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Case 7 Banvan Tree

Developing a Powerful Service Brand

Banyan Tree Hotels and Resorts had becotne a 40 locations in 20 countries. In &t first ten years since
leading player in the luxury resorts and spa market in its establishment in 1994, the company's flagship -
Asia. As pan of its growrh srrategy, Banyan Tree had brand, Banyan Tree, had won over 100 international
launched new brunds' and brcrrld 'extensiorts that tourism, hospitality, and marketing awards, some of
included resorts, spas, retail outlets, arid eve11 which included The "World's Best Spa" (Phuket)
museum shops. Now, the company had to contertiplate from Corlde Nast Traveler 1998, "Best Resort Hotel
how to manage its brand portfolio arid exparid its in Asia-Pacific" (Phuket) for three consecutive years
business while preserving the.distinctiveidentity and from Business Traveller since 2002, "Seychelles'
strong brand image of Banyan Tree. irr flogship
'
Best Resort" and "Seychelles' Best Spa" from World
brand Travel Awards (2003).' The Banyan Tree brand had
also been compared to internationally established
A brand synonymous with private villas, tropical brands such asHarley Davison and Manchester
garden spas, and galleries promoting traditional craft, .
United. ,

Banyan Tree :Hotels and Resorts received its first BTHL was founded by. Ho Kwon Ping, a travel
guest in 1994 in Phuket, Thailand. Since then, it hads enthusiast and Former journalist. Prior to entering the
grown into a leading manager and developer of niche hotels and nsons'business. Ho spent some 15 years
and premium resorts. hotels, and spas in Asia Pacific. managing the' family business, which was into
Despite having minimal advertising, Banyan Tree everything imaginable. such as commodities. food
achieved global exposure and a high level of brand products. consumer electronics. and property
awareness through the company's public relations and development. competing mainly on cost, and was not
global marketing programk. Much interest was also dominant in any particular couny or industry. The
generated by the company's pro-environmental closing of a factory in Thailand one year after its
business practices. With a firm foothold in the luxury openini-because it lost out to other low-cost
resorts market, the company introduced a' new and producers in Indonesia-was the last straw for Ho,
contemporary brand, Angsana, to gain a wider who then realized that a low-cost strategy was not
customer base. As the resorts market became only difficult to follow but would also lead him
increasingly crowded with similar competitive nowhere. Determined to craft out something
4
offerings, lured by the success of Banyan Tree, the proprietary that would allow the company to become
company had to contemplate how to expand its a price maker rather than a price taker, Ho decided
business and preserve its distinctive identity. that building a strong brand was the only way for him
to maintain a sustainable competitive advantage.
COMPANY BACKGROUND The idea of,entering the luxury resorts market
By mid-2004, Banyan Tree Holdings Pte. Ltd. was inspired by the gap in the hotel industry that giant
(B'h4L) owned, managed, and operated 15 resorts chains such as the Hilton and Shangri-La could not
and hotels, 35 spas,,and 38 retail .shops in more than 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.
Banyan Tree 495

