This case was written by Chua Chei Hwee, Research Associate and Arnound De Meyer, Akzo Nobel
Fellow in Strategic Management, Professor of Technology Management & Asian Business at
INSEAD. It is intended to be used as a basis for class discussion rather than to illustrate either
effective or ineffective handling of an administrative situation.
Copyright © 2001 INSEAD, Singapore
Banyan Tree Resorts & Hotels:
Building the Physical Product
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Copyright © 2001, INSEAD, Singapore.
“Hey, Abid, I’ve just looked at the costing for the Banyan Tree Seychelles – we
are way over budget for the poolside bar. Can you manage without the pizza
oven? If not, I’ll have to leave out that bar counter you wanted!” K C Ho asked.
At the other end of the telephone line, Abid Butt sighed:
“How am I going to serve pizza at the poolside bar then?”
“Mmm… how about bringing the pizzas from the main kitchen instead? It’s not
that far away. And we don’t expect many orders for pizza, right?” K C Ho
“Alright, I guess the bar counter is more important than the pizza oven,” Abid
Butt replied.
This was a typical conversation between K C Ho, Executive Director of Architrave Design
and Planning (ADP) and Abid Butt, Operations Vice President
of Banyan Tree Hotels &
Resorts, during the development of a new Banyan Tree resort. Requests for changes in the
design of the resort were often made, and trade-offs sometimes had to be made to keep within
budget. These discussions ranged from extremely informal telephone calls, to emails and
faxes. And changes were implemented straight away. Unlike most hotel owners who had to
engage various external companies, such as hotel operators, architects and construction
management companies to develop and manage their hotels, Banyan Tree Hotels & Resorts

(BTR) was not only both the owner and the operator, but also had in-house construction
management capabilities, as well as architectural design capabilities, through its subsidiary,
. Since key project players were all in-house staff, BTR had more flexibility in making
design changes and enjoyed much shorter response times. Red tape was minimised because
they did not have to worry about any contractual implication of the changes. Moreover,
everybody was integrated into the company’s corporate culture and was familiar with each
other’s personalities, preferences and styles of working.
Building a Banyan Tree Resort from Scratch
Key Players
Building a Banyan Tree resort from scratch typically involved six main groups of people.
Under the lead of K P Ho, Chairman and President of BTR, these key players included staff
from (1) ADP, (2) the BTR Project Management Department (BTR Project Mgt), (3) the BTR
Operations Department (BTR Ops), (4) the BTR Marketing Department (BTR Mktg), (5) the

Abid Butt was also the General Manager of Banyan Tree Phuket.
BTR had three Banyan Tree resorts. They were located in Phuket (Thailand), Maldives and Bintan
(Indonesia). Its new resorts in Seychelles and Nepal were due to be completed in mid-2001 and mid-2002,
ADP’s core activity was architectural design for a range of projects that included hotels, resorts, offices,
apartment complexes, houses, shopping centres, clubs and water filtration plants.

