LVMH and Cheval Blanc...Welcome to the new world of luxury wines' brand extension

(Find some more news on www.vitabella.fr). LVMH, the luxury goods company, recently announced they would enter the five-star hotel management business, initially through a partnership with Egypt's Orascom Development Holdings, to build two resorts in the Middle East. These first two hotels are scheduled to open in 2012 in Egypt and Oman. The hotels will be branded Cheval Blanc, after the Michelin-starred resort based in Courchevel opened in 2006 by Group Arnault. The hotels will also showcase some of LVMH's other brands - the Cheval Blanc resort already has Louis Vuitton and Dior shopping outlets as well as a Givenchy spa.
Even if a number of fashion and luxury brands have already diversified into hotels (Armani, Bulgari, Versace...), this is the first time the name of a luxury wine is put upfront as a hotel brand. In fact, LVMH is showing to the major actors in the luxury wine business that brand extension has to be integrated to the full strategy of a major estate. And as LVMH explained, it is a "natural extension of activities in luxury hospitality". For sure, not all estates will be able to enter the luxury hotel business. But as LVMH is doing, estates should consider, at first, opportunities which will commit no capital expenditures and have no management risk. In fact, there are plenty of opportunities and we will discover them over the next few years. But Luxury wine estates should get prepared now if they want to be successful in this brand extension strategy.(Find some more news on www.vitabella.fr).