PARIS: Shuttling across the French and Italian Riviera, Orient Express’ first giant yacht aims to attract a new class of billionaires.
Orient Express, now a joint venture between French hotelier Accor and Louis Vuitton owner LVMH, set out to revive the 19th century travel brand.
Its recently launched yacht is the first of two that will target the ultra-rich, adding to a portfolio of luxury hotels and a yet-to-launch historic art deco train.
Accor, the operational leader of Orient Express, expects a new pool of billionaires produced by the artificial intelligence boom will help the venture accelerate its push into luxury experiences, Accor’s chief executive Sebastien Bazin told Reuters.
“When you are getting rich, very rich, money hasn’t got the same meaning,” Bazin said.
He noted: “The only thing that has a meaning is recognition. Have you become someone?”
Spending on high-end experiences is set to grow by 9% to 11% this year, far outpacing the 1% to 4% growth forecast for personal luxury goods, a Bain study published last Thursday showed.
The trend is boosted by a tech boom in the United States and elsewhere, leading to a larger number of so-called ultra-high net worth individuals using private jets, yachts and increasingly flocking to mega-events like Formula One racing.
“When people are very rich and they have seven homes, and 12 cars, and 17 watches...they still have a bucket list of things they promised themselves to do before dying. It’s not to have an 18th watch,” Bazin pointed out in an interview with Reuters last week.
Bazin confirmed that Accor and luxury giant LVMH have reciprocal options to buy each other out in the coming years, providing the clearest insight yet into a partnership aimed at capturing the booming market for experiences as the luxury goods industry grapples with weak growth for products like handbags, fashions and watches.
Neither LVMH, nor Accor have so far disclosed the unit’s operating profit or enterprise value.
Orient Express’ high-end assets are estimated to be worth approximately €1bil (US$1.07bil).
Should either side decide to exercise the buyout option, an acquisition by LVMH appears more likely.
Accor is under pressure from shareholders to ramp up returns as its traditional business with hotel chains like Ibis and Novotel has been flat for years.
For LVMH, a sprawling luxury behemoth with over 10 times Accor’s sales and a huge war chest for acquisitions, the venture could become a key pillar as consumer trends shift.
Orient Express’ first giant yacht has so far been banking on mega-events like the Cannes film festival and Formula One race in Monaco as a playing field for its clients to signal social status.
“If you’ve been to a Monaco Formula One, if you want to go around, you need badges everywhere. Certain people would have certain badges,” said Estelle Dinh, a professor at Switzerland-based hospitality school Gilon and industry adviser.
For a four-day cruise, suites on deck start at approximately €25,000.
The vessel heavily features LVMH brands, from a Guerlain beauty salon to bottles of Hennessy cognac prominently displayed in its priciest penthouse suites. — Reuters