Copyright © 2001, INSEAD, Singapore.
BTR Purchasing Department (BTR Purchasing), as well as (6) external consultants (see
Exhibit 1). Project teams would consist of 10-20 key people, depending on the size and
complexity of the project.
Processes Involved in a Typical Project
Stage 1: Site Visit and Feasibility Evaluation
The project management process (see Exhibit 2) in building a Banyan Tree resort usually
began with a site visit by representatives from ADP, BTR Ops and BTR Mktg who would
conduct a site feasibility evaluation. ADP would look into areas such as the view of the site,
the quality of the land, its price and current ownership plus conditions of sale, and the local
bylaws. Sites with a unique view, such as the one in Nepal which faced the Himalayan ranges,
or sites with direct access to a good quality beach, were preferred. The quality of the land was
evaluated in terms of its terrain, size and shape, which had to be optimum for developing a
resort. Local architectural consultants were often hired at this point to help in land evaluation.
BTR Ops would check the local cost conditions for operating a resort, the availability of local
staff, as well as room rates charged and occupancy rates of existing hotels in the vicinity. As
for BTR Mktg, it would assess the market potential of the site for a luxury resort such as
BTR. Market potential was the most important factor in evaluating project feasibility. Since
BTR often preferred sites that were unique and secluded, air access to the destination and
reasonably easy access to the site in terms of distance and mode of transport were key
considerations. The level of room rates that a resort could charge was also considered. A
decision on whether to develop a resort on the proposed site would be made after combining
all the inputs from these three groups. On average, only one in every ten proposed sites would
pass the feasibility evaluation in this first stage, and result in a project being carried out.
Stage 2: Project Outline Brief, Design Development and Financial Evaluations
Once a proposed site was deemed feasible, an outline brief of the project would be formulated
based on the inputs of ADP, BTR Ops and BTR Mktg for the feasibility study done in the first
stage. Here, several initial project decisions would be made. These included the number of
villas and their level of luxury, and front of house facilities, etc. These initial propositions
helped ADP to determine the preliminary resort design and construction method. ADP’s
inputs would enable BTR Project Mgt and BTR Ops to estimate the cost of the construction
project and the operational costs of the resort, respectively, while BTR Mktg proposed the
room rates to be charged. Subsequently, the construction cost estimates, the resort operational
cost estimates and the proposed room rates were sent to BTR Ops for a profit and loss
analysis. In the initial proposals, ADP and BTR Ops would usually include a lot of
requirements that would translate into added costs. Hence this whole process of determining
the preliminary design, construction method and room rates, and estimating construction and
operational costs, would be repeated several times until the profit and loss analysis results
were deemed acceptable. The outline brief was always flexible and changes were often made
as the project progressed.
Having agreed the preliminary design and construction method, ADP would go on to the
design and development phase of the project where more architectural details and
construction requirements were determined. From this point, external consultants would be
hired for their specialised inputs until the construction of the resort was completed. The more

Copyright © 2001, INSEAD, Singapore.
detailed architectural and construction requirements were then sent to BTR Project Mgt for a
second level of cost estimation, which was then sent to BTR Ops for another round of profit
and loss analysis. Again, several series of modifications would have to be made to the
proposal until a satisfactory profit and loss analysis result was attained.
A typical architectural and construction costs breakdown was as follows:
Type of cost Percentage
Structural & Architectural 40%
Mechanical & Electrical 20%
Interior Design 20%
Landscaping 10%
Infrastructural (e.g. Road building
and power supply, etc.)

Once the proposed architectural details and construction requirements made during the design
and development phase were accepted, production drawing would commence. Here, very
detailed specifications were made so that construction contractors would know the exact
scope of their work scope, down to the level of the particular construction method and type of
materials to be used, etc. At the same time, BTR Project Mgt would appoint one of its staff as
the project manager for the next stage of the construction.
Stage 3: Construction and Pre-opening Preparations
Once appointed, the project manager would draft tender documents and send them out
together with the production drawings for bids. There were usually four main tender
packages: (1) structural & architectural tender, (2) mechanical & electrical tender, (3) interior
design tender, and (4) landscape tender. Any specialised tenders would usually be sent out
separately and then subsumed under a main contractor as a nominated subcontractor. This
made it easier to manage the contractors, and to keep track of their work progress. Tenders
were not necessarily awarded to the lowest bidder as price was not the sole factor under
consideration. Other factors such as the quality of work, capability, financial strength and
experience in hotel building were also considered. In cases where local contractors were too
small, or incapable of handling the job, international contractors would be hired.
After the tenders were awarded, the project would advance into the construction phase which
usually took about 12-24 months to complete, depending on the size of the project. The
project manager would be on site to manage the construction progress and the contractors.
One of his main jobs would be the administration of contracts because there were often design
changes that had implications on the work scope, schedule and costs of the project, and
affected the contractual terms. The project architect from ADP would also be involved in the
construction stage. He had to clarify all queries regarding design issues and had to visit the
site to check on the quality of the construction work done.
Meanwhile, BTR Ops would prepare its furniture, fittings, equipment (FFE) and operating
equipment (OE) list and send it to BTR Project Mgt for costing. This initial proposal would
always end up being modified several times until it had been reduced to a realistic level based
on the budget allocated. The list would then be sent to BTR purchasing for vetting and

BTR often had to build roads leading to its resorts because they were located in remote areas.

