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LVMH Shut Its Russian Boutiques, But Keeps 5-Star Hotel Open for Sanctioned Elites
Despite shuttering its other Russian businesses amid international sanctions, Bernard Arnault’s luxury conglomerate LVMH—owner of Louis Vuitton, Dior, and Bulgari—has kept its Grand Hotel Europe operational in St. Petersburg, Reuters reported on February 27.
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The discrepancy of LVMH has raised questions about the company’s adherence to sanctions, particularly given the hotel’s continued business dealings with sanctioned Russian entities.
The Grand Hotel Europe, owned by LVMH’s Belmond chain, has remained active, providing services to corporate clients, including major Russian state-owned companies such as arms manufacturer Rostec, energy giant Rosneft, and several sanctioned banks like Sberbank and Sovcombank.
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These clients, who have been under European Union and UK sanctions, paid the hotel for services, despite the overarching sanctions on Russia, Reuters wrote.
While the hotel remains legally compliant as it provides regular services such as accommodation and catering, which are not yet subject to international sanctions, its links to sanctioned entities have drawn scrutiny.
LVMH has claimed that the hotel operates independently from Belmond, and that it is not part of the Belmond distribution system.
However, corporate records still link Belmond to the hotel, with the business continuing to make substantial profits, as seen in its financial filings for 2024, reviewed by Reuters.
The hotel’s location on St. Petersburg’s Nevsky Prospekt, and its storied history, have kept it valuable to both local elites and international business figures, with annual revenues nearly doubling since the full-scale Russian invasion of Ukraine began.
Despite LVMH’s decision to maintain the hotel, many Western hotel chains have ceased operations in Russia, while others have scaled back their presence.
Earlier, the US Treasury Department had issued a threat to MBaer Merchant Bank AG, a Swiss financial institution, accusing it of facilitating illicit activities tied to Iran, Russia, and Venezuela.
The US government alleged that the bank played a role in money laundering, terrorist financing, and corruption, particularly involving Iran’s Islamic Revolutionary Guard Corps (IRGC) and its Quds Force, both of which are under US sanctions.
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