LONDON, United Kingdom — LVMH is betting that a new Cheval Blanc hotel by 'starchitect' Norman Foster around the corner from its Louis Vuitton mega-store in London’s Bond Street will increase dwell time at its nearby retail locations and advance the French group’s ambitions in experiential luxury.
The conglomerate is planning a hotel, spa, restaurants and a flagship store that appears intended for Hedi Slimane’s Celine on a stretch of Grafton Street that extends from Dover Street to Bond Street, according to a public consultation that opened on Thursday. The development, if it receives permission to proceed from the local council, would neighbour LVMH’s new Givenchy store that opened in late 2018. The project was conceived in conjunction with property group O&H and is expected to be completed by the third-quarter of 2022, documents show. The deal could be valued at up to half a billion pounds, one source estimated.
LVMH did not respond to multiple requests for comment.
A looming no-deal Brexit has yet to dent luxury goods consumption in the UK, as international tourists and ultra-high-net-worth Londoners (many of them with foreign wealth) continue to spend. And luxury brands are continuing to open new stores in prime London locations, notably on Bond Street and surrounding locations in Mayfair, as well as the affluent West London district of Chelsea.
The news comes after LVMH signalled its growing ambitions in hospitality when it paid $3.2 billion for Cipriani hotel-owners Belmond late last year. LVMH chairman and chief executive Bernard Arnault said of the deal: “the future of luxury will not only be in luxury goods, as it’s been for many years, but also in luxury experiences, and we want to be in both segments.” According to Bain, luxury hospitality rose 5 percent last year and high-end food and dining gained 6 percent, as affluent consumers continue to shift spending from physical goods to experiences including travel.
But while hotels, food and beverage have long been considered an effective way of extending shopping time, profitability has fallen short of personal luxury goods. LVMH owns Bulgari Hotels as well as the Cheval Blanc hotel chain, where rooms cost from $400 to $1,200 a night. Developed by LVMH in 2006, Cheval Blanc is named after the group’s Bordeaux vineyard, and includes locations in Courchevel, the Maldives, Saint-Barthélemy and Saint-Tropez. Another new location is planned for Paris. Cheval Blanc currently sits under “other activities” on LVMH’s income statement, a bracket which was loss-making in its latest financial year.
The new hotel will sit next door to contemporary art gallery Sprüth Magers, which is housed in a protected Georgian building at 7 Grafton Street that was designed by Sir Robert Taylor. The gallery, with its distinctive, large bay windows, will influence the aesthetic of the Foster & Partners-designed hotel. On the Bond Street end of the new development, there will be a 2-floor flagship retail store space. Celine posters currently appear on the building and the brand could be a contender for the space, given it lacks a store on Bond Street and has a hefty target to more than double revenues to 2 to 3 billion euros ($2.2 to $3.4 billion).
In addition to its Louis Vuitton flagship on Bond Street and the new Givenchy store on Grafton Street, LVMH has several other stores in the neighbourhood, which is ground-zero for luxury retail in London. Bond Street is also home to LVMH-owned Fendi, Loro Piana, Christian Dior and Rimowa stores. Meanwhile, nearby Mount Street is home to Celine, Loewe, Nicholas Kirkwood and Moynat stores. Kenzo is just around the corner from the new development on Bruton Street and Berluti is on adjacent Conduit Street. (Marc Jacobs closed its sole London store on Mount Street last year).
The luxury hotel will mean “dwell time increases massively,” said Anthony Selwyn, head of London & International Retail at Savills, a global real estate firm. “Bond Street is the key location for luxury, so it doesn’t necessarily need a helping hand. The more likely beneficiaries are Albemarle and Dover Streets, linking off Grafton Street., where LVMH will likely put a few brands.”
The Cheval Blanc hotel will have some competition. The Westbury Hotel on Conduit Street is adding a new floor, and the Mandarin Oriental is planning a new hotel on Hanover Square. There’s also Browns Hotel on Albemarle Street. And the former American Embassy, a short walk away, is being turning into a large-scale luxury hotel by Rosewood. It is believed that LVMH also bid on this property.
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