Copyright © 2001, INSEAD, Singapore.
checking for local substitutes. Once the list was finalised, BTR purchasing would despatch its
order so that the shipment would arrive towards the end of the construction phase. Following
this, BTR Ops would begin hiring staff, starting with the position of general manager and
other managerial positions. Once hired, these managers would in turn start hiring the rest of
their staff. The period of advance hiring depended on local staff conditions. In most of BTR’s
cases, hotel staff had to be hired several months before the soft opening of the resort, because
they had to undergo a few months of English language and hotel service training.
Near the end of the construction phase, the FFE and OE shipment would arrive. It was
therefore crucial that the storeroom of the resort was built early in order to be ready for it.
Stage 4: Soft and Grand Openings
The last stage of the project involved two big events, the soft opening
and grand opening of
the new resort. A lot of effort would be spent in preparing for the soft opening as it was the
most critical stage of the project. From this point there was no turning back. Meeting the soft
opening schedule often involved working around the clock, as contractors and others involved
with the project coped with various delays.
After the soft opening, all the remainder of the resort would be completed, and then a big
party would be thrown to celebrate the grand opening.
Managing Critical Issues
In delivering a brand new Banyan Tree resort, there were several critical issues that project
leaders and team members had to manage particularly well. These areas of concern affected
the progress and success of the project. They were the design and quality of the resort, the
schedule and budget of the project, project team composition and management of team
dynamics, usage of environmentally friendly practices, and compliance with government laws
and regulations.
Designing the Resort
Since the Banyan Tree brand attributes were ‘romance’ and ‘intimacy’, ADP had to make sure
that the design of the resort itself – and especially the villas, the core of its product offering,
reflected them. “To get inspirations for more innovative designs, we often have brainstorming
sessions to draw ideas from everybody in the team. We also refer to architectural design
magazines or visit other hotels and resorts to survey their design”, said Dharmali Kusumadi
General Manager of ADP Singapore. While the aesthetic aspect of the resort’s design was
important, an equally vital consideration was creating a design that delivered the best value
based on the budget. They usually skimmed on non-crucial aspects of the resort while
maximising the budget on more important aspects like the interior decor of the villas. The
architects worked on sophisticated cad-cam computers and used Autocad design and drafting

Soft opening of the resort was when the first group of paying guests arrived when the resort was near full
completion, and had all the basic facilities in place. Usually, guests were given a discount during this

Copyright © 2001, INSEAD, Singapore.
software. Their computers were upgraded frequently so that they could use the latest software
that usually had higher system requirements.
It was also important that the design requirements of other key players in the project were
well managed by ADP. Various parties, such as BTR Ops and BTR Mktg, would often
request design changes, and these changes usually impeded the project’s progress. Although
changes were inevitable, ADP made a point of minimising unnecessary occurrences by
getting their inputs early or by anticipating their needs. For instance, from previous
experience, ADP found that it was best to hire the hotel chef either in the early stages of the
project, so that he could decide on the layout of the kitchen, or to hire him at the end of the
project when changes could no longer be made. Midway design changes posed a lot of
problems because mechanical and electrical provisions in the kitchen based on the initial
proposed layout were always among the first things to be constructed. If the chef for the new
resort was not hired in the early stages, K C Ho would entrust BTR’s chief chef (at the
corporate level) to decide on the kitchen design.
Ensuring Quality
To ensure that contractors delivered good quality work, K C Ho, the project architect and the
interior designer would often go to the site together to check on their work. Explaining an
effective way of ensuring quality, K C Ho said, “We would always ask the contractors to
build a mock-up villa, i.e. to advance the work on one villa and fit everything as near as
possible to the real thing, with all the interior fittings, furnishings, and furniture down to the
fabrics, etc. From there we would be able to see if the quality of their work met our
requirements. If not, they would have to rework until the quality was satisfactory. Then, we
would set that standard as the benchmark quality to be delivered. Building a mock-up also
gave us an additional benefit: It allowed us to have the real visual impact of the product. For
example, sometimes the colour of a particular fabric might look nice on a small sample but
turn out looking gaudy on a sofa set. Hence, the mock-up gave us the opportunity to make
final changes before it was too late.”
Completing in Optimum Time and Keeping to the Schedule
As the owner and developer of the resort, two of BTR’s major concerns were building the
resort in optimum time and keeping to the schedule. It usually pursued a ‘fast-track’ schedule
by using various ways to build faster than the local standards which, as most sites in remote
areas, were usually not very speedy. For instance, it would build using a pre-fabrication
method; or engage more than one contractor so that different parts of the resort could be built
simultaneously. Local contractors were often small in size and had limited capabilities.
Sometimes, they would also embark on a ‘crash programme’, where construction work was
being tendered out according to the sequence of work, without waiting for all areas of design
to be ready. Since this method was deemed risky in terms of costs and design, it was only
used when necessary. One such example was when a new addition had to be ready at the same
time as the rest of the resort which was already half built. The completion date of the
construction and the opening of the resort were always timed to coincide with the start of the
high season.

