It looks like a pen holder you get at the store covered by fabric. If you printed your monogram onto iron on paper (through your printer at home) you could iron it on and then glue the fabric down along the edges and then add some cute trim on the edges. That is how I would try to do it. I don't know how well that iron on stuff works though?
They probably removed the pen holder and then reinserted it after covering it with the fabric.