private and intimate accommodation without the BRAND ORIGINS


expectation of glitzy chain hotels. This was fueled by
the sharp price gap between the luxurious Aman Known as Yung Shue Wan in the local dialect, Banyan
Resorts and other resorts in the luxury resorts market. Tree Bay was a fishing village on Lamma Island in
For example, the Amanpuri in Thailand, one of Hong Kong, where Ho and his wife lived for three '
Aman's resorts, charged a rack rate for its villas idyllic years before he joined the 'family business.
ranging from US$650 to over US$7,000 a night, Despite the village's modest and rustic setting, Ho
whereas the prices of other luxi~ryresorts, such as the remembered it to be a sanctuary of romance and
Shangri-La Hotel and Phuket Arcadis Beach Resort intimacy. The large canopies of the Banyan Tree
by Hilton in Thailand were priced below ~ ~ $ 3 5 0 . ' resembled the shelter afforded by Asia's tropical
Noticing the big difference in prices between Arnan rainforests. Ho thus decided to name his resort
Resorts and the other resorts in the luxury resorts Banyan Tree, and position it as a sanctuary for
market, Ho saw potential for offering an innovative romance and intimacy.
niche product that could also bridge the price gap in
this market. A seasoned traveler himself, Ho THE SERVICE OFFERING
backpacked b u g h o u t the world in his youth. His Unlike most other resorts then, Banyan Tm resorts
extensive experiences an evident in his comprise, individualvillas that cme with a private
nonconforming belief that resorts should provide pl,jacuzzi, or spa tMtment each designed to
more thjustaccommodation. H0 upon the idea offer guests exclusivity and utmost privacy. For
of building a resort comprising individual villas, example, a guest could skinnydipin the private pool
exotic in architectural design and positioned as a his vilh without being seen by oberguests,
romantic and intimate escapade for guests. The rack puning him in a world of his own (see ~ ~ h i 1bfori a~
rates are typically priced US$500 and private t w o - b e h m pool villa with Jacuni and spa
USS2.500 for the resort in Phuket, and between mment pavilion).
US$1,200 and US$4,400 for the resort in the All Banyan Tree resorts and villas were designed
se~che11es.3 Such a value proposition had yet lo be aroundthe concept of providing"a sense of placev to
adopted by any hotel or resort then. reflect and enhance the culture and heritage of the
Operalions at BanyanTree began with only One destination. This was reflected in the architecture,
resort in Phuket$situated On formermining land Once furnishings, landscape, vegetation, and the service
deemed too ravaged to any form of offers. To create a sense of exotic sensuality and
development by a United Nations ensure the privacy of its guests, the resorts were
planningunit. It was a bold decision, 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, 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 Tm Seychelles). In Banyan Tree
Tree Phuket when it was launc that Phuket, for example, h e bed was a square platform in
the company worked quickly lo build lw0 the middle of the room, made similar to the Thai
resorts, one at Bintan Island in Indonesia and the other L L ~ ~ overlooking
~ w , a lotus and illuminatedby
at Vabbinfaru Island in the The company soft lighting at night-in total contrast to the beds
had never looked back since*l3e1-1when the travel accompanied by strong reading lights that were found .
induso experienced a meltdownand was plagued in most other hotels and resorts then. The furnishings
retrenc~mentsd e r the Se~Rmberl1 On the of Banyan Tree villas were delibeiately native to
World Trade Center in 2001, rates at convey the exoticism of the destination with its rich
s w l y *and employe+was retrenched. Iocd flavor and luxurious feel. The spa pavilions in

'Rices a of July 2004; obtained fmm the Web sites of Shangri-La Hotels and Resorts and Hilton Hotels at www.shangri-la.comand.
www,hiton.com,respectively.
'Prices as of July 2004; obtained fmm the Web site of Banyan Tree at www.banyanate.com.Rices of villas a1 Seychelles originally
denominated in euros; convened to US$ at the exchange rate of I=USSI.2.
. .
4% Banyan Tree

.- 7.. s ,;-

:,mHwl Mew f&ri


4 ., .-- Tree Pool Mllo withhcuizi~dnd~liq~f&$@@t!
a ~rivdf&,~i&~&r&b'm;~im@n
Seychelles:wereconstructed around the large granite desired custbmir expeiience in mind. One such
boulders and lush foliage to offer an outdoor spa product was the "Intimate Moments" package,
experience in complete privacy. The resorts* local specially created for couples. This is presented as a
flavor was also reflected in the services offered, some surprise when guests returned to find .their villas
of which were unique to certain resorts. Employees decorated with candles, incense, flowers, satin sheets,
were allowed to vary the service delivery process a chilled bottle of wine or champagne, and at the
according to local culture and practices, as long as outdoor bath with flowers and bath oils. The couple
these were consistent with the brand promise of will be presented with a variety of aromatic massage
'

romance and intimacy. 'Thus, in Phuket, for instance, a oils to inspire those intimate moments;
couple could enjoy dinner on a traditional Thai long Another draw of the resorts was the Banyan Tree
tail boat accompanied by private 'Thai musicians Spa, found at every Banyan Tree property. The first
while cruising instead of dining in a restaurant. tropical garden spas in the industry, Banyan Tree Spas
Banyan Tree Phuket also offered wedding packages offered a variety of aromatic oil massages, and face
in which couples were blessed by Buddhist monks. In and body beauty treatments using traditional Asian
the Maldives, wedding ceremonies coi~ld be therapies, with a choice between indoors or outdoors
conducted underwater among the corals. Guests could treatment. The spa products used were natural,
aiso choose to dine in a castaway sandbank with only indigenous products, made from loial herbs and
their private chefs and a billion stars for company. spices. Non-clinical in concept, Banyan Tree Spas
Service standards at Banyan Tree were relied mainly on the "human touch" instead ofenergy-
determined in terms of customer satisfaction, rather consuming high-tech equipment. The spa experience
than typical service standards in the industry. Products was promoted as a sensorial, intimate experience that
and services offered were also conceived with the would rejuvenate one's "body, mind, and soul," and
498 Banyan Tree

