Featured image credit: Peter Marino
If you think Beverly Hills needs a luxury hotel, you’re in good company. The world’s richest man, Bernard Arnault agrees with you. The problem for Arnault is that the two of you seem to be in the minority. On Tuesday, Beverly Hills voters turned out to stymie the City Council’s efforts to bring Arnault’s ultra decadent Cheval Blanc hotel to fruition. Voters are hailing it as a win for affordable housing. But the city of Beverly Hills sees it as a lost opportunity that cost the community approximately $778 million in lost tax revenue. It also likely points to a bleak time for investment in luxury hotels in Beverly Hills along with any future developments in the hospitality industry.
The Luxury Hotel of Luxury Hotels in Beverly Hills
Beverly Hills already boasts seven hotels that would fit firmly into the luxury hotel category. But French multibillionaire Arnault wanted his Cheval Blanc to be the luxury hotel to end all luxury hotels. And, judging by his past endeavors, that’s not an idle intention.
Arnault’s forays into luxury hospitality have been executed under his conglomerate, LVMH Moët Hennessy Louis Vuitton. The Chevault Blanc would have been the sixth hotel under the LVMH imprint. It’s a small chain that elevates luxury to decadence judging by previous efforts.
For example, the Cheval Blanc Courchevel in the French Alps offers a ski-in/ski-out resort supported by a three-Michelin-star-rated restaurant and plenty of contemporary comforts. In the Caribbean, the Cheval Blanc St-Barth Isle de France is constantly imbued with its own custom luxury fragrance.
In its commitment to bring the luxury hotel of luxury hotels to Beverly Hills, LVMH presented a plan too decadent to fit into local zoning restrictions. The penthouse, making up a partial ninth story to the Cheval Blanc, would have been taller than any preceding Beverly Hills hotel. Nine stories may not sound lavish, but it was an indicator of the special treatment extended to LVMH. And, as Tuesday’s vote indicated, this didn’t sit well with Beverly Hills voters.
The Battle at the Ballot Box
Tuesday’s ballot posed two questions to Beverly Hills voters:
- Do you approve of the zoning amendment allowing for the Cheval Blanc’s construction?
- Do you approve of the Cheval Blanc’s development agreement with the city of Beverly Hills?
Only one of these measures needed to fail in order to halt the forward momentum of the ambitious and controversial project. While the results likely won’t be certified until Friday, LVMH was behind by at least 120 votes at the time of this blog’s publication.
Unite Here Local 11’s Affordable Housing Mission
The most vocal opponents of the Beverly Hills Cheval Blanc is the labor union Unite Here Local 11. A potent political labor union outside of Beverly Hills, Local 11 are renowned for representing Southern California’s and Arizona’s hospitality workforce. When Beverly Hills City Council approved development of the luxury hotel, Local 11 began soliciting signatures to force a public vote on the project. However, prior to Tuesday’s vote, it was unclear whether the union’s sway would have much impact in the predominantly wealthy community.
Local 11 have made it clear that their primary issue with the Cheval Blanc project is its lack of consideration for affordable housing. During LVMH’s financial proposal to the city council, no funds were earmarked for affordable housing initiatives.
The Lack of Affordable Housing in Beverly Hills
How bleak is Beverly Hills’ affordable housing inventory? With just under 32,000 residents in the city’s approximately six square miles, Beverly Hills has only 157 dedicated affordable housing units. And 150 of those are part of a single senior care facility.
With over 1,000 hospitality workers represented by Local 11, very few have the means to live in the city limits. While Beverly Hills City Council has cited that 50 more affordable housing units are in development, Local 11 saw too little of a concession contrasted against the abundance of luxury hotels in Beverly Hills.
Luxury Hotels in Beverly Hills Bring Tax Dollars
But most of the members of Beverly Hills City Council view Local 11 as a group that undermined the potential for hundreds of millions in tax dollars. When the city approved the development of the Cheval Blanc, it came with the stipulation that LVMH would cough up $26 million for the city’s general fund and $2 million for arts and cultural initiatives. In addition, Beverly Hills could look forward to a 5% surcharge on top of its usual 14% transient occupancy tax. Estimates gauged that, over three decades, the Cheval Blanc would have contributed approximately $725 million to the city.
However, the city council’s decision to approve LVMH’s venture wasn’t unanimous. Lone dissenter John Mirisch, a veteran of the entertainment industry, believed the deal was heavily tipped in LVMH’s favor. “We’re effectively doubling the value of their land,” he explained recently to the Los Angeles Times. “And the city negotiated, from my perspective, a measly $28 million.”
Inhospitable Conditions for Hospitality Investment
A representative of LVMH has made it clear that they have no plans to pursue the Beverly Hills Cheval Blanc beyond this point. Prior to the vote, the company had spent two and a half years developing the project. The shake up at the ballot box indicates a tough future for hospitality ventures in Beverly Hills.
With Local 11 showing that their power extends well enough into Beverly Hills to sway a vote, any hospitality initiatives will need to address the affordable housing problem. It’s a steep addition to any proposal. Thankfully, there are already seven luxury hotels in Beverly Hills from which to choose.