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Banyan Tree

Banyan Tree

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Case 7

Banvan Tree
Developing a Powerful Service Brand

Banyan Tree Hotels and Resorts had becotne a leading player in the luxury resorts and spa market in Asia. As pan of its growrh srrategy, Banyan Tree had launched new brunds' and brcrrld 'extensiorts that included resorts, spas, retail outlets, arid eve11 museum shops. Now, the company had to contertiplate how to manage its brand portfolio arid exparid its business while preserving the.distinctiveidentity and strong brand image of Banyan Tree. irr flogship brand


A brand synonymous with private villas, tropical garden spas, and galleries promoting traditional craft, Banyan Tree :Hotels and Resorts received its first guest in 1994 in Phuket, Thailand. Since then, it hads grown into a leading manager and developer of niche and premium resorts. hotels, and spas in Asia Pacific. 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 programk. Much interest was also generated by the company's pro-environmental im business practices. With a fr foothold in the luxury resorts market, the company introduced a' new and contemporary brand, Angsana, 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 how to expand its business and preserve its distinctive identity.

By mid-2004, Banyan Tree Holdings Pte. Ltd. (B'h4L) owned, managed, and operated 15 resorts and hotels, 35 spas,,and 38 retail .shops in more than

40 locations in 20 countries. In &t first ten years since its establishment in 1994, the company's flagship brand, Banyan Tree, had won over 100 international tourism, hospitality, and marketing awards, some of which included The "World's Best Spa" (Phuket) from Corlde Nast Traveler 1998, "Best Resort Hotel in Asia-Pacific" (Phuket) for three consecutive years from Business Traveller since 2002, "Seychelles' Best Resort" and "Seychelles' Best Spa" from World Travel Awards (2003).' The Banyan Tree brand had also been compared to internationally established brands such asHarley Davison and Manchester . United. BTHL was founded by. Ho Kwon Ping, a travel enthusiast and Former journalist. Prior to entering the hotels and nsons'business. Ho spent some 15 years managing the' family business, which was into everything imaginable. such as commodities. food products. consumer electronics. and property development. competing mainly on cost, and was not dominant in any particular couny or industry. The closing of a factory in Thailand one year after its openini-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 difficult to follow but would also lead him 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 fill, There existed a market segment that wanted

.This case was written by Jochen Wtnz and Maisy Koh. Corporate Director. Bnnd Management. at Banyan Tree Hotels and Resow. and at Angsana Resorts and Spa;. The authors gratefully acknowledge the assistance of Jeannene P. T. Ho, Corporate Director. Revenue Management of Banyan Tree Hotels and Resons. and Sin1 Siew Lien. in preparing this case, Copyright 0 2005 Jochen Winz and Maisy Koh. he complete list of awards won by Banyan Tree can be found on the company's Weh si3 at www.banyantne.com.

