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Case Study Banyan Tree

Case Study Banyan Tree

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Published by Roger Hong

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Published by: Roger Hong on Jun 18, 2012
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Banyan
Tree
DevelopingaPowerfulServiceBrand
JOCHENWIRTZANDMAISYKOH
BanyanTreeHotelsandResortshadbecomealeadingplayerintheluxuryresortsandspamar-ketinAsia.
As
partofitsgrowthstrategy,Ban-yanTreehadlaunchednewbrandsandbrandextensionsthatincludedresorts,spas,retailout-lets,andevenmuseumshops.Now,thecompanyhadtocontemplatehowtomanageitsbrandportfolioandexpanditsbusinesswhilepreserv-ingthedistinctiveidentityandstrongbrandim-ageofBanyanTree,itsflagshipbrand.
Abrandsynonymouswithprivatevillas,tropicalgardenspas,andgalleriespromotingtraditionalcraft,BanyanTreeHotelsandResortsreceiveditsfirstguestin1994inPhuket,Thailand.Sincethen,ithadgrownintoaleadingmanageranddeveloperofnicheandpremiumresorts,hotelsandspasinAsiaPacific.Despitehavingminimaladvertising,BanyanTreeachievedglobalexpo-sureandahighlevelofbrandawarenessthroughthecompany'spublicrelationsandglobalmar-ketingprograms.Muchinterestwasalsogener-atedbythecompany'spro-environmentalbusi-nesspractices.Withafirmfootholdintheluxuryresortsmarket,thecompanyintroducedanewandcontemporarybrand,Angsana,togainawidercustomerbase.Astheresortsmarketbe-comeincreasinglycrowdedwithsimilarcompeti-tiveofferings,luredbythesuccessofBanyanTree,thecompanyhadtocontemplatehowtoexpanditsbusinessandpreserveitsdistinctiveidentity.
COMPANYBACKGROUND
Bymid2004,BanyanTreeHoldingsPteLtd(BTHL)owned,managedandoperated15re-sortsandhotels,35spas,and38retailshopsinmorethan40locations
in
20countries.Inthefirsttenyearssinceitsestablishmentin1994,thecompany'sflagshipbrand,BanyanTree,had
ThiscasewaswrittenbyJochenWirtzandMaisyKoh,CorporateDirector,BrandManagement,atBanyanTreeHotelsandResorts,andatAngsanaResortsandSpas.TheauthorsgratefullyacknowledgetheassistanceofJeannetteP.
T.
Ho,CorporateDirector,RevenueManllgementofBanyanTreeHotelsandResorts,andSimSiewLien,inpreparingthiscase.Copyright©2005JochenWirtzandMaisyKoh.
 
