When the conflict in Ukraine erupted in February 2022, the global luxury conglomerate LVMH swiftly shut down its high-end boutiques in Russia, including Louis Vuitton, Dior, and Bulgari, just days before Europe implemented stringent export sanctions targeting luxury goods. This decisive move was part of a broader corporate response to the geopolitical crisis, reflecting the growing pressure on multinational companies to distance themselves from Russia. Additionally, LVMH divested its Sephora stores in the country, despite these outlets selling mass-market products not directly affected by sanctions, incurring financial losses in the process. Demonstrating a humanitarian stance, the group also contributed 5 million euros to aid victims of the ongoing conflict, underscoring its public commitment to supporting those impacted by the war.
However, amid these closures and divestments, one notable exception remains: the Grand Hotel Europe in St. Petersburg. This iconic establishment, owned through LVMH’s Belmond luxury hotel and train division, has continued to operate uninterrupted. The hotel itself is not subject to international sanctions and functions legally within Russia. Yet, investigations reveal that it has maintained financial relationships with several corporate clients who are under sanctions imposed by Europe and the United Kingdom. These clients include major Russian entities in sectors such as transportation, energy, media, banking, and military contracting. This ongoing business activity raises complex questions about the intersection of legal compliance and ethical considerations in a highly charged geopolitical environment.
In an effort to obscure its connection to LVMH, the hotel has removed visible signs of its Belmond ownership. Photographs circulating on social media show that the Belmond logo, once prominently displayed at the hotel’s entrance, has been taken down. Furthermore, the Grand Hotel Europe was removed from Belmond’s official booking platform in 2023, although corporate records in Russia, the UK, and France continue to list Belmond as the owner. It is important to note that Belmond is fully owned by LVMH, as confirmed in the conglomerate’s 2025 financial statements. Value-added tax documents reviewed reveal that the hotel has received payments from sanctioned companies, shedding light on the financial interactions that persist despite the broader sanctions regime.
When questioned about the hotel’s ongoing operations and its dealings with sanctioned clients, LVMH stated that the Grand Hotel Europe functions independently from Belmond, with a dedicated local management team overseeing the property. The company emphasized that the hotel is not integrated into Belmond’s distribution systems and declined to provide further details. Belmond echoed this response. Sources familiar with LVMH’s internal discussions disclosed that there was serious consideration given to closing the St. Petersburg hotel, but the decision was ultimately made to keep it open. One insider remarked on the human element involved, highlighting that many employees have been with the company for years and suggesting that penalizing them for the actions of their government would be unjust.
Located on the historic Nevsky Prospekt since 1875, the Grand Hotel Europe has a rich legacy of hosting illustrious guests, including Britain’s Prince Charles and renowned musicians like Elton John and Whitney Houston. Its early guests included the famous Russian composer Pyotr Tchaikovsky. The hotel is renowned for its luxurious amenities, such as personalized butler service and a celebrated caviar bar featuring delicacies like the “Egg in Egg,” a dish combining boiled truffle-infused eggs with multiple varieties of caviar. Beyond hospitality, the hotel has served as a venue for significant political and economic gatherings, including a high-profile meeting between U.S. and Russian diplomatic envoys during the Ukraine conflict and its own 150th-anniversary gala attended by influential figures from the banking sector, cultural institutions, and local government.
For more than ten years, the Grand Hotel Europe has been an official partner of the St. Petersburg International Economic Forum, a major annual event chaired by President Vladimir Putin that attracts business leaders and policymakers from around the world. This longstanding relationship underscores the hotel’s strategic importance within Russia’s elite circles and its role as a hub for high-level economic and political engagement.
Experts in Russian business suggest that the hotel’s continued operation is driven by its significant value and potential for future profitability. Artem Zhavoronkov, a partner at the St. Petersburg law firm Nordic Star specializing in sanctions law, believes LVMH may be adopting a wait-and-see approach, anticipating an eventual easing of tensions in Ukraine. He points out that the property is a prime asset situated in a prestigious location, with real estate values expected to appreciate over time. Kristian Lasslett, a professor at Ulster University who studies corporate behavior in Russia and Central Asia, adds that maintaining a presence in Russia often depends on personal relationships and political favor, which could influence LVMH’s decision to retain the hotel.
Additional factors may also play a role in LVMH’s choice to hold onto the property. Russian regulations require foreign companies to sell assets at substantial discounts if they exit the market, making divestment financially unattractive. Moreover, the city of St. Petersburg owns a 6.5% stake in the historic Art Nouveau building housing the hotel, complicating any potential sale. Attempts to clarify whether municipal approval is necessary for such transactions have gone unanswered by city officials. Unlike other Western hotel chains such as Marriott, Four Seasons, and InterContinental Hotels Group, which have severed ties with Russia by leveraging third-party investors, Belmond operates the Grand Hotel Europe directly, limiting its ability to withdraw quickly. Some chains, including Hilton, have paused new investments but continue operations in the country.
Legal experts from Paris, London, and Moscow, along with a European Commission official, confirm that the hotel’s core services—accommodation and catering—are not explicitly targeted by international sanctions. Regis Bismuth, a professor of international law at Sciences Po University in Paris, explains that since the hotel is incorporated under Russian law and provides routine services domestically, it falls outside the scope of current sanctions. However, the European Commission has cautioned that parent companies should not exploit their Russian subsidiaries to circumvent EU obligations.
Despite this legal framework, the Grand Hotel Europe continues to generate revenue from sanctioned entities. Tax records from the second quarter of 2022 through the first quarter of 2025 reveal payments from companies such as Rostec’s subsidiaries, Tactical Missiles Corp., Sovcomflot, Rosneft, and banks including Sberbank, Sovcombank, and VTB. While the exact nature of the services purchased remains unspecified, individual transactions generally align with typical hotel offerings like room bookings, dining, or event space rentals, with payments often below $2,000. Room rates vary widely, from approximately $270 to $1,200 per night for standard accommodations, with suites commanding prices between $1,800 and nearly $8,000 per night. Some clients have made repeated payments over the years, while others have transacted only sporadically.
Among the hotel’s most significant sanctioned clients is Sovcombank, which reportedly paid around $140,000, and Prezident-Servis, a Kremlin-owned travel agency, which made payments totaling at least $270,000. These transactions notably coincided with the timing of the St. Petersburg International Economic Forum in 2023 and 2024, highlighting the hotel’s role in hosting events linked to Russia’s political and economic elite. When approached for comment, the involved companies either did not respond or disputed the accuracy of the information without providing further details. The Kremlin distanced itself from the hospitality sector, stating it is not engaged in such business activities.
