There’s nothing like a royal wedding to draw attention to a country and drive its tourism to new heights. The biggest benefits are usually felt by the capital city or local area where the event takes place rather than the country overall. However, if ever there was an exception to this rule, it is Monaco, where the ruling Prince Albert will marry his fiancée Charlene Wittstock this month. It is set to give a glow to the fortunes of the entire country.
It only takes a few moments of being in Monaco to realise just how tiny the Mediterranean state really is. At under two square kilometres it is small enough to fit inside London’s Hyde Park and it is crammed with banks, boutiques and high-rise apartments. Lack of land is so acute in Monaco that its railway station had to be relocated underground to permit construction of 150,000 square metres of buildings above.
Sandwiched between France and Italy, Monaco doesn’t have much room to expand and there is good reason why its neighbours won’t give ground to it. Monaco’s storied history began in 1297 when Francois Grimaldi seized a Genoese fortress on what is now the rock of Monte Carlo. This gave it control of the 1.95 square kilometre tract of land, but it took more than 550 years for Monaco to become a powerhouse of a principality.
In 1863 Monaco opened the doors to its historic Grand Casino, the first in Europe, and within just three years it had made so much money that direct taxation of Monaco’s residents was abolished.
The upshot is that although there are just 6,687 native Monegasque citizens, Monaco has 31,109 residents. They are exempt from all taxes on income and personal wealth and stretch from celebrities such as Sir Roger Moore and Shirley Bassey to business luminaries like easyJet founder Sir Stelios Haji-Ioannou.
Using the income from his well-heeled casino customers, Prince Albert’s father, Monaco’s late Prince Rainier, developed a luxury tourism industry. It gave Monaco a radiant glow and the state’s size only adds to this exclusivity.
Destinations don’t come much more opulent than Monaco. The most dramatic race of the F1 season snakes through its spotless streets every year. Shopping centres are adorned with chandeliers and cascading fountains abound. Classical music is even piped to the pavements from carefully concealed speakers while automatic sprinklers water the roadside palm trees, which are wrapped in garlands of dazzling fairy lights.
However Monaco didn’t achieve true fairytale status until 1956, when Prince Rainier married American actress Grace Kelly. Despite her untimely death in a car accident in 1982, their marriage cemented Monaco’s link with glitz and glamour and it is still hard to avoid. Buildings and streets in Monaco are named after Grace Kelly, while roadside panels with faded pictures show the historic public duties that she performed at each spot. Prince Albert’s wedding will tap into this interest, and one company is expected to make the greatest gain.
Monaco’s biggest company is the state’s leisure operator, Société des Bains de Mer (SBM). Founded 148 years ago, SBM has a monopoly concession to run Monaco’s casinos until 2027.
It owns five of them as well as 32 restaurants, an 18-hole golf course, opera house, tennis club and several of the Riviera’s trendiest nightclubs. Its four hotels include the world-renowned Hermitage and the Hôtel de Paris, where rooms average €500 (US$718) per night.
“Definitely we do expect an increase in tourism and visitors during this year, and the years after, because of our sovereign wedding,” says SBM’s chief executive Bernard Lambert. He adds, “we believe that the focus on Monaco has already started in view of the visitor movements in Monaco since Easter.”
Classically-trained at Nice’s hotel school, Lambert cut his teeth working for the luxury Meurice chain before spending nearly 30 years at Le Méridien, rising to become CEO of the global hotel company. He took over the top job at SBM in 2002 and immediately got to work on shaking off Monaco’s greying image.
Monaco’s new direction is epitomised by the Monte Carlo Bay hotel. The 334-room art decostructure swung open its doors in 2005 at a cost of €200 million (US$287m) and was the first new hotel SBM had opened in 75 years. It sits on 10 acres of reclaimed land and looks like it would be more at home in Las Vegas than on the Riviera.
Belle époque balustrades have been replaced by a more minimalist style dripping with glitzy touches. It has Europe’s first sand-bottomed swimming lagoon and a fountain choreographed to classical music. Crucially, its casino is the only one inside an SBM hotel with no table games.
With an average rate of just over half that charged by the Hôtel de Paris, the Bay has made Monaco more accessible and Lambert says that it has “a younger and more family-orientated crowd.” However this was only part one of a plan to bring the state into the 21st century.
