Société du Louvre History

Address:

58, Boulevard Gouvion-Saint-Cyr
75017 Paris
France

Telephone: (33) 1.40.68.53.50
Fax: 1.40.68.53.45

Public Subsidiary of Taittinger S.A.
Incorporated: 1855 as Fabre-Cauchard-Henriot et Cie
Employees: 5,956
Sales: FFr 3.72 billion (US$600 million) (1997)
Stock Exchanges: Paris
Ticker Symbol: Louvre
SICs: Holding Companies

Company History:

Société du Louvre does not run that Paris museum, but its properties are almost as distinguished. Société du Louvre is a holding company that oversees active and investment control of subsidiary companies in three primary categories: hotels, luxury goods, and light industry. Governed by the Taittinger family since the 1950s, Société du Louvre is also a subsidiary of the Taittinger champagne company. Directly or indirectly, the Taittinger family controls more than 40 percent of Société du Louvre's stock and more than 60 percent of the company's voting rights. Anne-Claire Taittinger Bonnemaison was named company president in 1997, taking over from her father, Jean Taittinger. If the Taittinger name has become inextricably linked with Société du Louvre, that is also because of the family's active participation in the company's day to day operations: many of the company's top positions are held by Taittinger family members and close associates. In the 1990s the company, under pressure from minority shareholders, has taken steps to limit this family involvement, however.

Hotels represent Société du Louvre's principal activity, with nearly 70 percent of the company's total revenues in 1997. The company's hotel holdings are operated under two separate subsidiaries. The first and flagship subsidiary is the Concorde Hotels group. Representing some of the world's most distinguished hotels, including the famed Hotel Crillon in Paris, the Martinez in Cannes, Concorde Hotels represents more than 70 hotels worldwide and specializes in the luxury hotel category.

While luxury hotels have long formed a centerpiece of the Société du Louvre portfolio, the company has built a strong European position in the mid-class and budget accommodations categories through subsidiary Envergure. This subsidiary represents Europe's second largest hotel group (behind leader Accor), with more than 625 hotels and restaurants representing more than 38,000 rooms. Envergure hotels and restaurants are grouped under five different brands: Campanile, with more than 360 two-star hotel-restaurants; the three-star chain of Blue Marine hotels and restaurants; the single-star Premier Classe chain; Clarine, consisting of more than 35 hotels, primarily located in city centers; and the Côte à Côte chain of restaurants, founded in 1996.

In addition to its hotel holdings, Société du Louvre has claimed a strong position in the world's luxury goods markets through its Annick Goutal perfume subsidiary and especially through its majority control of famed crystal maker Baccarat, founded in 1764. Contrasting these holdings is Société du Louvre's light industry subsidiaries, particularly Deville, founded in 1846, a leading maker of heating and cooking products, which had formed part of the group since 1979.

In the late 1990s, Société du Louvre has been under attack by various investors, including François Pinault and Asher Edelman, who have made no secret of their separate ambitions to seize control of the company. An attempt by Edelman, who built a shareholding position of more than 10 percent by August 1998 once again placed the reserved Taittingers in the spotlight. The willingness of some family members to convert their stock to cash has led some observers to believe that one day such attempts might succeed. For the moment, however, the Taittinger family's control--spread across more than 100 family members--remains firm.

Luxuriating Since the 1850s

With roots extending to the mid-19th century, Société du Louvre's name would epitomize luxury in the 20th century. Founded in 1855 as the limited partnership Fabre-Cauchard-Henriot et Cie, the group's initial vocation was in the retail sphere. The partnership operated its own stores for more than 100 years, before abandoning its distribution activities in the 1970s. By then, the company had built up an impressive portfolio of hotels. Its name would change to Société du Louvre by 1898, reflecting at once the company's ownership of the Hotel du Louvre and its base in Paris.

During the 20th century, Société du Louvre continued to build its portfolio of properties, located not only in Paris but throughout France, gaining the company an impressive list of Parisian properties, as well as a number of the world's most prestigious names in luxury accommodations. Its presence in the real estate industry led Société du Louvre to extend its financial activities into the investment community, with the creation of the Banque du Louvre, specializing in brokering and other investment and investment management activities.