wonover100internationaltourism,hospitality,andmarketingawards,someofwhichincludedThe"World'sBestSpa"(Phuket)from
CondeNastTraveler
1998,"BestResortHotelinAsia-.Pacific"(Phuket)forthreeconsecutiveyearsfrom
BusinessTraveller
since2002"Seychelles'BestResort"and"Seychelles'BestSpa"fromWorldTravelAwards(2003).1TheBanyanTreebrandhadalsobeencomparedtointernation-allyestablishedbrandssuchasHarleyDavisonandManchesterUnited.BTHLwasfoundedbyHoKwonPing,atravelenthusiastandformerjournalist.Priortoenteringthehotelsandresortsbusiness,Hospentsome15yearsmanagingthefamilybusi-ness,whichwasintoeverythingimaginable,suchascommodities,foodproducts,consumerelec-tronics,andpropertydevelopment,competingmainlyoncost,andwasnotdominantinanypar-ticularcountryorindustry.Theclosingofafac-toryinThailandoneyearafteritsopening_:_be-causeitlostouttootherlow-costproducers
in
Indonesia-wasthelaststrawforHo,whothenrealizedthatalow-coststrategywasnotonly
dif-
ficulttofollowbutwouldalsoleadrumnowhere.Determinedtocraftoutsomethingproprietarythatwouldallowthecompanytobecomeapricemakerratherthanapricetaker,Hodecidedthatbuildingastrongbrandwastheonlywayforhimtomaintainasustainablecompetitiveadvantage.Theideaofenteringtheluxuryresortsmar-ketwasinspiredbythegapinthehotelindustrythatgiantchainssuchastheHiltonandShangri-
Case8BanyanTree
Lacouldnotfill.Thereexistedamarketsegmentthatwantedprivateandintimateaccommoda-tionwithouttheexpectationofglitzychainho-tels.Thiswasfueledbythesharppricegapbe-tweentheluxuriousAmanResortsandotherresortsintheluxuryresortsmarket.Forexample,theAmanpuri
in
Thailand,oneof
Amari's
resorts,chargedarackrateforitsvillasrangingfromUS$650tooverUS$7,OOOanight,whereasthepricesofotherluxuryresorts,suchastheShangri-
La
HotelandPhuketArcadiaBeachResortbyHiltoninThailandwerepricedbelowUS$350.
2
NoticingthebigdifferenceinpricesbetweenArnanResortsandtheotherresortsintheluxuryresortsmarket,Hosawpotentialforofferinganinnovativenicheproductthatcouldalsobridgethepricegapinthismarket.Aseasonedtravel-lerhimself,Hobackpackedthroughouttheworldinhisyouth.Hisextensiveexperiencesareevi-dentinhisnonconformingbeliefthatresortsshouldprovidemorethanjustaccommodation.Hohitupontheideaof
building
aresortcom-prisingindividualvillas,exoticinarchitecturaldesignandpositioned
as
aromanticandintimateescapadeforguests,TherackratesaretypicallypricedbetweenUS$500andUS$2,500fortheresortinPhuket,andbetweenUS$1,200andUS$4,400fortheresortintheSeychelles.'Suchavaluepropositionhadyettobeadoptedbyanyhotelorresortthen.Op,erationsatBanyanTreebeganwithonlyoneresortinPhuket,situatedonformermininglandoncedeemedtooseverelyravagedtosus-
1
ThecompletelistofawardswonbyBanyanTreecanbefoundonthecompany'sWebsiteatwww.banyantree.com.:,.
2
PricesasofJuly2004;obtainedfromtheWebsitesofShangri-LaHotelsandResortsandHiltonHotelsatwww.shangri-la.comandwww.hilton.com,respectively.~
3
PricesasofJuly2004;obtainedfroif-ttheWebsiteofBanyanTreeatwww.banyantree.com.PricesofvillasatSeychellesoriginallydenominated
ineuros:
convertedtoifS$attheexchangerateoflo=US$1.2.
 
,
ase8BanyanTree
tairianyformofdevelopmentbyaUnitedNa-tionsDevelopmentProgramplanningunit.
It
wasabolddecision,butthecompany,togetherwithHoandhisbrotherHoKwonCjan,restored
it
afterextensiverehabilitationworkscostingato-talofUS$250million.SosuccessfulwasBanyanTreePhuketwhenitwasfinallylaunchedthatthecompanyworkedquicklytobuildtwootherresorts,oneatBintanIslandinIndonesiaandtheotheratVabbmfaruIslandintheMaldives.Thecompanyhadneverlookedbacksince.EvenwhenthetravelindustryexperiencedameltdownandwasplaguedbyretrenchmentsaftertheSep-tember11attacksontheWorldTradeCenterin2001,roomratesatBanyanTreerosesteadily,andnoemployeewasretrenched.
BRANDORIGINS
KnownasYungShueWaninthelocaldialect,BanyanTreeBaywasafishingvillageonLamma
.,,_
•····."'1
IslandinHongKong,whereHoandhiswifelivedforthreeidyllicyearsbeforehejoinedthefamilybusiness.Despitethevillage'smodestandrusticsetting,Horememberedittobeasanctu-aryofromanceandintimacy.ThelargecanopiesoftheBanyanTreeresembledtheshelteraf-fordedbyAsia'stropicalrainforests.Hothusde-cidedtonamehisresortBanyanTree,andposi-tionitasasanctuaryforromanceandintimacy.
THESERVICEOFFERING
Unlikemostotherresortsthen,BanyanTreere-sortscomprisedindividualvillasthatcame
with
aprivatepool,jacuzzi,orspatreatmentroom,eachdesignedtoofferguestsexclusivityandut-mostprivacy.Forexample,aguestcouldskinny-dipintheprivatepool
within
hisvillawithoutbe-ingseen
by
otherguests,puttinghim
in
aworldof
his
own(seeExhibit1foraprivatetwo-bedroompoolvilla
with
Jacuzziandspatreatmentpavilion).
Exhibit
1ViewfromaPrivateTwo-BedroomBanyanTreePoolVillawithJacuzziandSpa
T~~Pavilion

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