Quotes of the Day

Behind one Milan warehouse's steel doors is the full-scale mock-up of a room that will serve as the template for the first hotel to bear the Bulgari brand name. Scheduled to open in Milan in January 2004, the hotel represents a gamble for CEO Francesco Trapani, but he's trying to be cool about it. "If it does well, it's another good hotel," he says. "If it does poorly, it's the end of the story. If it does particularly well, then it can change both our industries."

When Bulgari announced two years ago that it was forming a joint venture with Marriott to create a chain of hotels, financial analysts were unimpressed; Bulgari stock promptly dropped 5%. Although the $140 million joint investment required from the partners was relatively small, analysts felt the project would dilute the brand and distract the attention of management. But Trapani was confident that the people who buy Bulgari's high-priced gems would also stay at the hotels — provided they lived up to the brand's luxury image. And, he reckoned, having the Bulgari name on beautiful buildings throughout the world would be a good way to build brand awareness.

It took a year to find the first location, a former nunnery backing onto the botanical gardens in the heart of Milan. The old building has been gutted and given a new glass facade; teakwood balconies off the rooms on the top floors to allow spectacular views of the gardens. The $70 million hotel will offer its 58-rooms starting at j600 a night. There will be a swimming pool with gold-mosaic tiles, a spa, a meditation garden with smoking moss and a restaurant run by a (yet unnamed) famous chef.

The rooms will have an Asian feel, providing an ambience closer to the famous Amanresorts of Thailand and Indonesia than the pink-marble decor of Bulgari stores. Expect lots of black and gold, exotic wood and black-matte Zimbabwe marble. Each 45-sq-m room is meant to be light and airy, with floor-to-ceiling windows in the bedroom and bathroom. In the mock-up version, a gold mesh screen divides the space between the bedroom and the bath, which takes up a third of the total space. "A big bathroom is more fun," says Trapani. "Ultimately we are Italian: we like fun."

But there's nothing funny about what's riding on the venture. Bulgari has been particularly hard hit by the luxury-goods slowdown — a softening in the watch business has sent the company's shares, listed since 1995 in Milan and London, plunging to $5 from its all-time high of nearly $16. The company could use a big success, but analysts remain wary about Trapani's hotel project. "Even if it is really successful," scoffs a European analyst who tracks Bulgari, "it will never help their bottom line." Trapani might think the future of hotels rests with Bulgari, but for analysts the future of Bulgari is in jewelry.

• LAUREN GOLDSTEIN/Milan
• Bulgari hopes it has the future of luxury hotels