Monaco’s opulence alone isn’t enough to guarantee it will fend off competition from European resorts gifted with gaming deregulation and others farther afield, which are being opened up by low-cost travel. “Dubai is a competitor – on the French Riviera, Cannes has the promenade and we don’t have that. Also, Barcelona, Prague, Budapest,” says Lambert. He is taking the fight right to their doorsteps and, with space at a premium in Monaco, he needed to literally think outside the box to do it.
“We want to become a global luxury leisure brand,” says Lambert, and in December 2008 he announced SBM’s first ever international expansion. In 2013 the first SBM-managed hotel outside Monaco will open – a 93-suite, five-star resort and spa in Marrakech. It will be called ‘Jawhar (the jewel), by Monte-Carlo SBM’ but there is much more to it than just branding.
In addition to the branding in the name and the obligatory in-room SBM directory, there will also be more innovative marketing such as having signature dishes from its chefs in Monaco on the restaurant menu.
“Marrakech is close enough to us and is a destination for short breaks from all over Europe, so it’s a good window for us for promotion,” explains Lambert.
Indeed, although it is two years away from completion, Lambert has already been so impressed with the feedback about the project that he recently signed two more management contracts.
These hotels will open in around two years’ time on Abu Dhabi’s Saadiyat Island, where a museum run by the French Louvre is being built alongside a €290m (US$417m) Guggenheim Museum dedicated to modern and contemporary art. “We have finalised two management contracts for Abu Dhabi on the museums island,” says Lambert, explaining that they will be “a Monte-Carlo Beach Club, such as the one here, and a 200-bedroom hotel next to the museums.”
Building a replica of the Beach Hotel is perhaps the most direct way of advertising Monaco.
Built in 1928, the Beach Hotel is located on a secluded bay on the outskirts of the principality and looks like it has come straight from the pages of an Agatha Christie thriller, with terracotta-coloured walls and awnings over each of the room windows. The hotel is steeped in history, as it has been home to celebrities such as Eva Peron, who stayed there in 1947 during her Rainbow Tour of Europe to promote Argentinian interests.
A replica will be a bold statement of SBM’s intent to become a global brand, but Lambert isn’t stopping there. He has a long shopping list for further expansion: “Our objective is to have a flag in London and then in Paris,” he says, adding that although the majority of the deals are likelyto be management contracts, SBM may acquire a hotel outright. The Monegasque State holds 69.5 percent of SBM’s share capital, with the majority of the remainder traded on Paris’ Euronext exchange at a market capitalisation of €535m ($768m). It has even more than this – a total of €800m ($1.15bn) – to fund expansion and Lambert’s aim is to have a collection of 15 hotels over the next ten years.
“We have cash and we have a €160m ($230m) line of credit that we haven’t touched in the last five years because business has been extremely good,” he says.
But with the economy still in recovery mode, could SBM be cashing in its chips too early? Lambert is confident that international development and investment is a strategy for coping with the downturn. He believes that SBM’s risk is mitigated since it will own very few hotels. “To tell you the truth,” he adds, “today the situation with the worldwide economy will offer opportunities we had never thought of...deals are going to become cheaper than a year ago.”
The reward could be well worth the risk since the ultimate objective is to drive more guests to Monaco through what Lambert refers to as ‘windows’ around the world. He forecasts that once it is open, Jawhar in Marrakech will bring SBM an additional 10 percent of revenue over the following four years. It will be a welcome boost.
Although revenue from SBM’s hotels rose by 10 percent in the year to 31 March 2011, there was a 14 percent fall in casino takings, making up more than half of the company’s total turnover. It led to SBM’s overall revenue dropping three percent to €361.7m ($519m) with operating profit tumbling 58 percent to €21.7m ($31.2m) due to the decline in the high margin casino takings.
They are still being affected by a smoking ban, which was introduced to Monaco in November 2008. In response, Lambert is taking gambling outdoors for the first time in Monaco’s history.
“As we have completed the phase one of our renovation with the additional outdoor gaming terrace and additional marketing funds in new markets, we believe that we should get better revenues in the medium term.”
On the hotel side of its business, SBM has been well-positioned to weather the downturn. “No nationality accounts for more than 15 percent, which contributes to mitigate the risks,” says Lambert, adding that green shoots are coming from Asia and Southeast Asia. This month’s wedding is likely to attract even more regions to Monaco.
The spotlight will be back on the state, and this time the whole world will be watching along with Hollywood.