LVMH Acquires Belmond

There have been rumors lately of Belmond possibly being acquired. For example, earlier this year there were rumors that IHG might be interested in acquiring them.

Well, now Belmond has been acquired, but it’s not by one of the major global hotel brands. It has been announced that LVMH Moët Hennessy Louis Vuitton, a luxury group, will acquire Belmond for $25 cash per share. This represents an equity value of $2.6 billion and an enterprise value of $3.2 billion. The deal is expected to close in the first half of 2019.

For those of you not familiar with Belmond, up until 2014 it was known as Orient-Express, though they rebranded at that point (and there’s an interesting backstory to the rebranding).

Belmond has 46 hotels, trains, and river cruises, in 24 countries, so the brand goes beyond hotels (and is perhaps originally most well known for the Orient-Express train). It’s certainly a luxury brand, with some of their properties being world class, though not all properties are of the same caliber (which is true of most brands).

Hotel Cipriani, one of the iconic Belmond properties

What makes Belmond unique is that they actually own almost all of their hotels. Nowadays most global hotel chains primarily have management contracts for their hotels, while Belmond both owns and operates their properties.

Most people don’t realize this, but this isn’t LVMH’s first entry into the hotel market. LVMH already owns Cheval Blanc, which has hotels in budget friendly destinations like Courchevel, Saint Tropez, St. Barth, and the Maldives. 😉

Cheval Blanc Maldives

Furthermore, they’re also involved with Bvlgari Hotels, which currently has six properties, with a few more due to open in the coming years.

Bvlgari Dubai

It’s a small collection, so obviously their involvement in the hotel industry will be increasing significantly with this acquisition.

Belmond’s CEO had the following to say about this acquisition:

“Today’s announcement is the result of the strong execution of our strategic vision that builds on our pioneering legacy and is an exciting development for all stakeholders, including our employees. We are confident that, as part of LVMH’s world-class family of brands, Belmond’s ability to deliver timeless, one-of-a-kind luxury experiences will reach new levels.”

LVMH’s CEO had the following to say:

“Belmond delivers unique experiences to discerning travelers and owns a number of exceptional assets in the most desirable destinations. 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.”

Bottom line

LVMH is of course a very respected company. As of now their involvement in the hotel industry is fairly limited, though clearly they had interest in doing more, because this is a big, asset-heavy acquisition.

For those of us into loyalty programs, this is probably disappointing news, since we won’t be redeeming points anytime soon at Belmond properties. The only change I’d expect to see at Belmond properties pretty soon is perhaps the type of wine they serve. 😉

What do you make of LVMH’s acquisition of Belmond?

Comments

  1. Hopefully the first thing they will do will be to pay SNCF and bring back the revered Orient Express name. Renaming it Belmond brought absolutely nothing of value to the group.

  2. A corporate finance type cannot run luxury brands. You can not wring out profits from these products just looking at numbers. A lot of luxury products should never be public companies. The year to year focus is misplaced.

  3. Stayed at the Belmonds in Peru. They were generally good, but not all outstanding. Really liked the Belmond Miraflores Park in Lima but the others were less impressive for 5-star luxury standard.

  4. We took the Belmond Hiram Bingham train to Machu Picchu and got engaged up there a few years ago. It was very nice, but a long day. About 4 hrs each way, plus the tour.

  5. @Jason. I am not sure how LVMH sold out the Louis Vuitton brand, when LVMH itself was form by LV and nowadays has become by far the most powerful luxury brand in terms of both revenue and profit.

  6. @mason – LV use to be high end. They went really really trashy. It appeals to the masses, it’s not the elegant discreet brand it was once. While it’s a powerful brand, and appeals to the nouveau riche masses, those with true money and discretion look elsewhere.

  7. I think they’re building a Cheval Blanc in Paris as well in that nice art deco building on the Seine (I know…real specific…). It used to be a department store or something.