h e bed was a square platform in Tree Phuket when it was the company worked quickly lo build lw0 the middle of the room. H0 upon the idea offer guests exclusivity and utmost privacy. or spa tMtment each designed to more thjustaccommodation. one at Bintan Island in Indonesia and the other L L ~ ~ overlookinga lotus and illuminatedby ~ w . ' . convened to US$ at the exchange rate of I=USSI.jacuzzi.respectively.shangri-la. one of Hong Kong. for example. The large canopies of the Banyan Tree by Hilton in Thailand were priced below ~ ~ $ 3 5 0 . landscape. reflect and enhance the culture and heritage of the Operalions at BanyanTree began with only One destination.banyanate. and position it as a sanctuary for market. A seasoned traveler himself. made similar to the Thai resorts. For of building a resort comprising individual villas. romantic and intimate escapade for guests.Rices of villas a1 Seychelles originally s denominated in euros. ranging from US$650 to over US$7. To create a sense of exotic sensuality and ravaged to deemed too development by a United Nations ensure the privacy of its guests. and between mment pavilion). individualvillas that cme with a private n nonconforming belief that resorts should provide pl.400 for the resort in the All Banyan Tree resorts and villas were designed se~che11es. The rack puning him in a world of his own (see ~ ~ h i 1b i a for ~ rates are typically priced US$500 and private t w o . obtained fmm the Web site of Banyan Tree at www. Banyan Tm resorts extensive experiences a evident in his comprise. the Amanpuri in Thailand. Banyan Resorts and other resorts in the luxury resorts market.com. His Unlike most other resorts then. example. The spa pavilions in 'Rices a of July 2004. a guest could skinnydipin the private pool exotic in architectural design and positioned as a his vilh without being seen by ober guests. In Banyan Tree m launc that Phuket. convey the exoticism of the destination with its rich s w l y *and employe+was retrenched.2. www. the resorts were planningunit. Tree Bay was a fishing village on Lamma Island in For example. charged a rack rate for its villas idyllic years before he joined the 'family business.000 a night. The company soft lighting at night-in total contrast to the beds at Vabbinfaru Island in the had never looked back since*l3e1-1 when the travel accompanied by strong reading lights that were found induso experienced a meltdownand was plagued in most other hotels and resorts then.200 and US$4. resort in Phuket$situated On formermining land Once furnishings. Despite the village's modest and rustic setting. This was fueled by the sharp price gap between the luxurious Aman Known as Yung Shue Wan in the local dialect. Iocd flavor and luxurious feel. 'Prices a of July 2004. US$1. It was a bold decision.hiton. obtained fmm the Web sites of Shangri-La Hotels and Resorts and Hilton Hotels at www.comand.500 for the resort in Phuket. This was reflected in the architecture.b e h m pool villa with Jacuni and spa USS2. o niche product that could also bridge the price gap in this market. Ho resorts. . The furnishings On the retrenc~ments e r the Se~Rmber d l1 of Banyan Tree villas were delibeiately native to rates at World Trade Center in 2001. ' resembled the shelter afforded by Asia's tropical Noticing the big difference in prices between Arnan rainforests.Banyan Tree 495 private and intimate accommodation without the BRAND ORIGINS expectation of glitzy chain hotels. restored it after extensive rehabilitation works and boulders as a privacy screen (see Exhibit 2 costing a total of US$250 So was showing Banyan T Seychelles). and the service any form of offers. such as the remembered it to be a sanctuary of romance and whereas the prices of other luxi~ry Shangri-La Hotel and Phuket Arcadis Beach Resort intimacy.3 a value proposition had yet lo be aroundthe concept of providing"a sense of placev to Such adopted by any hotel or resort then. H saw potential for offering an innovative romance and intimacy. where Ho and his wife lived for three Aman's resorts.com. vegetation. Ho THE SERVICE OFFERING backpacked b u g h o u t the world in his youth. Ho thus decided to name his resort Resorts and the other resorts in the luxury resorts Banyan Tree. but the designed to blend into the natural landscape of the togetherwith H0 and his brother Ho ICwon surrounding environment and use the natural foliage Cjan.

.- ... .~im@nPool Mllo withhcuizi~dnd Tree ~liq~f&$@@t! .-- a ~rivdf&. s .- :.~i&~&r&b'm. .mHwl Mew f&ri 4 .. 4% Banyan Tree 7.

The spa experience was promoted as a sensorial. a chilled bottle of wine or champagne. In the Maldives. Service standards at Banyan Tree were determined in terms of customer satisfaction. The resorts* local flavor was also reflected in the services offered. Employees were allowed to vary the service delivery process according to local culture and practices. flowers. indigenous products. One such product was the "Intimate Moments" package. wedding ceremonies coi~ld be conducted underwater among the corals. mind. incense. The spa products used were natural. a couple could enjoy dinner on a traditional Thai long tail boat accompanied by private 'Thai musicians while cruising instead of dining in a restaurant. Banyan Tree Spas offered a variety of aromatic oil massages. Another draw of the resorts was the Banyan Tree Spa.Seychelles:wereconstructed around the large granite boulders and lush foliage to offer an outdoor spa experience in complete privacy. with a choice between indoors or outdoors treatment. for instance. intimate experience that would rejuvenate one's "body. specially created for couples. Non-clinical in concept. Banyan Tree Spas relied mainly on the "human touch" instead ofenergyconsuming high-tech equipment. Products and services offered were also conceived with the desired custbmir expeiience in mind. Banyan Tree Phuket also offered wedding packages in which couples were blessed by Buddhist monks. and soul. The first tropical garden spas in the industry. The couple will be presented with a variety of aromatic massage oils to inspire those intimate moments. and face and body beauty treatments using traditional Asian therapies. and at the outdoor bath with flowers and bath oils." and ' . as long as these were consistent with the brand promise of romance and intimacy. Guests could aiso choose to dine in a castaway sandbank with only their private chefs and a billion stars for company. 'Thus. This is presented as a surprise when guests returned to find . in Phuket. made from loial herbs and spices. satin sheets.their villas decorated with candles. found at every Banyan Tree property. some of which were unique to certain resorts. rather than typical service standards in the industry.

