Beverly Hills voters reject the LVMH luxury hotel on Rodeo Drive

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

Friday’s surprising result came as a setback for Arnault, the richest person in the world, who had chosen Beverly Hills as the first US location for his group of luxury hotels. LVMH, which recently became the first European company to reach a Market valuation of $500 billionspent nearly $2.9 million on his campaign to get approved on the runoff.

The Cheval Blanc hotel proposal was approved by city officials last year. However he ran into opposition from a powerful union representing 32,000 hospitality and hotel workers in Southern California. The group has collected enough signatures to activate an electoral referendum to decide whether the project should go ahead.

The union argued that the development deal made no provision for affordable housing in Beverly Hills, where few domestic or hotel workers can afford to live. Beverly Hills, an independent city of approximately 32,000 people within Los Angeles County, has a median household income of over $100,000.

Opposition also came from a group of residents who criticized the size of the planned hotel, saying it would overpower nearby buildings and make traffic congestion worse.

“We oppose the monolithic Cheval Blanc hotel project because it is simply too big and tall for our village,” read flyers distributed by Residents Against Overdevelopment, which says its mission is “to preserve the quality of life in Beverly Hills “.

LVMH said the hotel development will generate approximately $780 million over the next 30 years in tax revenue for Beverly Hills. As part of the deal, the company also agreed to contribute $26 million to the city budget and an additional $2 million earmarked for arts and culture.

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

Few votes remain to be counted, but the LVMH-backed endorsement campaign group acknowledged late Friday that it was unlikely to pass.

“If the final vote count confirms the voters’ rejection of our project, we will respect the outcome and will not take the hotel project back in any form,” read a statement released by the group, the Yes on B&C campaign. , so named for the letters on the voting proposal.

Designed by New York-based architect Peter Marino, who also oversaw the lavish renovation of LVMH’s jewelry store The flagship of Tiffany & Co New York store, the Beverly Hills Cheval Blanc was the group’s latest expansion into the luxury hospitality sector. Plans for the 115-room hotel included space for a 500-member private club, along with high-end restaurants and retail shops.

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

However, it denies the company a chance to capitalize on its growing appetite for upscale hospitality and experiences with a project in Beverly Hills. LVMH and its rivals have been pouring money into the hospitality sector in recent years, and analysts predict it will be one of the fastest growing areas of luxury in the coming years.

In 2022, the luxury hospitality market more than doubled in value year-on-year to €191 billion despite remaining below its pre-pandemic peak, according to consultancy Bain.

Arnault founded the first of the Cheval Blanc hotels in the Courchevel ski resort in 2006. The high-end chain has now grown to include resorts from Paris to the Maldives. In 2018, the group announced it bought the Belmond hospitality group for $3.2 billion, stocked with a luxury travel portfolio ranging from high-end hotels to Orient Express train service.

The deal strengthened LVMH’s hotel portfolio which already included Cheval Blanc and Bulgari Hotels and Resorts. The segment including LVMH’s hospitality businesses accounted for only a small fraction of the group’s record revenue of €79bn last year, but after taking a major hit during lockdowns, it has rebounded strongly from the pandemic.