News: Beverly Hills voters reject LVMH ultra-exclusive hotel on Rodeo Drive

Voters in Beverly Hills, known for its wealth and luxury, have narrowly rejected a proposal by Bernard Arnault's LVMH to construct an ultra-exclusive hotel on Rodeo Drive.

The surprising outcome, which occurred late on Friday, was a setback for Arnault, the wealthiest person in the world, who had chosen Beverly Hills as the first location in the US for his luxury hotel group. LVMH spent nearly $2.9 million on its campaign to gain approval in the ballot, making it the first European company to reach a $500 billion market valuation.

City officials had approved the Cheval Blanc hotel proposal last year, but it faced opposition from a powerful union representing 32,000 hotel and hospitality workers in southern California. The union collected enough signatures to trigger a referendum election to decide the fate of the project.

The union argued that the development agreement failed to include provisions for affordable housing in Beverly Hills, where few hotel or domestic workers can afford to live. With a median household income of over $100,000, Beverly Hills is an independent city of approximately 32,000 people within Los Angeles County.

Opposition also came from a group of residents who criticized the size of the planned hotel, claiming it would overshadow neighboring buildings and worsen traffic congestion. The group, called Residents Against Overdevelopment, aimed to preserve the quality of life in Beverly Hills.

LVMH countered by highlighting that the hotel development would generate approximately $780 million in tax revenues for Beverly Hills over the next 30 years. As part of the deal, the company agreed to contribute $26 million to the city's budget and an additional $2 million earmarked for arts and culture.

Although a few votes remained uncounted, the campaign group supported by LVMH acknowledged on Friday that the project was unlikely to pass. They stated that if the final vote confirmed the rejection, they would respect the outcome and not pursue the hotel project in any form.

Designed by New York architect Peter Marino, who oversaw LVMH's renovation of jeweler Tiffany & Co.'s flagship store in New York, the Beverly Hills Cheval Blanc hotel represented the company's latest venture into luxury hospitality. The plans for the 115-room hotel included space for a 500-member private club, high-end restaurants, and retail shops.

While LVMH will retain ownership of the property and has the option to develop it for other purposes, such as retail or office space, the rejection prevents the company from capitalizing on the growing demand for high-end hospitality experiences in Beverly Hills. Luxury conglomerates like LVMH have been investing heavily in the hospitality sector, which is expected to be one of the fastest-growing areas in luxury in the coming years.

Arnault introduced the first Cheval Blanc hotel in the ski resort of Courchevel in 2006, and the high-end chain has since expanded to include locations from Paris to the Maldives. In 2018, LVMH acquired hospitality group Belmond for $3.2 billion, adding a luxury travel portfolio that ranged from high-end hotels to the Orient Express train service.

Although LVMH's hospitality businesses accounted for a small portion of the group's record €79 billion in revenues last year, the segment has rebounded strongly after experiencing setbacks during the pandemic.