Beverly Hills voters reject LVMH luxury hotel on Rodeo Drive

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

The surprising result late on Friday was a setback for Arnault, the world’s richest person, who had chosen Beverly Hills as the first US location for his luxury hotel group. LVMH, which recently became the first European company to reach a $500bn market valuation, splashed out nearly $2.9mn on its campaign to gain approval in the ballot.

The Cheval Blanc hotel proposal was approved by city officials last year. However it ran into opposition by a powerful union that represented 32,000 hotel and other hospitality workers in southern California. The group gathered enough signatures to trigger a referendum election to decide whether the project should go ahead.

The union argued that the development agreement did not set aside provisions for affordable housing in Beverly Hills, where few hotels or domestic workers could afford to live. Beverly Hills, an independent city of about 32,000 people in LA county, has a median household income of more than $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 just too big and tall for our village,” said leaflets distributed by Residents Against Overdevelopment, which said its mission was to “preserve the quality of life in Beverly Hills”.

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

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

A few votes remained to be counted, but the group backed by LVMH to campaign for approval acknowledged late on 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 bring the hotel project back in any form,” said a statement released by the group, the Yes on B&C Campaign, so named for the letters on the ballot proposal.

Designed by the New York architect Peter Marino, who also oversaw LVMH’s lavish refurbishment of jeweler Tiffany & Co’s flagship store in New York, the Beverly Hills Cheval Blanc represented the group’s latest expansion into the luxury hospitality industry. Plans for the 115-room hotel include 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 has the option to develop it for other uses, including retail or office space.

Still, it denies the company a chance to capitalize 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 will be one of the fastest-growing areas in luxury in the coming years.

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

Arnault established the first of the Cheval Blanc hotels in the ski resort of Courchevel in 2006. The high-end chain has now grown to include locations from Paris to the Maldives. In 2018, the group announced 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 bolstered LVMH’s hospitality portfolio that already included Cheval Blanc and Bulgari Hotels and Resorts. The segment that includes LVMH’s hospitality businesses accounted for only a small proportion of the group’s record €79bn in revenues last year, but after taking a hit during lockdowns it has rebounded strongly since the pandemic.