Items sold were made:by l&al artisans. The management of marketing activities was centralized at the Singapore headquarters for consistency in brand building. More than merely resort stays. The advertisements were visual in nature with succinct copy or showcasing the awards and accolades won." 1 HOTELS A N D RESORTS I I I I I Sanctuary For The Senses i Though' furnished luxuriously. handicrafts. which guests could use at home to replicate the Banyan Tree Spa experience. Brand awareness for Banyan Tree was generated largely through public relations and global marketing programs.498 Banyan Tree was mainly targeted at couples who could enjoy their treatments together. Global exposure was also achieved through Banyan Tree's membership in the Small Luxury Hotels and Leading Hotels of the World.to provide information on Banyan Tree products and services.canied out for a short period of time to gain recognition in the industry.s a treat for all the special occasions like honeymoons and wedding anniversaiies.banyantree." MARKETING BANYAN TREE. tribsl art. the sense . In the first two' yeirk' when Bahyan.retail outlet. A Banyan Tree Web site (. extensive advertising was. and together with the management came up with the marketing tagline "Sanctuary for the Senses.scaled down on advertising and kept it minimal. "Banyan Tree Experiences" was marketed as those intimate private moments with loved ones at the Banyan Tree resorts. Tree was launched. the company . rather than luxurious accommodation as touted by most competitors then. The result of Banyan Tree's efforts was "a . garmeqts. and . For example. and included traditionally woven handmade fabrics. and spa accekories. which management felt was more effective in conveying the "Banyan Tree Experience" from an impartial third-party perspective. markets. and the promise of romance.as providing roman tic and intimate "smallish" hotel experiences. The resorts saw theniselves as setting the stage for guests to create those unforgettable memories. a . the company's marketing communications was managed by an international advertising agency. "It'.com)was also set up to enable online reservaiions of rooms and spa services. Another guest commented. known as the Banyan Tree Gallery. BTHL appointed a few key wholesalers in each targeted market. To reinforce the Banyan Tree brand association with culture and heritage.mainly in highend travel magazines in key. The agency also designed the Banyan Tree logo shown in Exhibit 3.? as described by one guest.www. was set up in each resort. of place. . proktkd. Rather than selling through wholesale and retail agents that catered'to the general market. Exhibit 4 shows Banyan Tree advertisements highlighting the award-winning Banyan Tree' resorts. private holiday feeling. jewellery. Targeting high-end consumers. . they represent various independent exclusive hotels and have sales offices in major cities around the world. and help promote cottage crafts. relationships 'with travel editors and writers were cultivated to encourage visits to the resorts. It's the architecture.very exclusive. This helped increase editorial coverage on Banyan Tree. and worked closely with them to promote sales. Banyan Tree resorts were. such as incense candles and massage oils. . BTHL chose to work only with agents specializing in exclusive luxury holidays targeted at wealthy customers. subsequently. When Banyan Tree was first launched.

~ & e h s Awardi Won by Banyan Traa Resortr ~tibwcasin~: ~ h t i . ~ ~ ~ ~ . ~ + .A.Banyan Tree 499 ~ . t $ _ _ C 3U:$+ .