Copyright © 2001, INSEAD, Singapore.
Although the main motivation for contractors to keep to the schedule was through the
structure of their tender contracts, dates usually tended to slip, and there were often delays in
the construction stage. Impediments to work progress often came in the form of wrong
manpower and materials estimations by the contractors, delays in shipments due to changes in
government regulations, and unfavourable weather conditions.
Completing the project in optimum time and keeping to the schedule were two of the most
pressing and difficult issues the project manager had to deal with. Project managers used the
computer programme Microsoft Project to track the project schedule. To monitor work
progress, the project manager would set weekly targets. If these were not met, he would look
into the problems and think of ways to overcome them. Depending on the problem, he could
either approach ADP to make simplifications to the design or hire extra contractors to finish
the job. Nevertheless, the latter solution was only used in extreme situations.
Recounting solutions for pushing contractors to finish on time, that he had learned from
previous projects, K C Ho said, “Usually contractors would fall into delay. So we would
select a date that seemed realistic and tell them that we would be holding a black tie dinner on
that evening. We would tell them how many VIPs were invited and the list of things that had
to be ready by then, such as the kitchen, the ball-room and a certain number of rooms, etc.
This method usually managed to push the contractors to deliver about 80% - 90% of the
desired requirements on time.”
Internally, the decision making process during the construction stage was hastened by the
formation of a GX group which met regularly and had the authority to make overall project
decisions below a certain financial limit without the need for approval from K P Ho. This
concept of a GX group had its origins in one of ADP’s earlier projects, Laguna Beach Resort.
Towards the end of constructing that resort, the owners wanted to hasten the construction
progress. So they appointed four people to act as a small, tight body that met regularly and
was able to make decisions without referring to them. It was then jokingly referred to as the
‘Gang of Four’ or G4. The group was so effective that the concept was adopted in subsequent
projects. Since the number of people varied from project to project, it was eventually termed
‘GX’ where G represented Group and X represented an arbitrary number, reflecting the
number of persons in the group. The GX group usually consisted of (1) the project manager,
(2) the project architect, (3) the spa manager, (4) the general manager, and (5) the purchasing
manager, although a few more people might be involved as well. In addition, where ADP and
BTR Project Mgt were concerned, they were also empowered to make decisions below a
certain financial limit without consulting K C Ho, other than when those decisions had
aesthetic implications.
Managing the Budget
The project budget was estimated through a number of rounds of profit and loss analysis and
was controlled by BTR Project Mgt. For all its projects so far, BTR Project Mgt had been able
to keep all costs within 2-5% of the budget. It tracked all costs and produced out monthly
reports. When any of the sub-budgets was exceeded, BTR Project Mgt would ask the people
involved to make trade-offs in their expenditures.
Sometimes, overall project budgets had to be reduced due to unforeseen circumstances, and
all parties involved would have to make adjustments. For example, BTR was in the midst of

