Monaco's casino and wedding-cake-style hotels group Société des Bains de Mer is defying the gloom and looking to open luxury hotels in London and Paris as part of a big international expansion programme over the next few years.
This is the first time the state-owned Monégasque company, founded in 1863, has taken the Monaco brand overseas. Its chief executive, Bernard Lambert, speaking at the Hotel de Paris, says: "Paris and London are the two main capitals we are looking at." But he is also planning a new hotel in Marrakesh, which will open in two years.
Lambert adds that there are no plans for casinos in European cities due to the difficulty of acquiring licences. But it could be possible in resort destinations. SBM has a monopoly concession to run Monaco's casinos until 2027. It owns five, as well as four hotels, 32 restaurants, an 18-hole golf course, an opera house and several nightclubs, including Jimmy'z, where a glass of water costs more than €30 (£24).
SBM is also looking to take a punt in the Middle East and in Los Angeles, Miami and New York. Lambert hopes to open 15 hotels within the next 10 years and expects to spend up to €800m, "funded from results or from borrowing if needs be".
Global expansion for a luxury brand may seem a little daring at the moment but Lambert is bullish. The risk, he says, is mitigated as SBM will not own the hotels outright. The ultimate objective is to drive more guests to Monaco through "windows" around the world. "In terms of hotels, I think it could grow the business by five to 10 points over five or 10 years," says Lambert.
In 2007, turnover grew 15 per cent to €457.6m with net profit soaring 75 per cent to €93.5m. Gaming revenues were up 16 per cent to €259.6m and hotel receipts rose 13 per cent to €185.1m. This increase is in sharp contrast to the performance of the main operator across the border, Casino de France, which reported a 10 per cent drop in revenue in the first quarter of this year.
Lambert puts his success down to SBM's first global advertising campaign for table games as well as to innovative marketing strategies such as offering free travel and accommodation to high-rolling gamblers from around the world. It is believed to have an annual budget of €20m for this.
Profits were also boosted by a 10 per cent increase in room rates in the past year. And as Lambert explains, the rooms are being occupied for longer these days: "New markets have developed tremendously – such as the former USSR, which is 15 per cent of our business. The average length of stay is 2.9 days but for Russians it can be up to three weeks."
Making SBM's outlook even rosier is the demand in its stock. The Monaco state holds 69.5 per cent with the majority of the remainder traded on Paris's Euro-next index at a market capitalisation of €766.8m.
The Qatari Diar investment company last month launched a bid for 30.4 per cent of SBM's stock. The offer represented a 31 per cent premium on the share price and valued the business at €1.3bn. SBM took out an ad in the French press calling the price "insufficient". It added that it would support Qatari Diar's offer only if it was limited to 10 per cent of capital.
A similar battle took place in the 1960s, when the Greek shipping magnate Aristotle Onassis secured a majority stake only to find Monaco's late Prince Rainier issuing 600,000 new shares and passing a law to make them non-transferable. Times change but the allure of Monaco does not.