livelihood to the people who work. protect. in This creates a c~alture which everybody is friendly and helpful. and body lotion provided in the resorts were nontoxic and biodegradable. and had access to various amenities. which included . What we need-more than exact standards-is for them to have a sense of hospitality. to .forthe guests. Althoughmanagement imposed strict rules in the administration of' the resorts. environment. Refuse was recycled where possible and treated through an in-house incinerator system otherwise. Ho said. Banyan Tree invested liberally in staff welfare: employees were taken to and from work in air-conditioned buses. The company hoped to build the brand on values that employees and customers could identify with and support as part of their own life values. Thus.water from the risked disrupting the underground water-table. ~ v the detergents e ~ and soap used in the resorts were biodegradable. Through the retail arm Banyan Tree Gallery. ' greeting guests. Rather.in a rainforest were constructed around existing trees. "The most gratifying response is the sense of ownership that our staff began to have. refrigerators.minimize the impact the resort had on the natural environment. People come from villages.500 Banyan Tree BRAND VALUES Banyan Tree embraced such values as active caring for the natural and human environment and revitalizing local communities. the housekeeping teams were not restricted by a standard bed decoration. telephones. and at the same time minimizing the impact on the environment. and filled in reusable containers made from celadon or ceramic. At Banyan Tree Bintan. bath foam. Waste water was also treated and recycled in the irrigation of resort landscapes. hair conditioner. and promote the natural and human environment in which Banyan Tree resorts were located. These employment opportunities provided a source of income for the tribes and. sometimes. by virtue of being there. remembering their first names. and anticipating their needs. and medical and child care facilities. but they actually care about the property. Management believed that the stay would help employees understand better what guests will experience. and attached bathrooms. whi~h ecological system inthe'long run. Involving Guests in Environmental Conservation As part of the company's efforts to encourage environmental conservation and help save the. some employees got a taste of the "Banyan Tree ~xperierke" part of as their training. by people who are already quite well-versed in a service culture. in turn creating pride and respect among staff. enhance their delivery of special experiences. for example. In our business. the human environment efforts were evident in the active sourcing of furnishing from indigenous tribes to provide gainful employment. cutting down as few trees as possible. guests were invited to take part in the coral transplantation program (see Exhibit 5 for a picture of Creating Brand Ownership Among Employees All employees were trained in the basic elements of Five-star service establishments. they were given room for creativity although they had general guidelines for turning the bed to keep in line with the standards of a premium resort. For example. I Preserving the Environment Resorts were built from scratch using local materials as far as possible. the 70 villas located. service and'servicestandards do not always mean the same thing as in a developed country. In the Maldives. the company worked actively to preserve. at the same time. In addition. Banyan Tree organized activities that involved guests' participation to create more interest in environmental preservation. instead of extracting. Staff dormitories had televisions. The villas were built on stilts and platforms to avoid cutting trees and possible soil erosion. have not seen hotels." :. fresh water supply was obtained by the more expensive method of desalination. At Banyan Tree Maldives Vabbinfaru and Banyan Tree Seychelles. a sense that the guest is an honored person who. The company's generous staff welfare policies apparently paid off. including goodqual ity canteens. for instance. where standards are measured by efficiency and productivity. is able to give a decent . preserved their unique hen tage. in return. Toiletries. We operate in places that. such as shampoo. It's not a sense of financial ownership. employees were given room to exercise creativity and sensitivity. and.

such as environmental creation of employnient and various community messages aitached to in-villa turndown. and take supplied by local traders. most of which were more about the conservation of marine life. Guests were billed retail outlets. even as the resorts were progress of their effoqs. projects. The response from handicraft that complemented the villas' aesthetics i guests had been tremendously positive.from local artisans. were also purchased. Where possible. such as to the local famiers and traders by making it a point to the building of schools for the local coniniunity. Villas were constructed as far as possible in marine biology sessions that allowed them to learn from indigenous materials. the company also brought business patronage contributed to meaningful causes. Thus. besides providing employment for the ~ u e s t swere often happy to know that their local comnlunity. purchase fresh produce from them.- ooriyan I ree 3U I IF the island resort and its surrounding coral reefs). in US$[ per room night (of which they could opt out if The company believed in building profitable they wished) and the company matched dollar for resorts that would also benefit the local environment to and contribute to the local economies through the dollar. Details of the program were c~mmunicated guests through various ways. Traditional art. and the sur~i\~al the corilpany also supported local tourism ventures of local village crafts. that would both benefit the wider local cdmmunity . the Banyan Tree Gallery.gifts. Guests could also participate being built. ~ a & a nTree established The ~ r i Imperative the company engaged local craftsmen to produce ' q Fund to support community-based environmental indigenous & and handicrafts for sale at the resort's actiol~ the Asia Pacific region. Involving the Local Community Guests who participated in the progrim were then Banyan Tree also tried to involve the local community encouraged to return several years later to see the in all aspects of its business. and part n reef cleaning projects. In addition. restoration of devastated coral reefs.