By the mid-1950s, the Taittinger family--already proprietors of one of the world's leading champagne labels--had built a leading shareholding position in Société du Louvre, to the extent that the group quickly became synonymous with the Taittinger name and subsidiary of the Taittinger family business. The first of the Taittinger clan to arrive at the helm of Société du Louvre was Pierre Taittinger, who took over the company's management in 1955. The elder Taittinger--the first of three generations of the Taittinger family to lead the group in the 20th century--soon placed the group more firmly within the family's ownership, buying up shares in Société du Louvre and succeeding in placing the group's important real estate holding, including hotels and a number of France's largest and most prominent department stores, under direct control of the Taittinger champagne empire.

Hotel Expansion in the 1970s

Pierre Taittinger ceded Société du Louvre's leadership to son Guy Taittinger by the 1960s. The first generation of Taittingers had consolidated the group's position as a holder of prime Parisian and French department store, hotel, and other real estate properties, including such landmarks as the Hotel Crillon, widely considered among the world's most beautiful hotels, the Hotel Lutetia, the company's namesake hotel, and Hotel du Louvre, overlooking the museum and other grand hotels. The second generation of Taittingers led the way to establishing Société du Louvre as a European leader in hotel accommodations.

Guy Taittinger began building the company by dismantling a number of its investments, shedding significant parts of the company's real-estate holdings, including many of its department stores. In turn, the company began expanding its hotel purchases, as well as building the hotel extension to the Palais des Congrès, one of Europe's largest convention centers. The Hotel Concorde-Lafayette, a towering structure located on the Parisian rim and featuring 1,000 rooms, crowned Guy Taittinger's achievements in 1974. By then, Société du Louvre had moved more firmly in the direction of hotel ownership and management: in 1970, the group created the Concorde hotel insignia to group its growing list of luxury hotels, whether company-owned or managed under contract. With its attention fixed on the hotel trade, Société du Louvre jettisoned its department store activities in 1973.

While Société du Louvre's initial focus had been on the luxury hotel category, it soon saw the chance to expand into new accommodation categories. In 1974, the group purchased a position in a small chain of budget hotels operated by the Société Fran&ccedilse de Promotion et Développement Hôtelier. The chain, renamed Campanile in 1976, became the spearhead to the development of Société du Louvre as one of Europe's leading hotel groups. The period also marked a transition in the group's leadership, as Jean Taittinger became president at his brother Guy Taittinger's death.

Jean Taittinger not only diversified the company's hotel holdings, he also diversified its activities. In 1979, Société du Louvre moved beyond the accommodation categories with the acquisition of Compagnie Financière Deville. Created as a foundry in 1846, Deville took on its specialty by the 1880s, that of heating equipment, especially coal- and wood-burning furnaces. In the 1950s, Deville extended its product range to the production of oil-burning stoves and ovens, quickly becoming the French leader in this category. Deville's high-end kitchen equipment was supplemented in the 1970s with a line of coal-burning stoves, as well as a range of electric appliances targeted at the high-end kitchen.

While the Deville acquisition brought the company into light industry, Société du Louvre was also extending its hotel holdings, particularly with the gradual acquisition of the Hotel Martinez, long a Cannes landmark, by 1982, and the purchase of the Hotel Ambassador in 1989.

Hotel and Luxury Leader in the 1990s

Société du Louvre had also begun to seek further diversification, with a focus on the luxury goods category. In 1985, the group formed a partnership with perfumer Annick Goutal. Launched in 1981 by the designer, Annick Goutal perfumes quickly found success among consumers in the high-end perfume segment, especially in the United States. As Annick Goutal moved into retail operations, opening its first Paris boutique, the perfumer caught the interest of Jean Taittinger. In 1985, Société du Louvre entered Annick Goutal as a 50 percent partnership; in 1988 the group took full control of Annick Goutal--leading to its founder's departure--and the perfumer's four Paris boutiques.

