One of South Carolina’s best-known and priciest business-meeting destinations and hotels is changing hands. The company that owns the Belmond Charleston Place, Belmond Ltd., is set to be sold to LVMH Moët Hennessy Louis Vuitton.
LVMH is behind luxury fashion labels like Christian Dior and Louis Vuitton, and it already owns high-end hotels like Bvlgari and the Cheval Blanc that’s in the renowned Courchevel ski resort.
LVMH’s 3.2 billion deal
LVMH is in the process of diversifying its portfolio of luxury brands by expanding its presence in the luxury hotel market. With the Belmond purchase, LVMH’s finance chief says the company will hit a critical mass in the ultra-luxury hotel business with a single acquisition.
Belmond and its French buyer, LVMH, struck the $3.2 billion deal several months after it embarked on a strategic business review.
Roland Hernandez, Belmond’s board chairman, said the process of selling the luxury properties elicited huge and wide interest from sovereign wealth funds, hoteliers, boutique investment firms, and many other interested buyers.
Hernandez also asserted that the winning offer provides certain value to shareholders and a clear and exciting way forward, with a company that values Belmond’s strong management team and exquisite properties.
In its offer, LVMH will pay $25 for every Belmond share. That means Belmond’s equity is valued at 2.6 billion, or a 3.2 billion inclusive of debt. The purchase which was first announced in early December 2018 and it will be finalized by the end of the first half of 2019.
A cornerstone of Charleston’s economy
Belmond Charleston Place stands in King Street in downtown Charleston. Thirty-two years after it was built, the property is still considered a cornerstone of the Charleston peninsula’s economy, in which tourism is the premier industry.
Moreover, Belmond Charleston Place is a key part of the revitalization efforts that reshaped Charleston. It was one of those risky and rare deals that give a lifeline to an entire city.
If you’re a newcomer, you won’t recognize the early 1980s King Street. At that time, shoppers were shifting to the suburbs. An Atlanta magazine painted a glum of the 1979 Downtown Charleston: It’s an epitome of a decaying American city.
It’s at this time when Joe Riley, the then-mayor, attempted to recapture the dwindling foot traffic by executing the recommendations of an old study that pointed to a need for a major hotel at Hasell, Market, Meeting and King Streets.
The hotel then called The Omni was up and running by 1986. Although it was shrouded in controversy at first, the hotel opened a critical commercial lifeline between the heavily toured City market area and the King Street.
Belmond, then called Orient-Express Hotels, came into the picture in 1995 when it invested in The Omni and changed the hotel’s name to Charleston Place. Later, in 2013, it added Belmond.
Future of Luxury
LVMH, the company that’s poised to take over Belmond, already runs two luxury lodging firms and it’s looking to tap into the upper crust of the emerging experiential’ travel phenomena.
Through its Belmont acquisition, LVMH will get its hands on more than 40 prized assets that include the famous Cipriani in Venice, Hotel Splendido in the Italian Riviera, the only hotel in Machu Picchu citadel, Peru, the Copacabana Palace in Rio de Janeiro and Charleston’ biggest hotel.
LVMH’s finance chief Jean-Jacques said his company’s bid for Belmond was informed by their belief that the future of luxury is changing and it won’t be based only on luxury goods as it has been for years, it will also encompass luxury experiences. LVMH wants to tap into both segments.
Chris Hollis who heads LVMH’s investor relations also points out that the benefits of the Belmond acquisition deal include:
- Acquiring legendary and iconic properties around the world
- Owning prime real estate
- Gaining access to a highly refined and globally diverse customer base
- Owning a premium brand that complements Cheval Blanc
- Having an experienced management team with extensive industry knowledge
- The ability to attain a critical mass in the ultra-luxury hospitality industry with a single acquisition
LVMH will retain the Belmond Brand, and it will combine it with its portfolio of luxury brands that include Moët & Chandon and Dom Perignon.