. BTHL launched "Colours of Angsana" to penetrate the soft adventure and cultural tourism market. complete with an Angsana Gallery. but a number of jewels that form a chain around the world. the company constructed a food center with proper facilities for these hawkers. located less than one kilometer away from Banyan Tree. and the . Recognizing that the dispkity:in lifestyles and living standards between guests and the local community might create a sense of alienation within the local community. Ho planned to venture into locations in South America and Sou!hern Europe. and retail outlets. This was the first Banyan Tree hotel to be located in the city area. hosting lunches and parties for the elderly. each with their own &lor and name.2004. spas. amore contemporary and affordable . as Ho wanted them to "remain individual. to run as stand-alone spa businesses in other hotels. In 2000. and comprised a collection of individual hotels and resorts. to promote proper hygiene standards and limit pollution from refuse-and waste food scraps. In 2003. THE ROAD AHEAD To diversify its geographic spread. These hotels were acquired under management or revenuesharing arrangements." A list of Banyan Tree's current and planned properties is shown in the Appendix at the end of the case. independent of Banyan Tree hotels and resorts. given the higher costs of doing business in America and Europe.BANYANTREE BTHL.-took over the management of a city In hotel in. 'lbe hotel was rebranded as Banyan Tree ~hagkok. China's Yunnan province. As the sayanTree brand became established. Stand-alone Banyan Tree Spas and Banyan Tree ~allbrieswere set up . build new additional spa amenities and a Banyan Tree Gallery. a Community Relations Department was set up to develop and manage copunity outreach programs. noting that the local hawkers tended to peddle food and gift items on the beachfront near Banyan Tree properties. situated at more offbeat and exotic locations.after extensive renovation works were completed to upgrade the hotel's facilities. each with their own identity.'Hohad to be mindful of the brands' focus and be cartifid not to dilute the brands. unlike the other beachfront Banyan Tree properties. Also. In Phuket. Sydney.' like in artist's palette. GROWING THE . The Angsana Spa was so well received that the company quickly set up five other such spas in various hotels in Thailand. building a school and child care center. BTHL introduced the Angsana brand. in various cities such as Shanghai.as separate ventures. As the positioning of these hotels did not fit that of Banyan Tree. while expanding the company's network of hotels and resorts. India. and supporting local culhlral and religious activities were some of the community outreach programs introduced by the company.d . and Dubai.Deer Park in Giritale. operating either in other hotels or as stand-alone outlets. the company decided to' launch a new brand.502 Banyan Tree and enhance the visitor's experience. The first Angsana Spa was opened in 1999 at Dusit Laguna. would the same strategy that had brought fame and success to Banyan Tree in Asia be workable in the rest of the world? Ho's'ultimate vision was 'lo string a necklace of Banyan Tree Resorts around the world. Funding scholarships for needy children. two hotels were launched under the ''~olouif Angsanaw brand-the Gyalthang Dzong Hotel in Shangri-La. not quantity. and priced more affordably than Banyan Tree. one of several hotels at Laguna Ruket. the company began expanding its netwoik of spas and retail outlets. ow ever."' As . He also had to consider the strategic INTRODUCING NEW BRANDS After establishing a foothold in the luxury resorts market. The brand name was chosen. for example. in response to demand from hotel operators in Asia that were keen to introduce spa services'intheir hotels. catering to the more adven&uS segment of the market. Sri Lanka. Angsana.the heart of Bangkok from Westin Hotel company.Bintan. where he hoped to replicate Banyan Tree's success in Asia. and were "miinaged by" Angsana. "Colours of Angsana" was launched as a product line of Angsana. brand than Banyan Tree. an integrated resort development with shared fkilities located at Bang Tao Bay in Thailand. BTHL opened i(s first h g & a Resort & Spa.

. its success attracted various competitors. company's pordolio of brands.Banyan T. Since then. which offered similar products and services. . y . . . 503 . f i t of the. which comprised Banyan Tree. Thus. it w imperative that Banyan T e m retained its competitive advantage to ppvent losing its distinctive position in the market. . Angsana*and Coloun of Banyan T e certainly stood out among its re competitors in the resorts industry when it was first launched.

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