was mainly targeted at couples who could enjoy their Though' furnished luxuriously, Banyan Tree
treatments together. resorts were, proktkd,as providing roman tic and
To reinforce the Banyan Tree brand association intimate "smallish" hotel experiences, rather than
with culture and heritage, and help promote cottage luxurious accommodation as touted by most
crafts, a .retail outlet, known as the Banyan Tree competitors then. More than merely resort stays,
Gallery, was set up in each resort. Items sold were "Banyan Tree Experiences" was marketed as those
made:by l&al artisans, and included traditionally intimate private moments with loved ones at the
woven handmade fabrics, garmeqts, jewellery, Banyan Tree resorts. The resorts saw theniselves as
handicrafts, tribsl art, and spa accekories, such as setting the stage for guests to create those
incense candles and massage oils, which guests could unforgettable memories.
use at home to replicate the Banyan Tree Spa When Banyan Tree was first launched, extensive
experience. The result of Banyan Tree's efforts was "a advertising was.canied out for a short period of time
,very exclusive, private holiday feeling,? as described to gain recognition in the industry. subsequently, the
by one guest. Another guest commented, "It'.s a treat company .scaled down on advertising and kept it
for all the special occasions like honeymoons and minimal, ,mainly in highend travel magazines in key,
wedding anniversaiies. It's the architecture, the sense markets. The advertisements were visual in nature
of place, and the promise of romance." . with succinct copy or showcasing the awards and
accolades won. Exhibit 4 shows Banyan Tree
MARKETING BANYAN TREE. advertisements highlighting the award-winning
Banyan Tree' resorts.
In the first two' yeirk' when Bahyan, Tree was Brand awareness for Banyan Tree was generated
launched, the company's marketing communications largely through public relations and global marketing
was managed by an international advertising agency.
programs. For example, relationships 'with travel
The agency also designed the Banyan Tree logo
editors and writers were cultivated to encourage visits
shown in Exhibit 3, and together with the
to the resorts. This helped increase editorial coverage
management came up with the marketing tagline on Banyan Tree, which management felt was more
"Sanctuary for the Senses."
effective in conveying the "Banyan Tree Experience"
from an impartial third-party perspective. A Banyan
Tree Web site (,www.banyantree.com)was also set up
to enable online reservaiions of rooms and spa
services, and .to provide information on Banyan Tree
products and services.
The management of marketing activities was
centralized at the Singapore headquarters for
consistency in brand building. BTHL appointed a few
key wholesalers in each targeted market, and worked .
closely with them to promote sales; Rather than
selling through wholesale and retail agents that
catered'to the general market, BTHL chose to work
only with agents specializing in exclusive luxury
holidays targeted at wealthy customers. Global
exposure was also achieved through Banyan Tree's
1 HOTELS I
I
I membership in the Small Luxury Hotels and Leading
A N D RESORTS I Hotels of the World. Targeting high-end consumers,
I they represent various independent exclusive hotels
Sanctuary For The Senses
i and have sales offices in major cities around the
world.
Banyan Tree 499

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

BRAND VALUES greeting guests, remembering their first names, and


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

sourcing of furnishing from indigenous tribes to Involving Guests in


provide gainful employment. These employment Environmental Conservation
opportunities provided a source of income for the As part of the company's efforts to encourage
tribes and, at the same time, preserved their unique environmental conservation and help save the,
hen tage. environment, Banyan Tree organized activities that
involved guests' participation to create more interest
Creating Brand Ownership Among in environmental preservation. In the Maldives, for
Employees instance, guests were invited to take part in the coral
All employees were trained in the basic elements of transplantation program (see Exhibit 5 for a picture of
Five-star service establishments. which included
- -
ooriyan I ree 3U I

the island resort and its surrounding coral reefs). 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, even as the resorts were
progress of their effoqs. Guests could also participate being built. Villas were constructed as far as possible
in marine biology sessions that allowed them to learn from indigenous materials, most of which were
more about the conservation of marine life, and take supplied by local traders. Traditional art, and
part ni reef cleaning projects. The response from handicraft that complemented the villas' aesthetics
guests had been tremendously positive. were also purchased.from local artisans. In addition,
' established The ~ r i Imperative
~ a & a nTree q the company engaged local craftsmen to produce
Fund to support community-based environmental indigenous & and handicrafts for sale at the resort's
actiol~in the Asia Pacific region. Guests were billed retail outlets, the Banyan Tree Gallery.
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
dollar. Details of the program were c~mmunicatedto and contribute to the local economies through the
IF
guests through various ways, such as environmental creation of employnient and various community
messages aitached to in-villa turndown.gifts. projects. Thus, besides providing employment for the
~ u e s t swere often happy to know that their local comnlunity. the company also brought business
patronage contributed to meaningful causes, such as to the local famiers and traders by making it a point to
the building of schools for the local coniniunity, purchase fresh produce from them. Where possible,
restoration of devastated coral reefs, and the sur~i\~al the corilpany also supported local tourism ventures
of local village crafts. that would both benefit the wider local cdmmunity
502 Banyan Tree

