LVMH is betting $2.6 billion that consumers who spend $1,000 on a Louis Vuitton bag will splash out for a $2,000-a-night hotel on Italy’s Amalfi Coast.

The French luxury giant agreed to buy Belmond Ltd., owner of New York’s ‘21’ Club and high-end resorts around the world. The transaction is LVMH’s largest since taking full control of Christian Dior for more than $7 billion last year and pushes the company further into services amid rising concern about the sustainability of the Chinese demand that’s driven fashion industry growth.

LVMH agreed to pay $25 a share in cash for London-based Belmond, a 42 percent premium over its closing price in the U.S. on Thursday. The Paris-based company’s shares fell as much as 3.1 percent early Friday.

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