Copyright © 2001, INSEAD, Singapore.
building the Angsana
Bintan resort when the Asian financial crisis started in late 1997 and its
bank was no longer able to provide the loan. Although stopping the project was an option,
BTR chose to reduce its scale to a level at which its own financial resources could suffice. It
reasoned that since a substantial portion of the resort had already been built, it was better to
finish the project on a smaller scale and be able to generate operating revenues than to
abandon the project entirely. Moreover, BTR wanted to keep its credibility with its buyers. It
had sold some suites to purchasers who could either keep them for their own use or let BTR
manage them as an investment item. In the event, BTR reduced the number of rooms by
having one wing of four storeys and another of two storeys, instead of having two wings of
four storeys each. To cut costs further, it also simplified the design of various facilities such
as the swimming pool. However, it did not reduce the number of resort facilities. “Luckily, we
had an in-house design office. We were able to make all these changes very quickly. In
hindsight, downscaling the project actually improved the design of the resort as it made the
site less dense,” Dharmali said as he recalled how they had dealt with the situation.
Assembling the Team and Managing Team Dynamics
During the construction stage, having a competent construction team that worked together
well was vitally important. Besides having strong technical skills, team members also needed
good communication and co-ordination skills. This was especially important for the project
architect and the project manager who had to provide accurate information and set the right
objectives and targets for external consultants and contractors. BTR believed in selecting staff
who were self motivated, and rewarding them well with good salaries and good guidance.
Staff had an annual performance appraisal and their salary adjustments were performance
From his experiences in project management, K C Ho found that the success and progress of a
project hinged on the leader’s ability to manage team dynamics. Very often, various parties
holding responsibility for different aspects of the project had conflicting requirements and
desires. Explaining his approach in managing these situations, he said, “I usually hold
marathon meetings. I get them into a meeting room at 9 am, go through every single problem
and let them fight it out on the spot. We usually finish the meeting at about 5 pm, and we even
work during lunch. These meetings are utterly exhausting but they are very fruitful because a
problem usually concerns three or four parties. By putting them all in the same room, they can
thrash out everything and find a solution together. I would usually take the lead in proposing
Being Environmentally Friendly
Environmental considerations had always been a top priority in BTR’s resort development
. K C Ho said, “With us, conservation and enhancement of the environment is an

‘Angsana’, another of BTR’s brands, was a four-star resort with the same Banyan Tree brand attributes of
romance and intimacy. Angsana resorts were located at Bintan (Indonesia), Great Barrier Reef (Australia)
and Bangalore (India).
BTR’s Laguna Phuket project clinched the ‘Global Environment Award’ given by the American
Express/International Hotel Association in 1992. BTR was also awarded the British Airways’ Tourism for

Copyright © 2001, INSEAD, Singapore.
automatic criterion when we design and plan. We hardly ever debate it because it has become
a reflex, something which we take for granted.” Among other environment practices, BTR
insisted on not using wood as a structural element in constructing its resorts. It also minimised
air-conditioning in the public areas of its resorts through architectural design. This helped to
avoid the use of CFC-based air-conditioning and reduced power consumption. So far, it had
not encountered any problems from environmental groups in developing its resorts since it
always exceeded the local laws and environmental standards. Also, environmental awareness
in Asia where most of its resorts were located was not very strong.
Abiding Government Bylaws
Since BTR’s resorts were located in different countries, it had to familiarise itself with local
governmental bylaws and manage its relationship with the local government. It had a full-time
government liaison staff for its Phuket operations, and engaged a local law firm to represent it
in Maldives. As for it operations in Bintan, government liaison was accomplished through
Bintan Resort Management Pte Ltd, the master developer of all resorts in Bintan.
Sometimes, new laws and regulations might adversely affect the progress of a project. For
example, when Banyan Tree Maldives was under construction, its progress was impeded
when the government of Maldives enacted a temporary ban on all vessels from India when
India was hit by an epidemic outbreak. This resulted in BTR being unable to import sand
from India for its concreting work and it had to wait three months for the ban to be lifted.
Importing sand from elsewhere was not feasible because alternative sources were too far
away. To minimise the disruption, the project manager re-scheduled the construction work to
items that did not involve concreting, such as wood working and bar bending, while waiting
for the ban to be lifted.
Future Challenge of Project Management
Noticing a trend towards increasing specialisation of skills, K C Ho felt that project
management would become a much more daunting task in the future. For instance, most
mechanical and structural engineers who used to provide acoustic advice had ceased doing so
and an extra acoustic consultant had to be hired. As he counted the number of specialists who
were usually involved and the additional ones which might be needed in the future, K C Ho
said, “I foresee that we could literally run into having to deal with about 20 specialists! At the
present level of specialisation, managing the situation is difficult and time-consuming enough.
If there’s going to be even more people in the project group to represent their own areas of
expertise, it will be even more difficult to manage the team dynamics and find solutions that
catered to everybody’s concerns. I also can’t imagine how much more time will be spent on
ironing out their conflicting requirements.”