and enhance the visitor's experience. In Phuket, for brand than Banyan Tree, to run as stand-alone spa
example, noting that the local hawkers tended to businesses in other hotels.
peddle food and gift items on the beachfront near The first Angsana Spa was opened in 1999 at
Banyan Tree properties, the company constructed a Dusit Laguna, one of several hotels at Laguna Ruket,
food center with proper facilities for these hawkers, to an integrated resort development with shared fkilities
promote proper hygiene standards and limit pollution located at Bang Tao Bay in Thailand. The Angsana
from refuse-and waste food scraps.. Spa was so well received that the company quickly set
Recognizing that the dispkity:in lifestyles and up five other such spas in various hotels in Thailand.
living standards between guests and the local In 2000, BTHL opened i(s first h g & a Resort &
community might create a sense of alienation within Spa, complete with an Angsana Gallery, located less
the local community, a Community Relations than one kilometer away from Banyan Tree.Bintan. In
Department was set up to develop and manage 2003, BTHL launched "Colours of Angsana" to
copunity outreach programs. Funding scholarships penetrate the soft adventure and cultural tourism
for needy children, building a school and child care market, catering to the more adven&uS segment of
center, hosting lunches and parties for the elderly, and the market. "Colours of Angsana" was launched as a
supporting local culhlral and religious activities were product line of Angsana, and comprised a collection
some of the community outreach programs introduced of individual hotels and resorts, each with their own
by the company. identity, situated at more offbeat and exotic locations,
and priced more affordably than Banyan Tree. These
GROWING THE .BANYANTREE hotels were acquired under management or revenue-
sharing arrangements, and were "miinaged by"
In BTHL,-took over the management of a city Angsana. The brand name was chosen, as Ho wanted
hotel in.the heart of Bangkok from Westin Hotel them to "remain individual, each with their own &lor
company. 'lbe hotel was rebranded as Banyan Tree and name,' like in artist's palette."' As .d,2004, two
~hagkok,after extensive renovation works were hotels were launched under the ''~olouif Angsanaw
completed to upgrade the hotel's facilities, build new brand-the Gyalthang Dzong Hotel in Shangri-La,
additional spa amenities and a Banyan Tree Gallery. China's Yunnan province, and the .Deer Park in
This was the first Banyan Tree hotel to be located in Giritale, Sri Lanka.
the city area, unlike the other beachfront Banyan Tree
properties. THE ROAD AHEAD
As the sayanTree brand became established,
the company began expanding its netwoik of spas and To diversify its geographic spread, Ho planned to
retail outlets. Stand-alone Banyan Tree Spas and venture into locations in South America and Sou!hern
Banyan Tree ~allbrieswere set up .as separate Europe, where he hoped to replicate Banyan Tree's
ventures, independent of Banyan Tree hotels and success in Asia. ow ever, given the higher costs of
resorts, in various cities such as Shanghai, Sydney, doing business in America and Europe, would the
India, and Dubai, operating either in other hotels or as same strategy that had brought fame and success to
stand-alone outlets. Banyan Tree in Asia be workable in the rest of the
world? Ho's'ultimate vision was 'lo string a necklace
INTRODUCING NEW BRANDS of Banyan Tree Resorts around the world; not
quantity, but a number of jewels that form a chain
After establishing a foothold in the luxury resorts around the world." A list of Banyan Tree's current and
market, BTHL introduced the Angsana brand, in planned properties is shown in the Appendix at the
response to demand from hotel operators in Asia that end of the case.
were keen to introduce spa services'intheir hotels. As Also, while expanding the company's network of
the positioning of these hotels did not fit that of hotels and resorts, spas, and retail outlets,'Hohad to
Banyan Tree, the company decided to' launch a new be mindful of the brands' focus and be cartifid not to
brand, Angsana, amore contemporary and affordable dilute the brands. He also had to consider the strategic
Banyan T.. y 503
. . . . .

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