Monaco Struggles to Shake Image as Shady Tax Haven
Willa Cather, the great novelist who chronicled America’s frontier life, struggled to see beyond the surreal façade of Monaco. After a visit in 1902 she recorded her “restless feeling that there was nothing at all real ... The sea was too blue to be wet, the casino too white to be anything but pasteboard.”
Little has changed in the 110 years since she documented her European tour for a Nebraska newspaper. The sparkling sea still defies belief and the Casino with its belle époque finery dazzles just as it did when it opened in 1863.
Monaco is like nowhere else in the world. Smaller than New York’s Central Park, the tiny statelet of just two square kilometres has been a destination for the rich and famous since its prince, Charles II, decided to raise revenues by allowing high stakes gambling – but only for foreigners. Anyone born in Monaco – and today they number just 7,600 out of a 35,000-strong population – is still banned from crossing the Casino threshold.
The principality’s own citizens recognise the unreal nature of this small country, which has been ruled by the same royal family since the 13th century, squeezed between the French Alps and the Mediterranean Sea.
“Monaco was created to be a stage,” says Axel Hoppenot, sales and marketing manager of the Société des Bains de Mer, the state-owned company that runs virtually all the country’s top hotels and leisure attractions. Its wealthy residents, attracted by the absence of income tax and the year-round clement weather, are actors in the country’s never-ending play.
The 7 million visitors who come every year either have walk-on parts in the nightly parade of wealth and luxury that passes in front of the casino steps or make up the audience.
“That’s what we sell in Monaco,” says Guillaume Rose, head of Monaco’s Tourist and Convention Authority. “You are part of the experience.”
Monaco tries to maintain its lustre with attractions usually only found in the world’s greatest cities. It has a philharmonic orchestra, an internationally acclaimed ballet and an ornate opera house that is a minuscule replica of the grand Opéra Garnier in Paris.
It is also working hard to establish a reputation for innovation in culture and the arts, with festivals around the year drawing international stars and artists. But the world’s top critics have not yet felt compelled to put the principality on their review list and it still struggles to shed its image as a shady haven for tax evaders.
It was Prince Albert II’s father, Prince Rainier, who promoted the development of Monaco as a financial center. Finance and business services make up almost a third of the country’s gross domestic product. But tourism generates roughly a fifth of revenues and has become even more important since the global economic crisis dealt a devastating blow to the country’s banking and financial services industry. Revenue from this sector halved in 2009.
Prince Albert has tried to refocus the principality. He has succeeded in striking enough bilateral accords to have Monaco taken off the international blacklist of uncooperative tax havens. He has also encouraged investment in the environment and in medical research in an effort to generate new sources of income.
His fairytale wedding to former swimmer Charlene Wittstock last year helped to create interest in the statelet and a younger generation is discovering the country’s good education and healthcare systems, and its unrivalled security.
Surveillance cameras mean no street is unwatched and the principality has more police officers per capita than any other country.
It was Prince Rainier’s marriage to Hollywood star Grace Kelly in 1956 that marked the apogee of Monaco’s reputation as sophisticated and luxurious destination.
But there is a feeling that a new style of sophistication is coming to Monaco, more casual but just as exclusive – although the bling is never far away. “We cannot copy that period of Prince Rainier and Princess Grace,” says Sergio Mangini, head of the four-star Monte-Carlo Bay hotel. “This is a different generation. They do not know what that epoch was. We have to create something new.”
Yet as Monaco seeks to draw a younger generation it is also courting new types of tourists, not without controversy.
Along with the multimillion-dollar yachts tied up in the harbour, Monaco has opened its ports to vast cruise liners carrying hordes of day trippers who descend every morning on the tiny principality. Some residents complain that the endless crocodiles of flip-flopped tourists are damaging Monaco’s reputation for upmarket luxury.
But Mr Rose says there is little that can be done. Even if only the most exclusive cruises were allowed to stop: “We cannot close our borders,” he says.
Mass market cruise liners would simply tie up at Villefranche-sur-Mer, a few minutes’ drive down the Riviera coast, and put their passengers on a bus to come for the Monaco experience.
Hoteliers are not complaining. The majority of the liners docking in the port bring upmarket passengers who seek out the gourmet restaurants found in hotels.
“I do a lot of business with these people,” says Jean-Claude Messant, managing director of the luxury Hotel Metropole, which boasts two of celebrity chef Joël Robuchon’s Michelin-starred restaurants. Nonetheless, the revival of interest in Monaco’s new style of glamour is taking its toll on the ability to deliver good service. Visitors and residents have complained of complacency, and Mr Rose admits to a “problem recently, especially in the casino”.
Officials say more has to be done to ensure that the top-class hotels and restaurants do not simply charge luxury prices for standard service.
“The service in general is of a high quality,” insists Mr. Rose. “But what you will tolerate in Nice or Villefranche you will not tolerate in Monaco.”
Monaco will also have to adapt its service offer to clients from new markets such as Asia and eastern Europe. There are still too few Asian restaurants to rival Monaco’s gourmet European cuisine, for example.
Mr. Rose says efforts are under way to train more Monégasques in Chinese culture and language to prepare for when Beijing’s elite come for their Riviera holidays.
But the country is already bursting at its borders. Prince Albert will soon have to decide whether to authorise a costly project to reclaim land from the sea. But this promises to wreak havoc with one of Monaco’s main attractions – its uninterrupted vista of the sea. Hoteliers may have the most to lose from the disruption that will be caused if and when the project goes ahead. But they also have the most to gain and are prepared to make the sacrifice.
“Monaco is always moving, always changing,” says Mr. Mangini with a shrug.
Without more space the future is bleak, says Michel Roger, the principality’s first minister. “Monaco is very small. It is always in construction,” he says. “The day there are no more works in Monaco we should be worried.”