When the conflict in Ukraine erupted in February 2022, the global luxury conglomerate LVMH swiftly closed its Louis Vuitton, Dior, and Bulgari stores across Russia, anticipating the wave of export sanctions on luxury goods imposed by Europe. This decisive move came just days before the formal sanctions took effect, signaling LVMH’s initial commitment to align with international pressure. Furthermore, the company divested its Sephora outlets in Russia at a financial loss, despite the fact that these mass-market cosmetics were not directly targeted by sanctions. Demonstrating a humanitarian stance, LVMH also contributed 5 million euros to aid victims of the unfolding crisis, referring to the situation in Ukraine as “tragic.”
However, amid these closures and divestments, one notable exception remained: the Grand Hotel Europe in St. Petersburg. This iconic establishment, part of LVMH’s Belmond portfolio of luxury hotels and trains, has continued its operations uninterrupted. Legally, the hotel is not subject to sanctions, allowing it to function within Russian jurisdiction. Yet, investigations reveal that the hotel has been receiving payments from corporate clients who are themselves under sanctions by Europe and the UK. These clients include major Russian entities in transport, energy, media, banking, and even military contracting sectors, raising questions about the complexities of business operations amid geopolitical tensions.
In an effort to obscure its association with LVMH, visible signs of Belmond’s ownership have been removed from public spaces and social media. Photographs once showing the Belmond logo at the hotel’s entrance have been replaced by empty spaces. Additionally, the hotel was removed from Belmond’s official booking platform in 2023, as confirmed by archived website snapshots. Despite these public-facing changes, corporate records in Russia, the UK, and France continue to list Belmond—and by extension LVMH—as the owner. filings from 2025, Belmond remains a wholly owned subsidiary of LVMH.
Tax documents reviewed from the period between mid-2022 and early 2025 reveal that the Grand Hotel Europe has accepted payments from several sanctioned companies. These include subsidiaries of Rostec, a major arms manufacturer, Tactical Missiles Corp, Sovcomflot (a shipbuilding firm), energy giant Rosneft, and banks such as Sberbank, Sovcombank, and VTB, all of which face asset freezes or other restrictions. The payments, generally modest amounts consistent with hotel services like accommodation, dining, or event hosting, suggest ongoing commercial relationships despite international sanctions.
LVMH has stated that the Grand Hotel Europe operates independently from Belmond’s global distribution systems and is managed locally by a dedicated Russian team. The company declined to elaborate further on the hotel’s dealings with sanctioned clients. Similarly, Belmond echoed this stance, emphasizing the hotel’s autonomous management. Sources familiar with LVMH’s internal deliberations disclosed that while executives considered shuttering the St. Petersburg property, they ultimately chose to keep it open, citing loyalty to the staff who have been employed there for years. One insider remarked, “These are people who work for us, that we have been paying for years. Shall we punish them because their country is being run by a fool?”
The Grand Hotel Europe, located prominently on Nevsky Prospekt since 1875, boasts a rich history of hosting distinguished guests such as Britain’s Prince Charles and renowned musicians like Elton John and Whitney Houston. Its legacy dates back even further, with composer Pyotr Tchaikovsky counted among its earliest visitors. The hotel is famed for its luxurious amenities, including personalized butler service and a renowned caviar bar featuring delicacies like the signature “Egg in Egg” dish—a boiled truffle-infused egg served with three varieties of caviar. Beyond hospitality, the hotel has played a role in Russia’s political and economic landscape, hosting high-profile events including diplomatic meetings between U.S. and Russian envoys during the Ukraine conflict and lavish celebrations attended by banking executives and government officials.
Experts in Russian business suggest that the hotel’s continued operation reflects LVMH’s strategic patience. Artem Zhavoronkov, a partner at the St. Petersburg law firm Nordic Star, specializing in sanctions law, believes the conglomerate is banking on a future improvement in the geopolitical climate. “It’s a valuable asset, profitable and located in prime real estate that is likely to appreciate over time,” he noted. Kristian Lasslett, a professor at Ulster University who studies corporate conduct in Russia and Central Asia, added that maintaining a foothold in Russia often depends on personal relationships and political favor, hinting at long-term ambitions for re-entry into the Russian market.
Other factors may also influence LVMH’s decision to retain the hotel. Russian regulations require foreign companies to sell assets at significant discounts if they exit the market, complicating divestment. Moreover, the city of St. Petersburg holds a 6.5% stake in the historic Art Nouveau building housing the hotel, which could further restrict sale options. Attempts to clarify whether the city’s involvement affects ownership or sale permissions have gone unanswered by local authorities.
Unlike Belmond, most Western hotel chains such as Marriott, Four Seasons, and InterContinental have severed ties with Russia, often facilitated by third-party investors that allowed swift withdrawal. Some chains, including Hilton, have paused new investments but continue to operate. Legal experts in Paris, London, and Moscow, as well as EU officials, agree that the hotel’s services—primarily accommodation and catering—do not fall under current sanctions, which focus on goods and financial transactions rather than hospitality services. Regis Bismuth, a law professor at Sciences Po University, emphasized that the hotel is a Russian-registered entity providing local services, thus not directly restricted by international sanctions.
Despite the legal nuances, the hotel’s financial ties to sanctioned companies remain a contentious issue. Value-added tax records show payments from entities under sanctions, including arms manufacturers and state-controlled banks. The hotel’s pricing ranges from approximately $270 for standard rooms to nearly $8,000 per night for premium suites, with many transactions aligning with major events like the St. Petersburg International Economic Forum, an annual gathering chaired by President Vladimir Putin. Notably, Sovcombank, a sanctioned lender, paid around $140,000, while Prezident-Servis, a Kremlin-owned travel agency, made payments exceeding $270,000. These transactions coincide with the forum’s 2023 and 2024 editions, underscoring the hotel’s role as a hub for Russia’s political and business elite.
Requests for comment from the implicated companies largely went unanswered, with VTB disputing the accuracy of the information without providing details. The European Commission reiterated that while sanctions do not apply extraterritorially, parent companies must ensure their subsidiaries do not circumvent EU obligations. The Kremlin, when questioned about the hotel, distanced itself from the hospitality sector, stating it is not involved in such businesses.
