Inflight Magazine of Brussels Airlines

The grand gambler

Monaco is famous for Bond, baccarat and wedding-cake-style hotels. But in a bid to shake off a greying image, Bernard Lambert is gambling on hotels that pay homage to Las Vegas glitz and casinos without table games

Destinations don’t come much more opulent than Monaco. Shopping centres are adorned with chandeliers, and spotlessly clean streets are lined with palm trees wrapped in fairy lights. But even this is no longer enough to support its tourist industry. The Mediterranean state is facing competition from European resorts gifted with gaming deregulation, while others further afield have been opened up by low-cost travel. And since Monaco is small enough to fit snugly inside London’s Hyde Park, it has had to think far outside the box to keep up with its rivals.

Residents are attracted by exemption from all taxes on income and personal wealth, and for companies, business industry tax is the only direct tax levied by the Monegasque government. It stands at 33.33% and, along with property revenues, brings in 60% of the state’s revenue.

Despite being famous for being an offshore banking haven, finance only provides around 13% of Monaco’s GDP. Perhaps more surprisingly, gambling revenues only represent around 2% of its annual turnover, with tourism being the real powerhouse at the heart of the principality’s fortune. This accounts for 25% and drives in over six million visitors every year. One company is at the heart of this: the Société des Bains de Mer (SBM).

Founded over 150 years ago, SBM has a monopoly concession to run Monaco’s casinos until 2027. It also owns an 18-hole golf course, opera house, tennis club, five luxury hotels and several nightclubs, including Jimmy’z, where a glass of water costs over €30.

Last year SBM had a net profit of €53.6m on revenues of €396.7m, but for a state with seemingly limited growth opportunities, it has seen a meteoric rise in performance.

Profits were up 79% in 2006, driven by the relatively low overheads of gambling. Over the past few years SBM has gambled on gaming and won. It upgraded its several thousand slot machines to the most high-tech systems and 2006 brought its highest-ever gaming revenues. Business from slots was up 23% and one explanation accounts for this.

At the end of 2005 SBM opened its first new hotel in 75 years, the Bay Resort. SBM had to literally think outside the box to build the 334-room Bay, since space is at such a premium that even Monaco’s train station had to be built underground to permit construction of apartments above. Reclaiming 10 acres of land was the response and the result is a hotel inspired by the modern mystique of Las Vegas.

The Bay drips with glitzy touches such as 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 to have no table games and, to appeal to families, its average room rate is €290.

Monaco’s masterplan of making its image more youthful has been spearheaded by Bernard Lambert, SBM’s chief executive. “We created something nobody was expecting – a true international resort, unique in Europe,” he says. “We wanted to bring a new facet to our current range of products. The other ones are more four-plus and five-star palaces.” Due to this careful positioning, the Bay attracted more interest in Monaco and brought €4m of business to its peers instead of taking custom from them.

“The hotel has unique facilities and we know that this is exactly what the Italian market likes,” says Lambert. After the French, who represent around 24% of SBM’s customers, the Italian market is the next biggest, comprising 14% of stays. The British market pretty much matches it and, after a rocky five years, the US market is finally returning to the state that was once home to Hollywood heroine Grace Kelly.

“I think the US business is going to increase this year to 16.5% and pre-9/11 it was 20%,” says Lambert, explaining. “To get the figures up

to 20% it will take a different rate of exchange – it is still 30% higher than it was.” To sail through this problem his strategy has been “if you can’t beat ’em, join ’em”.

In June 2003 Lambert took a punt by paying €40m for a 3.6% stake in Wynn, the US company which owns some of the world’s biggest casino-hotels. Wynn was a winning gamble, and fresh with speculation that one of its hotels was coming to Monaco, SBM’s own share price more than doubled. But although SBM’s acquisition included cross-marketing initiatives between the two companies, Lambert stresses that the alliance is in capital only. “Wynn has not invested in SBM and does not intend to develop anything in Monaco.”

That’s despite the fact that Monaco has an unmatchable mystique. Lambert says that two core skills of his job are being open-minded and understanding that “there is a respect for keeping the roots and the strong element of what has made the brand”. However, he acknowledges that building on its heritage cannot come at the expense of keeping Monaco at the cutting edge.

“Clients today are a younger crowd who make money faster than their parents, and when they travel they want to discover new things, hence they go to Dubai. This is what we need to create here,” says Lambert. “The next stage for SBM to attract a different client is to create new events, whether it’s a new nightspot, a new restaurant or new experiences,” he adds.

Last year Lambert launched Monaco’s winter jazz festival – the first on the Riviera – and he is looking to expand the number of poker events held in the off-season, as these are already hugely popular. Lambert is looking farther afield to build gaming business in the long term.

SBM sent agents into exclusive country clubs, golf clubs and cigar dens in Shanghai, Hong Kong, Guangzhou and Beijing to “lure people that travel, that are educated and that want to see Europe”. SBM has an impressive hook to pull in punters: complimentary all-inclusive travel and accommodation packages for gamblers waging over €20,000.

