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Scenes from a Fallout: St. Regis Monarch Beach
March 03, 2009
St. Regis Monarch Beach is where "the AIG effect" began, and the property is still suffering as a result
By Corrie Dosh
"That's where it happened, right there," says Michael Mustafa, director of sales and marketing for the St. Regis Monarch Beach, his tone darkening like passing a murder scene as he pointed out an unassuming white stucco wall. 'It" means the place where insurance giant AIG in October last year was discovered hosting a high-end dinner as part of a $440,000 incentive trip—one week after receiving an $85 billion bailout from the government. The resulting fallout has prompted public outcry, presidential censure, new regulations, and millions of dollars in cancelled business. It now even has a name: "the AIG effect."
At the time of the incident, Mustafa says nothing seemed out of ordinary. AIG was rewarding about 70 of its leading independent agents with a week's stay at the 172-acre, 400-room luxurious St. Regis, including spa treatments, golf and all the other amenities that go along with a 5-star, 5-diamond resort (the only property in California to have both designations.) One night, St. Regis catered an after-hours dinner at nearby Mission San Juan Capistrano for the attendees, and installed lighting elements to display the AIG logo on the mission walls.
Peeking over the wall, a passerby spotted the AIG logos and festivities and called up the Orange County Register and his local congressman to complain, Mustafa says. Federal investigators subpoenaed the bill, and the media reports pushed corporations to cancel hundreds of events and incentives at high-end resorts. After the AIG incident, 8,000 rooms were cancelled at the resort, despite Mustafa's efforts to "try anything" from rescheduling events to adjusting packages. Occupancy at the St. Regis Monarch Beach is now down 15 percentage points, and Mustafa expects the average occupancy rate to hover around 50 percent this year. Twenty percent of the hotel’s business comes from financial services groups, and another large chunk comes from pharmaceuticals.
"Enough is enough," he says of the fallout. "We need to get back to business."
The meetings industry, including associations like Meeting Professionals International (MPI) and Site, needs to do more to help the public understand the effect of canceling events on the local economy, and how these events generate profits for the host company, he says. Proposed market studies, such as an MPI white paper currently under development, are not expected to be released until 2010, and "by then we'll be out of it," Mustafa complains. "That's probably my biggest frustration."
Mustafa says not only has his property been the center of a media firestorm over the past months, he also regularly receives angry calls from the public, demanding free rooms, spa treatments and whatever else taxpayers feel they need to even the score with AIG. The complaints, and the government hearings held to investigate the event were "crazy," he says, and things like lead time and cancellation clauses were overlooked. "Obviously, you don't get a bailout and then book an incentive five days later."
Going forward, the property just has to weather the storm. St. Regis has built its business on a reputation for lavish luxury, and some of its clientele, such as an upcoming buy-out by Cisco, will only stay at 5-star properties.
"We will never apologize for being 5-star, 5-diamond," Mustafa says. "We've worked too hard for it."
To fill the gaps, the property is reaching out to local business in southern California for day meetings with amenities such as a newly remodeled boardroom with built-in video conferencing, projectors and a separate, private entrance. Every Thursday, the lobby lounge transforms into an upscale nightclub with a dance floor and DJ to bring in crowds and a little life into the silent hallways. And still going strong is the property’s famed Sunday champagne brunch (with 35 accoutrements just for your pancakes.)
Make no mistake, there's a reason why AIG chose the St. Regis Monarch Beach to begin with. There is an onsite 18-hole golf course, three swimming pools, a private beach available for events with a beautiful restaurant surfside, surfing lessons, botanical garden and suites with butler service. There is 30,000 sf of indoor event space, functioning as a mini convention center with ballrooms and breakouts tucked away from the main guest areas. Another 60,000 sf of outdoor function space is regularly used thanks to the dependable and beautiful weather of sunny southern California.
Another hit with groups is the private wine cellar for dinners of up to 50, surrounded by a collection of 17,000 bottles and 100-year-old French flooring tiles. The culinary team at the resort is second to none. Award-winning executive chef Frederic Castan heads up Motif, and executive pastry chef Stéphane Tréand took first place in the 2008 World Pastry Team Championship. Celebrity chef Michael Mina has opened Stonehill Tavern on the property, with a private banquet room for up to 22 guests.
The Spa Gaucin, a focus of many of the complaints against AIG, offers 24 treatment rooms and the heavenly Kate Summerfield products. Beyond massages and manicures, the fitness center offers wellness activities for meeting breaks and classes, and a spa cafe of healthy and light lunch fare.
The property is 25 minutes from John Wayne Airport in Orange County, CA, and just 15 minutes from downtown Laguna Beach, filled with art galleries and restaurants. This lovely stretch of California coastline is called the American Riviera, and groups have plenty of options in sunset dinner cruises, ferries to Catalina Island, kayaking and other seaside activities.
St. Regis Monarch Beach will just have to continue doing what it does best, Mustafa says, which is high-service luxury and glamorous style. How soon the market comes back for it is anybody’s guess, but for now there is unfortunately plenty of availability at the property.
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