Beverly Hills voters reject LVMH luxury hotel on Rodeo Drive

The voters of Beverly Hills, the epitome of wealth and luxury, have narrowly rejected Bernard Arnault’s proposal to build an ultra-exclusive hotel on Rodeo Drive by LVMH.

The surprise result late Friday was a blow to Arnault, the world’s richest man, who has chosen Beverly Hills as the first US location for his luxury hotel group. LVMH, which recently became the first European company to reach a market valuation of $500 billion, spent about $2.9 million on its campaign to get approval on the ballot.

The proposal for the Cheval Blanc hotel was approved by city officials last year. However, a powerful union representing 32,000 hotel and other hospitality workers in Southern California opposed it. The group gathered enough signatures to launch a referendum election to decide whether the project should proceed.

The union argued that the development agreement did not set aside provisions for affordable housing in Beverly Hills, where some hotels or domestic workers may live. Beverly Hills is an independent city within LA County of approximately 32,000 people with a median household income of over $100,000.

Opposition also came from a group of residents, who criticized the scale of the planned hotel, saying it would tower over neighboring buildings and worsen traffic congestion.

“We oppose the monolithic Cheval Blanc hotel project because it is too big and tall for our village,” said a pamphlet distributed by Residents Against Overdevelopment.

LVMH argued that hotel development for Beverly Hills would generate approximately $780 million in tax revenue over the next 30 years. As part of the deal, the company also agreed to contribute $26mn to the city’s budget and $2mn earmarked for arts and culture.

Andy Licht, who oversaw the approval of the Cheval Blanc project as chairman of the Beverly Hills Planning Commission, said, “I’m devastated.” “It’s a terrible decision.”

Some votes were yet to be counted, but the group backed by LVMH to campaign for approval acknowledged late Friday that it was unlikely to pass.

“If the final vote count confirms the rejection of our project by the voters, we will respect the result, and will not bring back the hotel project in any form,” said a statement issued by the group, on the B&C campaign. Yes, so for the letters on the designated ballot motion.

Designed by New York architect Peter Marino, who also oversaw LVMH’s lavish renovation of jeweler Tiffany & Co.’s flagship store in New York, the Beverly Hills Cheval Blanc represents the group’s latest expansion into the luxury hospitality industry. Plans for the 115-room hotel included space for a 500-member private club as well as high-end restaurants and retail outlets.

LVMH is expected to retain ownership of the property and have the option of developing it for other uses, including retail or office space.

Still, that doesn’t stop the company from capitalizing on the growing appetite for high-end hospitality and experiences with a project in Beverly Hills. LVMH and its rivals have poured money into the hospitality sector in recent years, and analysts expect it to be one of the fastest-growing sectors in luxury in the coming years.

According to consultancy Bain, the luxury hospitality market is set to more than double year-on-year to €191bn in 2022, down from its pre-pandemic peak.

Arnault established the first of the Cheval Blanc hotels in 2006 at the ski resort of Courchevel. The highly rated chain has now grown to include locations from Paris to the Maldives. In 2018, the group announced that it had bought hospitality group Belmond for $3.2bn, which came with a luxury travel portfolio ranging from high-end hotels to the Orient Express train service.

The deal strengthened LVMH’s hospitality portfolio which already included Cheval Blanc and Bulgari Hotels & Resorts. The segment that includes LVMH’s hospitality business was only a small part of the group’s record €79bn in revenue last year, but has made a strong comeback since the pandemic after being hit during lockdown.