LVMH makes $2.6 billion bet that luxury shoppers will carry on travelling
Luxury giant LVMH has agreed to acquire fast-growing hotelier Belmond. The group, which owns brands such as Christian Dior and Louis Vuitton, is making a multi-billion dollar bet that wealthy consumers will continue their love affair with luxury travel. Belmond is well-placed to deliver that service, and offers its high-class clientele access to “some of the most opulent travel experiences money can buy in settings like the Hotel Cipriani in Venice, the Copacabana Palace in Rio de Janeiro and Orient Express trains connecting to major European cities,” according to the New York Times.
LVMH’s share price has declined by nearly 3% over the last five days as investors fret over a possible downturn in Chinese demand for luxury
Source: Yahoo Finance
Experiences like those offered by Belmond are proving to be a robust trend in the luxury market. And LVMH – the world’s largest luxury company by sales – is looking to capitalise. Increasingly, consumers with the financial means to do so are choosing to spend their money on experiences, rather than the latest handbag. This trend is being driven by millennial consumers, and global spending on luxury experiences is expected to hit $8.2 trillion by 2028, according to market researchers at Euromonitor.
In a statement over the acquisition (which is LVMH’s first in over 18 months), the company’s CEO, Bernard Arnault, said: “Belmond delivers unique experiences to discerning travelers and owns a number of exceptional assets in the most desirable destinations.”
Belmond’s president and CEO, Roeland Vos, added: “We are confident that, as part of LVMH’s world-class family of brands, Belmond’s ability to deliver timeless, one-of-a-kind luxury experiences will reach new levels.”
Thomas Chauvet, head of European luxury goods equity research at Citi, suggested in a note to investors that LVMH might be able to use this acquisition to boost sales of its many branded products. He wrote: “LVMH’s transaction makes sense given the continued growth in high-net-worth individuals globally and an increasing shift towards experiential luxury.”
Dominion holds LVMH in its Global Trends Luxury Fund.
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