Beverly Hills Voters To Decide Whether World’s Richest Person Can Build Hotel

Beverly Hills Voters To Decide Whether World’s Richest Person Can Build Hotel

If Approved, LVMH’s Proposed Cheval Blanc Hotel Would Attract Guests With Rodeo Drive Site, Analyst Says

By Jack Witthaus
CoStar News
May 19, 2023 | 3:49 P.M.

A proposed luxury hotel in affluent Beverly Hills, California, would attempt to lure guests to an area that’s considered underserved for hospitality — as long as residents vote to support the project.

French luxury conglomerate LVMH needs to win a special election on May 23 on whether it can proceed with redeveloping a former Brooks Brothers at 468 N. Rodeo Drive into a 109-room Cheval Blanc hotel. LVMH’s founder, chairman and reported owner of about half the company is Bernard Arnault, who Forbes and Bloomberg have ranked as the world’s richest person.

Beverly Hills is among the strongest hotel markets in Los Angeles and generates some of the highest rates in the city because of its famous shopping, relative lack of hotel competition and tourist attractions, said Alan Reay, president of Irvine-based hospitality brokerage Atlas Hospitality Group. Adding to the hotel’s appeal is its location on Rodeo Drive, one of the world’s most valuable shopping districts. The Hollywood-Beverly Hills hotel market has an average daily rate of $348.82, well above the greater L.A. average of $199.18, according to CoStar data.

“It would phenomenally successful,” Reay said of the proposed Cheval Blanc hotel. “The demand for that product will outstrip the number of rooms it has”

However, it has long been difficult to build new hotels in California as these developments can face issues including lack of land, stiff opposition and onerous approval processes. The muted levels of new hotel inventory, though, generates demand for existing hospitality properties, driving up their value, Reay said.

The vote is a test of whether the city of Beverly Hills, located on L.A.’s Westside, wants more hotel development in the years ahead. At least 216 luxury hotel rooms are in the works in Beverly Hills in a market that features 17 hotel properties, according to CoStar data.

Heated Debate

Supporters say the Cheval Blanc hotel would generate roughly $778 million in tax revenues to the city’s general fund over the next 30 years and bring more business to Rodeo Drive and Beverly Hills. Project champions include the Beverly Hills Chamber of Commerce in addition to the city’s firefighters’ and police associations. Numerous residents and businesses also have voiced their support for the development.

The project went through a two-and-a-half year planning process and won approval from the Beverly Hills planning commission and city council in 2022. Then, labor union Unite Here Local 11 gathered enough signatures to put the hotel development on the ballot. The group opposes the project due to a lack of nearby affordable housing available for workers at the hotel site.

Some residents oppose the project simply because they don’t support new construction. “He’s coming for us: Bernard Arnault, the world’s richest man,” according to a YouTube video opposing the project. Arnault is “bringing noise, construction traffic. All so he can own Beverly Hills.”

LVMH is among the most active property buyers in Beverly Hills. In March, the French luxury company bought the roughly 14,100-square-foot retail property at 357 N. Beverly Drive for $43 million, or about $3,000 per square foot. LVMH also acquired the former 80-room Luxe Hotel at 360 N. Rodeo Drive for an eye-popping $200 million, or about $2.5 million a room, in December 2021.

Representatives for LVMH and Unite Here Local 11 didn’t respond to request to comment from CoStar News.

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