His biggest challenge is building revenues in a resort that is limited to just 951 hotel rooms. Land reclamation takes years and, although Lambert admits that “size is a big challenge”, he is planning to push SBM’s brand out further than ever before.

Radical plans are on the drawing board for SBM to operate casinos and hotels outside Monaco in order to broaden brand awareness and “to create enough windows outside to sustain growth”.

Lambert says that SBM is considering city and resort destinations and property ownership as well as management. The latter will enable quicker growth, which is exactly what he is looking for.

“We are working on two or three projects that could be up and running within the next 24 months,” he says, adding that Berlin, Paris and London are all on his shopping list. It’s a grand gamble but this is exactly what Monaco has become famous for.

NL Gros plan sur Monaco

La Société des Bains de Mer (SBM) détient le monopole de la concession des casinos de Monaco jusqu’en 2027. Elle possède également un club de golf, un opéra ainsi que des clubs de tennis et des boîtes de nuit.

Fin 2005 SBM a ouvert son premier nouvel hôtel en 75 ans, le Bay Resort. Il étincelle littéralement mais pour rester attractif auprès des familles, il propose des chambres au tarif moyen de €290.

L’hôtel apporte une nouvelle jeunesse à Monaco et Bernard Lambert, le directeur général de SBM est le fer de lance de ces nouveaux développements. “Nous avons créé quelque chose auquel personne ne s’attendait – un vrai centre de villégiature international, unique en Europe,” dit-il.

Alors que le nombre de touristes en provenance des Etats-Unis était en train de chuter après les attentats du 11 septembre, Lambert a pris le pari en juin 2003, d’investir €40m, une participation à hauteur de 3.6% dans le capital de Wynn, la société américaine propriétaire des quelques plus gros hôtels-casinos dans le monde. Ce pari s’est avéré payant pour SBM qui a plus que doublé sa mise de départ.

D’un côté, Lambert prend appui sur l’héritage de Monaco, de l’autre, il a le regard tourné vers l’avenir: “Dans la perspective de diversifier sa clientèle, SBM doit créer des événements, que ce soit un nouveau club de nuit, un nouveau restaurant ou encore d’autres types de divertissements,” confie-t-il.

L’année dernière, Lambert a lancé le festival de jazz d’hiver de Monaco, il a aussi envoyé des délégués dans des clubs exclusifs de Shanghai, de Hong Kong, de Guangzhou et de Beijing “pour séduire les gens qui voyagent, qui ont un haut niveau d’éducation et qui veulent voir l’Europe.”

De grands projets sont à l’étude dans les cartons de SBM, visant à gérer des casinos et des hôtels à l’extérieur de Monaco afin d’étendre la visibilité de la marque et de “créer suffisamment de niches à l’extérieur pour soutenir la croissance.”

Ce sont en réalité de grands paris, mais n’est-ce pas justement ce qui a fait la réputation de Monaco?

NL Monte Carlo’s grootste gokker

De Société des Bains de Mer (SBM) heeft tot 2027 het monopolie over de casino’s van Monaco. Daarnaast bezit het een golfbaan, een operazaal, tennisclubs en discotheken.

Eind 2005 opende SBM zijn eerste nieuwe hotel in 75 jaar, de Bay Resort. Omdat het blitse hotel ook op gezinnen mikt, bedraagt de gemiddelde kamerprijs €290.

Voor Bernard Lambert, chief executive van SBM, vertegenwoordigt het hotel het jonge Monaco. “We creëerden iets dat niemand verwachtte, een internationaal resort dat uniek is in Europa”, vertelt hij.

Ondanks het dalende aantal Amerikaanse toeristen na 9/11, had Lambert in juni 2003 maar liefst 40 miljoen euro over voor een aandeel van 3,6% in Wynn, het Amerikaanse bedrijf dat enkele van ‘s werelds grootste casinohotels bezit. Het bleek een uitstekende zet, want de prijs van SBM’s eigen aandelen verdubbelde.

Lambert bouwt niet alleen voort op Monaco’s erfgoed, maar kijkt ook naar de toekomst. “Als SBM een ander soort klanten wil aantrekken, moet het voor nieuwe evenementen zorgen, zoals een discotheek, een nieuw restaurant of nieuwe ervaringen”, zegt hij.

Vorig jaar lanceerde Lambert het winterjazzfestival van Monaco, en stuurde hij agenten naar exclusieve clubs in Sjanghai, Hongkong, Guangzhou en Peking, “op zoek naar opgeleide mensen die Europa willen zien”.

SBM heeft ook grote plannen voor casino’s en hotels buiten Monaco, om meer naamsbekendheid te verwerven en “groei te verzekeren via externe kanalen”.

Het is een gok, maar is dat niet waar Monaco zo bekend om is geworden?

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