Union Played Role in Cheval Blanc’s Demise

Union Played Role in Cheval Blanc’s Demise
A rendering of the Cheval Blanc hotel project.

Two primary undercurrents seem to have motivated Beverly Hills voters to reject a luxury hotel development in their city a couple of weeks ago.

On one hand, you had the typical overdevelopment argument — it was too massive with too little parking, one group said, creating the potential for traffic gridlock in the area. On the other, tenants and workers cast aspersions at the city for seemingly clearing the way for the Cheval Blanc’s development, while the prospects of new or affordable housing in the city remained unclear. 

At the end of the day, it was enough to overcome the nearly $3 million spent by LVMH Moet Hennessy Louis Vuitton to get its project approved.

“I felt it was a bad deal for the city,” said John Mirisch, the lone Beverly Hills City Council member to oppose the hotel. “I felt it was a great deal for LVMH and a bad deal for us.”

Union opposition

The project, which called for 115 hotel rooms in a nine-story building with starting rates at around $2,000 per night, had seemingly made it through all of the usual city channels of approval last year. After being proposed in 2020, environmental review was completed. The city’s planning commission approved it, and the council passed it on a 4-1 vote.

And then the hospitality union — UNITE HERE Local 11 — got involved, successfully placing ultimate approval of the hotel onto a referendum for a citywide vote. By a margin of just 80 votes, the union’s supporters prevailed with 50.5 percent of the vote in the May 23 contest.

“I think despite the outrageous amount of money spent by LVMH, that the residents saw through the propaganda,” Mirisch observed. “I think many felt we were being hustled. In most cases, the side that spends that amount of money wins easily, and I think our residents saw through it.”

Another local group, Residents Against Overdevelopment, joined forces to seemingly pool together resentment to the hotel proposal. In addition to the worries about scale and traffic, its members aired concerns on its website about the effect the project would have on local infrastructure and promoted fliers being distributed by the hospitality union — which included endorsements from Mirisch and former councilman Dr. Charles Aronberg.

On the notion that it seemed odd that the famously ritzy Beverly Hills would reject a luxury hotel — along Rodeo Drive, no less — Mirisch suggested residents were cognizant of preserving the city as a community rather than succumbing to the brand.

“Having grown up here, let’s remember that Beverly Hills isn’t just 90210,” he said, referencing the signature ZIP code of its wealthiest residents. “What people don’t know is that over 50% of our residents are renters. Were a much more diverse community than people think.”

Indeed, the Beverly Hills Renters Alliance joined forces to amplify the hospitality union’s referendum petition. And while the petition made no mention of labor issues — instead criticizing the project for being in a mixed-use zone, decrying the lack of affordable housing and speculating about increased traffic — Cheval Blanc also would not have been a union hotel.

Luxury lost

With a nearly 50-50 split, clearly many active voters in Beverly Hills also saw the project positively.

“From a Chamber side, we’re very disappointed because we felt that this project — which was going to be the only Cheval Blanc, a six-star hotel, in North America — would have really earmarked Rodeo Drive,” said Todd Johnson, president of the Beverly Hills Chamber of Commerce. “We feel it would have raised the bar for the whole city, not just economically but the nuance of true luxury, because the hotel is that. It’s just unfortunate that it made it through planning and the council and was approved but obviously got taken out with the vote.”

Had the project been approved, LVMH’s agreement with the city would have had the conglomerate pay $26 million to the city’s general fund and $2 million to arts and cultural programming up front. Additionally, on top of the established 14% transient occupancy tax, LVMH said it would add an additional 5% to that sum.

Outside of that, the hotel was seen as bringing added tourism revenue to Beverly Hills businesses, although Mirisch pointed out the city’s economic impact study did not consider potential cannibalization of other local hotels’ customers.

Johnson was also suspicious of the hotel’s impact on local traffic, given that it was a boutique hotel slated for barely more than 100 rooms and “not like the Beverly Wilshire, opening up with 500 rooms.”

“We had worked with them for a number of years. I was made aware of this project right before Covid and we were truly excited,” he added. “But, nevertheless, the community has spoken, and I certainly respect that. We’ll continue to move forward, and I think us, as a city, have to be continually looking for new business opportunities to come to our city without disrupting it.”

Now what?

Given that LVMH already owns the parcels upon which it would have built the Cheval Blanc, it’s unclear what’ll come next for that neighborhood, which presently hosts retail space. The group — owned by the world’s richest person, Bernard Arnault — has publicly indicated it won’t come back and try again. But Mirisch said he wouldn’t close the door on a hotel eventually coming there, albeit in curbed scale.

“The door would be open for me if they were interested in a better project, but if they’re not, so be it,” he said.

Meanwhile, Mirisch echoed his electoral allies’ concerns about the lack of attention paid to affordable housing. Regarding LVMH’s agreement with the city, he added he would like to have extracted more than $28 million up front from the conglomerate and would have wanted dedicated funding for housing construction.

“We need to build affordable housing in the city,” he said. “That would have been a way to ensure that the wealthiest people in the world would finance something for those who aren’t.”

Johnson speculated LVMH would either further develop the retail offerings on the properties or simply offload them. Given the density of Beverly Hills and the general Los Angeles sprawl, he did think that concerns about building height will eventually have to cede ground here.

“There’s virtually no open space in Beverly Hills, and I do think someday we’ll see growth vertically, probably along Wilshire Boulevard where the train stations are coming,” he said. “I think there’s some opportunity for the southeast corner of our city to developed. We’ll certainly do our part to work with the city to bring as many world-class businesses to our city as we can.”

History lesson

As it happens, this isn’t the first hotel proposal defeated by Beverly Hills voters.

In 1984, voters rejected a referendum to modify city zoning codes that would have allowed Four Seasons to develop a new hotel. That opposition effort was largely spearheaded by Hernando Courtright, owner of the Beverly Wilshire Hotel — located just across the street from the development site — at the time.

Both parties spent around $60,000 on their efforts during the election, while the Four Seasons group had sunk around $1.25 million into developing the project, according to the Los Angeles Times.

In the end, Four Seasons built a hotel nearby within Los Angeles city limits. And in the postscript, Four Seasons would ultimately acquire the Beverly Wilshire.

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