Tomorrow Highly Commended Award for three consecutive years (1997, 1998 and 1999) and the Conde
Nast Traveler’s Ecotourism Award in 1999.

Copyright © 2001, INSEAD, Singapore.
Exhibit 1
Brief on Key Groups of Players

Architrave Development & Planning (ADP)
Headed by K C Ho, Executive Director, ADP was in charge of the project’s architectural
design and sometimes interior design. The architect team usually consisted of (1) Dharmali
Kusumadi, General Manager of ADP Singapore, who oversaw the team, (2) a project
architect, and (3) an external architect from a local partner. Since the projects were usually
outside Singapore, ADP found it useful to partner with a local architectural firm that was
familiar with local conditions.
BTR Project Mgt
Also headed by K C Ho, BTR Project Mgt was in charge of project management, project cost
and contract control. The team consisted mainly of cost controllers and project managers.
BTR Ops, BTR Mktg, and BTR Purchasing
Since BTR was the operator of the resort, inputs and action by BTR Ops, BTR Mktg, and
BTR Purchasing were crucial in various stages of the project. Representing BTR Ops, Abid
Butt, Vice-President of Operations, supported by one or two of his staff, would evaluate
proposed sites on the basis of operational issues, make operational cost evaluations and be
involved in other operational activities. BTR Mktg was represented by Edwin Yeo, Senior
Vice-President of Marketing. His team evaluated the market potential of proposed sites and
designed marketing activities to launch new resorts. Represented by Teo Gek Kiow,
Purchasing Manager, BTR Purchasing’s role was to procure the FFE and OE for new resorts.
External consultants
Where external consultants were concerned, those hired and their level of involvement usually
depended on the size of the projects. Bigger and more complex projects usually required more
specialised consultants. Types of external consultants hired included (1) structural engineers,
(2) mechanical & electrical engineers, (3) landscapers, (4) lighting consultants, (5) interior
designers, etc. Although BTR was familiar with a small group of consultancies, it made it a
point of not using the same companies all time so that it would not only get to try new
companies but also ensured that its regular suppliers did not become complacent.

Copyright © 2001, INSEAD, Singapore.
Exhibit 2
Project Management: Processes in Building a Banyan Tree Resort
Architrave Design &
Planning (ADP)
Banyan Tree
Banyan Tree
- Operator
Banyan Tree
Banyan Tree
- Purchasing

Stage I

Stage II

Stage III

Stage IV

Suggest local
Hire & train staff
FFE&OE arrives
Grand opening
Award Tenders
Hire local
Visit site Visit site
• View
• Land Quality
• By laws
• Local costs
• Staff availability
• Room rates &
occupancy rates of
nearby hotels
• Air access
• Market
• Room Rates
OUTLINE BRIEF: No. of villas, luxury level of villas, facilities of the front house, etc.
Profit & Loss
Analysis -
Multiple rounds
Room Rates
Design & Devt. Cost
Profit & Loss
Analysis –
Multiple rounds
Hire other
Project Mgr
A series of tenders Draft out
tender docs
(Will take
about 12 –
24 months,
depending on
size of
FFE&OE list
Soft Opening
Boulevard de Constance, 77305 Fontainebleau Cedex, France
Telephone 33 (0)1 60 72 40 00 Fax 33 (0)1 60 74 55 00/01
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