Photo: Flick/∃Scape

The world’s largest luxury goods producer, LVMH (Louis Vuitton Moët Hennessy) has bought a five-star hotel in the Caribbean and has apparent plans for other top hospitality locations. Next to the recently bought Hotel Saint-Barth Isle de France on the French Caribbean island of Saint Barthélemy, LVMH has also acquired the Cova café in Milan, located next to Prada’s store on the grand Montenapoleone.

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The group’s Cheval Blanc hotel division is converting the iconic Parisian department store La Samaritaine into a five-star hotel with spa and hanging gardens. The company is also expanding in the Middle East, where plans are targeted towards luxury hotels at Amoun in Egypt and al-Sodah in Oman.

This brings up some questions as to whether hospitality is a new way for LVMH to attract and satisfy their customers. According to analyst Jane Kellock, LVMH’s strategy is about adding experiences for its wealthy customers, in order to “offer something truly unique and memorable”.

LMVH Isle De France hotel. Image: Isle De France

“It’s a move to keep relevant with consumers whose appetite for luxury and definition of luxury is constantly changing,” said Laura Ford from Futurebrand about the aim of LVMH’s chairman; “to own the whole spectrum, to have a 360-degree view on what the customer is doing, what they are buying, what they are eating, where they are staying.” Ermenegildo Zegna, CEO of this Italian luxury fashion house added: “Being innovative along the desires and the interests of these well-off, whom we don’t want to get bored, is the name of the game.”

This implies that luxury brands are using indirect tools to keep up with changing tastes of customers in order to follow and adopt new definitions of luxury into their core business. At the same time, examples from the past, such as Pierre Cardin show that brands must be cautious when it comes to increasing exposure towards wider range of products and services. In the case of Pierre Cardin the brand was damaged due to its overexposure. To avoid this, risk mitigation can be done by only adding brands that stand out in specific businesses, according to Armando Branchini, Founder of the Italian consultancy Intercorporate.

Are you also curious to see whether other luxury brands will follow the same expansion pattern?