Shifting Gears in Monaco: A Luxury Case In Point

Prospects for tourism and gaming in most major destinations around the world are close to or at record levels driven by the burgeoning middle class leisure traveller, and businesses who still value personal contact over phone and email. Yet those trends don’t guarantee profitable growth, even in some of the most famous and luxurious destinations.

Perusing the lobby at The Metropole Hotel in Monaco this week while sipping thé à la menthe in the company of friends, there is not much change, since my first visit in 1983 beyond the Karl Lagerfeld-inspired facelift. Billionaires and villains sit astride comfy sofas, a gentle murmur arises from the well-healed denizens in the hotel restaurant and the cognoscenti maintain an eagle-eyed awareness of the movers and shakers, as they stride across the hotel lobby. Dig a little deeper and take in the view high above Monaco, on the road down from La Turbie, and you will see The Odeon Tower arising from the principality, a new Sir Norman Foster designed Yacht Club soon to open in June and the start of the Sporting D’ Hiver development project. Yet surf or a number of international media in recent weeks and you will see that change is not being met with universal approval in a location that values privacy and where decisions are made by polite decree.

Monaco tourism resembles the Gucci brand in the pre-Domenico De Sole days without the blood and thunder. A fabled luxury brand with a dwindling band of loyal customers, who like it just the way it is, and executive management, who are facing demands for improved results and broadening the Principality’s appeal to a wider global audience of new money. In trying to balance the need for short-term and long-term results, there is a visible sense that those demands are placing significant burden on top management. International business and leisure customers, who want greater excitement, employees who fear the “journey of transformation” (closure of Hotel de Paris for renovation) will result in financial hardship, and local residents, who fear the character and charm of Monaco is being forsaken in this process.

There are lessons here for any luxury brand undergoing a transformation. Here are some simple conditions needed to help people with the journey of transformation:

  1. Société des Bains de Mer’s General Management needs goals and a big picture that are in focus and clear such that the inevitable complexity attached to the changes will readily fall into place.
  2. Politicians and General Management at SBM need to innovate, not simply solve problems. They need to raise the bar in terms of the luxury customer experience and look outwards for benchmarks (Dubai, Miami, Hong Kong, Macau, Singapore and so forth).
  3. Hotel and Gaming leadership needs to change the culture not just the policies and procedures in each of the properties. To do that effectively, they need to appeal to the self-interest of all the key constituents (customers, employees, owners, politicians and so forth), not simply rely on coercion.
  4. There must be someone in key leadership, who is the visible “champion” of change. They must be an avatar and an exemplar for the desired beliefs that govern people’s future behaviour.
  5. There needs to be clear accountabilities with a carrot and a stick from the very top, Prince Albert, all the way down to those delivering the frontline customer experience.
  6. Executive and General Management needs to determine where their strengths are most productively applied and where they are not. For example, are they better owning key assets and bringing in world-class private operators to manage the real estate, hospitality, retail and food and beverage assets? History around the world would say “yes” but that assumes the Principality’s leaders can get comfortable relinquishing some control.
  7. There needs to be a high level of clarity about the hotel and gaming businesses’ proposition (how are their guests better off after their visit), who precisely are the highest-potential future customers and how do they best reach those people and vice versa. The answers to those three questions are the only marketing plan they need.

Monaco has some amazing tourism assets (the Grand Prix). The new developments bring additional horsepower, in the form of excitement for international guests, what it needs is sustained power, more events, additional repeat business, and a stronger siren call to the new rich. There are lessons to be found in a multitude of luxury brands around the world. Tourism is speeding out of a long tunnel into a blaze of sunlight. Additional horsepower is great but it is the skills and volition of local tourism leaders to nurse the businesses successfully around the tight bends that will determine whether a new lap record is set for Monaco tourism or the current initiatives merely lead to a false dawn.

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