Hospitality Management major Business Trip 2019 - IHIF Conference

As a participant from the Hospitality Management major of the Global MBA, I had the chance to attend the International Hotel Investment Forum (IHIF) in Berlin in March 2019. One of the panels I chose to attend was entitled “Luxe Good: Why is Luxury so Attractive” which included panelists Valeriano Antonioli of the Lungarno Collection, and Caroline Domange-Harding of LVMH Hotel Management. This topic is particularly interesting for the #ESSECGMBAExperience because it is relevant to both the Hospitality Management and Luxury Brand Management majors of the Global MBA. It is remarkable to note that LVMH, one of the founding partners of the Luxury Brand Management major of the Global MBA, is now encompassing hospitality as an additional Luxury Sector in the four other sectors in which they already have a strong presence: Fashion and Accessories, Fragrances and Cosmetics, Watches and Jewelry, Wines and Spirits.

LVMH entered the Luxury Hospitality sector in 2001 with the acquisition of Bulgari. The luxury brand had previously signed a co-branding agreement with Ritz-Carlton (Marriott International). With the acquisition of the luxury jewelry brand, LVMH also took the Bulgari hotels under its umbrella company. Today, there are six properties operated under this brand, with three more under construction.

Then came the opening of Cheval Blanc in 2006, with its first hotel in Courchevel. At this time, LVMH designated a specialized and experimented task force to ensure the robustness of their hotel business model and strove to deliver a comprehensive and exceptional experience to their guests. 

Following the success of Cheval Blanc, LVMH took the decision of creating a full-scale hotel brand. The French luxury conglomerate boosted its entry into Luxury Hospitality at the end of 2018 by acquiring Belmond Ltd., including 35 deluxe hotels, 7 tourist trains, 3 river cruises and restaurants in 22 countries for over US$2.6 bn. With this acquisition, LVMH Hospitality encompasses over 3500 rooms, establishing themselves as a strong leader of Luxury Hospitality on the international stage. LVMH also recently created another concept, White 1921, with properties in St-Tropez and Courchevel.

In addition to the acquisition of the Belmond group, LVMH has announced the upcoming development of a mix-use ultra-luxury activity, located in London’s prestigious Bond Street area, encompassing a hotel, spa, and boutiques. The project is estimated to be completed in 2022. This London project mirrors the La Samaritaine development which will also be a mix-use activity in Paris’s 2nd arrondissement and is set to host the Paris location of the Cheval Blanc.

The strategy of entering Luxury Hospitality for LVMH was explained by Caroline Domange-Harding. Originally, LVMH is a luxury company with most of its activities based on retail luxury consumer goods. In the late 1990s, although the company found that this area of the industry was experiencing steady development, the growth was in single digits, whereas the luxury services industry was growing in double digits. Caroline Domange-Harding mentioned the adoption of a vertical growth strategy versus a horizontal growth strategy, by crafting more levels of luxury rather than growing on more niche sectors of the industry.

This fits into LVMH’s broader strategy of aiming to capture customer segments looking for luxury experiences such as travel and gastronomy, rather than luxury products. Today, responding to the millennial mindset is key in the luxury industry. According to a report by Bain & Company, the “milliennialization” of luxury customers is a crucial issue with 85% of luxury growth fueled by Generations Y and Z. Brands who aspire to survive in today’s competitive and fast-moving luxury business landscape will need to personalize products and services more effectively to tend to the shifting generational expectations.

Overall, we can conclude that the luxury customer is drawn to luxury products of varied ranges, covering vehicles, fashion, and accessories, cosmetics as well as services which include hotels and gastronomy. Creating an integral vision for a company is imperative, and luxury companies should strive to do so to encourage brand loyalty in an increasingly large panel of the broader luxury goods and services industry.

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