Société du Louvre's next move confirmed its taste for luxury: in 1988 the company acquired 12 percent of the famed Cristalleries Baccarat. Founded in 1764, Baccarat had established itself as one of the world's great designers of crystal ware by the mid-19th century. Baccarat designs graced the palaces of much of European royalty, before becoming a favorite among the rising numbers of wealthy Americans. By the 20th century, the company's name had reached legendary status. Baccarat went public in 1978; the company's fortunes soared during the economic boom of the 1980s. Eager to expand its name into new markets, particularly the rapidly developing economies in the Asia Pacific region, Baccarat received expansion capital with the Société du Louvre into its shareholding structure. Société du Louvre continued to advance its position, building its share of Baccarat's stock to 25 percent in 1990, then 47 percent in 1992, before reaching majority control of 51.7 percent in the late 1990s--even as Baccarat's growth was slowed by the extended economic recession of the early 1990s, and the later collapse of much of the Asian economies in the late 1990s.

Annick Goutal's fortunes also slumped in the early 1990s. Caught by the gloomy economic climate, and seemingly lost without the guidance of its founder, Annick Goutal began losing money in the 1990s. However, an agreement reached between Société du Louvre and Annick Goutal returned the designer to the perfumer's creative lead. The perfume design and retail company returned to profitability by the late 1990s.

The hotel world also underwent a crisis in the early 1990s. The combination of overbuilding and the collapse of the worldwide economy at the start of the decade, coupled with travelers' fears arising from the Persian Gulf War, saw occupancy rates plunge. Yet Société du Louvre, which by then had created the subsidiary Envergure Group to guide its non-luxury hotel activities, chose this period to accelerate its growth in the hotel accommodations market.

Between 1992 and 1998, Société du Louvre more than tripled the number of hotel beds under its control. This was accomplished not only by the rapid expansion of its Campanile chain--which had opened to franchising after a long period of reluctance by the Société du Louvre--but also by the strong growth seen in several newly created Envergure labels. Designed to span the range of price categories, Envergure's insignias grew to include the three-star hotel chain Blue Marine, the budget accommodation chain Première Classe, and the chain of two-star Clarine hotels, launched in 1995. Société du Louvre also reinforced its restaurant holdings, launching the Côte à Côte concept of grill restaurants. The company's commitment to hotels and restaurants as its primary source of growth could be seen as well in its sale of its position in the Bank du Louvre to CCP in 1997.

By the middle of the decade, Société du Louvre had grown to become Europe's second largest hotel group, after the giant Accor. The company remained far behind such world leaders as Choice Hotels, however. In addition, the 1990s saw the company's independence threatened. With the difficult economic climate, the company struggled to maintain the all-important occupancy rates. The company's stock price, too, softened--and Société du Louvre quickly became attractive to a number of outside investors eager to add the company's collection of prestigious names to their own portfolios. Perhaps the most tenacious suitor was the American Asher Edelman, who succeeded in building up a position of 11 percent in the company's stock by the end of 1997, and who formally announced his interest in acquiring majority control of Société du Louvre's shares.

These shares, however, remained under the Taittinger family's control, bound by a family pact not to sell shares to outsiders. Yet, with the company paying reduced share benefits, many of the Taittinger family's more than 100 shareholding heirs were finding themselves hard-pressed to pay the hefty estate taxes demanded by the French government. While principal decision-making remained among the majority shareholders in the Taittinger family, represented especially by the Jean Taittinger branch, the company was still forced to tread lightly, particularly as the group's non-family shareholders (including members of the Peugeot group) had begun to demand a clearing out of Taittinger family members from the leadership of many of the group's subsidiaries and operations. Nonetheless, the company was able to rebuff Edelman's several attempts to buy control through 1998.

In 1997, Jean Taittinger retired from the lead of Société du Louvre. His daughter, Anne-Claire Taittinger Bonnemaison was named in his stead as company president. The member of the new Taittinger generation at Société du Louvre's helm had spent nearly 20 years in the company's management, including taking leadership of Baccarat in 1994 and returning that company to revenue growth and profitability for the second half of the decade. Despite continued concerns about the safety of the Taittinger's shareholding position, Anne-Claire Taittinger inherited control of a company set for still greater expansion, particularly through the growth and franchising of the units of its Envergure subsidiary. The return to economic growth--and the upswing in the hotel industry--spelled an optimistic future for the Société du Louvre.

Principal Subsidiaries: International Concorde Hotel Company; Groupe Envergure; Groupe Baccarat; Groupe Deville; Annick Goutal; Louvre Corporation.

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