Now, the company was preparing to aggressively grow its global footprint in the Americas, Caribbean, Europe, and the Middle East while preserving its distinctive Asian identity and strong brand image of Banyan Tree. A brand synonymous with private villas, tropical garden spas, and retail galleries promoting traditional craft, Banyan Tree Hotels and Resorts (BTHR) received its ? rst guest in 1994 in Phuket, Thailand. Since then, it had grown into a leading manager and developer of niche and premium resorts, hotels and spas in Asia Paci? . Despite having minimal advertising, Banyan Tree achieved global exposure and a high level of brand awareness through the company’s public relations and global marketing programs. Much interest was also generated by the company’s socially responsible business values and practices caring for the social and natural environments. With a ? rm foothold in the medium-sized luxury resorts market, the company introduced a new and contemporary brand Angsana in 2000 to gain a wider customer base.
As the resorts market became increasingly crowded with similar competitive offerings, lured by the success of Banyan Tree, the company had to contemplate about expanding its business and preserving its distinct identity. Banyan Tree and Angsana resorts were expanding geographically outside of Asia and also into the urban hotel market in major cities throughout the world. With around 34 hotels and resorts scheduled to open over the next three years, Banyan Tree faced the challenge of translating and maintaining the success of a niche Asian hospitality brand into various arket segments on a global scale. Company background By end of 2008, BTHRs managed and/or had ownership interests in 25 resorts and hotels, 68 spas, 65 retail galleries, and two golf courses in 55 locations in 23 countries. Since its establishment in 1994, the company’s ? agship brand, Banyan Tree, had won some 400 international tourism, hospitality, design, and marketing awards, some of which included the ‘‘Best Resort Hotel in Asia-Paci? ’’ (Phuket) for four consecutive years from Business Traveller Awards since 2002, ‘‘Seychelles’ Best Resort’’ and ‘‘Seychelles’ Best Spa’’ from World Travel Awards (2003), ‘‘Best Hotels for Rooms’’ (Bangkok) from UK Conde Nast Traveller (2006), ‘‘Best Hotel (Luxury)’’ (Lijiang) from Hospitality Design Awards (2007), and ‘‘PATA Gold Award – Ecotourism Project Category’’ (Bintan) from Paci? c Asia Travel Association Gold Awards (2008). BTHR was founded by Ho Kwon Ping, a travel enthusiast and former journalist, and his wife Claire Chang, a strong advocate of corporate social responsibility (CSR).
Prior to entering the hotels and resorts business, Ho spent some 15 years managing the family business, which was into everything imaginable, such as commodities, food products, consumer The support and feedback of the management of Banyan Tree Hotels and Resorts in the writing of this case is gratefully acknowledged. Disclaimer. This case is written solely for educational purposes and is not intended to represent successful or unsuccessful managerial decision making. The author/s may have disguised names; ? nancial and other recognizable information to protect con? dentiality.
The closing of a factory in Thailand one year after its opening – because it lost out to other low-cost producers in Indonesia – was the last straw for Ho, who then realized that a low-cost strategy was not only dif? ult to follow but would also lead nowhere. Determined to craft out something proprietary that would allow the company to become a price maker rather than a price taker, Ho decided that building a strong brand was the only way for him to maintain a sustainable competitive advantage. The idea of entering the luxury resorts market was inspired by the gap in the hotel industry that giant chains such as the Hilton and Shangri-La could not ? ll. There existed a market segment that wanted private and intimate accommodation without the expectation of glitzy chain hotels.
This was fueled by the sharp price gap between the luxurious Aman Resorts and other resorts in the luxury resorts market. For example, the Amanpuri in Thailand, one of Aman’s resorts, charged in 2004 a rack rate for its villas ranging from US$650 to over US$7,000 a night, whereas the prices of other luxury resorts, such as the Shangri-La Hotel and Phuket Arcadia Beach Resort by Hilton in Thailand were priced below US$350. Noticing the big difference in prices between Aman Resorts and the other resorts in the luxury resorts market, Ho saw potential for offering an innovative niche product that could also bridge the price gap in this market.
Seasoned travellers themselves, Ho and Chiang backpacked throughout the world in their youth. Their extensive experiences are evident in their nonconforming beliefs that resorts should provide more than just accommodation. Ho and Chiang hit upon the idea of building a resort comprising individual villas, local-inspired architectural design and positioned as a romantic and intimate escapade for guests. Banyan Tree had moved up its positioning into the higher end of the luxury market, and by 008 its rack rates were typically between US$1,200 and 7,000 for the resort in Phuket, and between e1,500 and 4,200 for the resort in the Seychelles. Operations at Banyan Tree began with only one resort in Phuket, situated on a former mining site once deemed too severely ravaged to sustain any form of development by a United Nations Development Program planning unit and the Tourism Authority of Thailand. It was a bold decision, but the company, together with Ho, Chiang, and Ho’s brother Ho Kwon Cjan, restored it after extensive rehabilitation works costing a total of US$250 million.
So successful was Banyan Tree Phuket when it was ? nally launched that the company worked quickly to build two other resorts, one at Bintan Island in Indonesia and the other at Vabbinfaru Island in The Maldives. The company never looked back since. Even though Asia’s travel industry experienced periodic meltdowns such as the Asian Economic Crisis in 1997/1998, the September 11 attacks on the World Trade Center in 2001, the dot. com crisis in 2001/2002, severe acute respiratory syndrome (SARS) in 2003, and the Tsunami on December 26, 2004, no employee was retrenched and room rates at Banyan Tree rose steadily.
Brand origins Known as Yung Shue Wan in the local dialect, Banyan Tree Bay was a ? shing village on Lamma Island in Hong Kong, where Ho and his wife Chiang lived for three idyllic years before he joined the family business. Despite the village’s modest and rustic setting, they remember it to be a sanctuary of romance and intimacy. The large canopies of the Banyan Tree also showed semblance of the shelter afforded by Asia’s tropical rainforests. Ho and Chiang thus decided to name their resort Banyan Tree, and position it as a sanctuary for the senses. The service offering.