm opened the first Cheval Blanc hotel in 2006, located in the ski resort of Courchevel in the French Alps. Three other hotels complete the roster: Cheval Blanc St-Barth Isle de France in the Caribbean, Cheval Blanc Randheli in the Maldives and the recently acquired Cheval Blanc St-Tropez, set to open in May. The Cheval Blanc Paris will be the first time the concept is applied to a city.
In December, further signaling its intention to bulk up hospitality operations globally and position itself as much of a leading player in experiential luxury as in fashion, leather goods and prestige wines and spirits, LVMH purchased Belmond Ltd. for $2.6 billion. Established more than 40 years ago with the acquisition of Hotel Cipriani in Venice, Belmond operates in 24 countries with a portfolio of 46 luxury hotel, restaurant, train and river cruise properties, including New York’s 21 Club, the Orient Express and Royal Scotsman trains.
LVMH also owns the six Bulgari hotels, with plans to open three more destinations in Paris in 2020, Moscow in 2021 and Tokyo in 2022. Its newest hotel investment would follow a decade-long trend of luxury brands expanding into the hospitality sector, including the Armani hotels, Ferragamo’s Lugarno brand, Palazzo Versace hotels in the Gold Coast of Australia and Dubai, the Fendi Suites in Rome, and the upcoming Audemars Piguet property opening in Switzerland in 2020. In January, Rick Caruso, the real estate developer behind L.A.’s The Grove and Palisades Village retail destinations, opened his first hotel, the Rosewood Miramar Beach in Montecito, Calif., including a sundries shop from Gwyneth Paltrow’s Goop, another brand that has expressed interest in hotels.