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Amanresorts signs 30-year lease for Sveti Stefan island-hotel in Montenegro

Luxury resort operator Amanresorts signed a 30-year lease Wednesday to renovate and run the famed Sveti Stefan island hotel, once the playground of Hollywood celebrities.

Singapore-based Amanresorts said it would invest €40 million (US$52 million) to revamp the limestone houses and cobblestone streets that drew a Hollywood stars during the 1970s but fell into decline during the breakup of the former Yugoslav federation in the 1990s.

"The objective is to bring Sveti Stefan back to its former glory and pre-eminent position in the tourism industry in the Mediterranean, " said Adrian Zecha of Amanresorts, who signed the deal with Montenegro's tourism and ecology minister, Predrag Nenezic.

Amanresorts is to pay €2.1 million (US$2.7 million) annually to Montenegro for Sveti Stefan and for the nearby Milocer hotel, formerly a summer residence of Serbian monarchs that was nationalized after World War II.

Both facilities will be renovated and reopen for tourists in 2008, said Nenezic. Under the contract, the Asian investors also get another nearby hotel, built in the early 1970s, but will demolish it in order to a build a completely new one on the lot.

Originally a 15th century fishing village, Sveti Stefan consists of a few dozen stone houses perched atop a large, circular rock in the sea linked to the mainland by a narrow sandy isthmus.

In the 1960s, when Montenegro was part of communist Yugoslavia, authorities turned Sveti Stefan into an exclusive resort with 118 rooms and suites. Visitors included former West German Chancellor Willy Brandt and movie icons Elizabeth Taylor, Richard Burton, Sophia Loren and Sylvester Stallone. U.S. chess legend Bobby Fischer played his controversial 1992 match against Russia's Boris Spassky at Sveti Stefan, in violation of the U.S.-backed embargo on Yugoslavia.

The turmoil of the 1990s now well behind Montenegro, now a sovereign state following its split last year from Serbia, "Amanresorts will ... bring the highest quality service product to Montenegro," Zecha said, calling it "the next coming thing." The Singapore-based group oversees posh playgrounds around the globe, from France to French Polynesia.

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