  8. While I was hoping that Rosewood would acquire Belmond, I think this is about as good of an outcome as Belmond could have hoped for. The hotels will end up tricked out a bit to flog LVMH merchandise but have a better chance of remaining distinctive than if they had been swallowed by Marriott or Four Seasons — and of remaining properly maintained than if they had been treated like Sheraton treated the CIGA hotels (later the core of Starwood’s misfits and aging dowagers with the Luxury Collection). About six years ago, there was speculation that what was then Orient-Express Hotels would merge with Indian Hotels/Taj–not a bad fit, but Taj is a mess as an organization.

    @Michael There is not a snowball’s chance in hell of SNCF ever selling the rights Orient-Express name. They wouldn’t sell it to Jimmy Sherwood or to Accor, which currently licenses the name for hotels. Also, as Orient-Express Hotels, what is now Belmond did a lousy job of creating a unified brand, as each hotel was marketed as a separate brand (and had its own web site). The Belmond rebranding attempted to create a single brand across the hotels.

  9. Stayed at the La Residence in Cambodia – exquisite, refreshing and highly personalized stay. Enjoyed it very much, albeit for a steep price.

  10. Well done on the investment analysis Lucky. Asset-heavy… Love the analysis, but yeah, not the strategy as-is. Lets see a 99 year management contract with a REIT spinoff!

  11. @Jason:

    Would agree and add that LV is targeting a very specific customer base these days: mainland Chinese. But LV is not alone in this given the rise of the (upper) middle class in China and newfound wealth – something often discussed on travel blogs as a result of the uptick in international travel and the rise of culture-specific faux pas aboard. If you take a look at any number of luxury brands/lines, you’ll see patterns, designs, and colors skewing towards tastes unique to that region. Or, for a more basic understanding of target demographics, visit a brick-and-mortar location and note the ethnicities of and/or language(s) spoken by the salespeople on the floor.

  12. LVMH is fantastic at mass producing “luxury” goods and branding. Veuve Cliquot NV Brut Yellow Label in all Belmond properties, with lots of cross selling opportunities! How this translates to Belmond will be interesting. I think the Starwood brand exiting the market has created a vacuum for a higher tier/medium sized chain with a robust loyalty program (dreaming maybe).

  13. You guys complaining about LVMH being trashy or not being able to manage high end products, are you familiar with Cheval Blanc properties at all?

  14. I wouldn’t call LV trashy at all. There were always fakes, and there was always nouveau riche with their products. In Germany, until 10 years ago, if a young female was wearing it, it was either borrowed from her mom, or she was a prostitute. This has changed, even people otherwise unable to afford luxury goods, are willing to spend every last dime and forego their summer vacay for a single LV item. The business politics are brilliant, they never need to go on sale, everything they produce is being torn from their hands. But I do agree, they nowadays are gearing their offerings towards Chinese customers. It used to be be oriented towards Japanese customers 15 years ago.

  15. @mason
    Having high revenue and profit does not mean a brand hasn’t sold out. LV used to be truly luxury, now it’s just “luxury” canvas and monogram bags sold to nouveau rich and wanna-be. Is Wal-Mart a more luxurious brand because it has higher revenue and profit than LVMH?

  16. It has been my experience that Belmond/Orient Express has always been a second or third-tier operation, despite their desperate airs of pretension. LVMH can’t help but improve these properties.

  17. It would be very interesting to see LVMH hopefully upgrading Belmonds all around. Some of the Belmonds are quite nice while the one by Machu Picchu entrance is astrocious. If they can make all Belmonds as nice as all the Cheval Blanc, especially like the one in Maldives, I’m all for it.

    Bulgari, on the other hand, is managed by Marriott. Need I say more?

  18. You forgot to mention the iconic Copacabana Palace in Rio is now under LVMH since the acquisition 😉

    Btw, its Louis Vuitton Moet Henessey, hence the LVMH

  19. everyone calling LV trash probably cant afford anything from there…its far from trash. its true luxury. if u dont like it dont buy it, just dont make ignorant comments about a respectable brand

  20. @schar
    It actually is overpriced trash, and not because people “can’t afford it”. The actual good stuff cost more than LV. Hermes, Brunello Cucinelli, Loro Piana, John Lobb (which is actually owned by LVMH, but hasn’t gone the tacky LV route… yet) etc. comes to mind.

    Enjoy your derivative, tacky LV wallet with logos plastered all over it though.

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