Questions

1. What are the main factors that contributed to Banyan Tree's success?

2. Evaluate Banyan Tree's brand positioning and communications strategies. Can Banyan Tree maintain its unique positioning in an increasingly overcrowded resorts market?

3. Discuss whether the brand portfolio of Banyan Tree and Angsana, as well as the product portfolio of beach resorts and city hotels, spas, galleries, and museum shops fit as a family. What are your recommendations to Banyan Tree for managing these brands and products in future?

4. What effect does the practice of corporate social responsibility have on brand equity?

5. What potential problems do you foresee bringing Banyan Tree to the Americas, Europe, and the Middle East? How could Banyan Tree address those issues?

Banyan Tree Hotels & Resorts 2010 by Jochen Wirtz

Banyan Tree Hotels and Resorts had become a leading player in the luxury resort and spa market in Asia. As part of its growth strategy, Banyan Tree had launched new brands and brand extensions that included resorts, spas, residences, destination club memberships, retail outlets, and even museum shops. 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 received its first 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 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 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 firm 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 market segments on a global scale.

Company Background By early 2009, Banyan Tree Hotels and Resorts (BTHR) 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 flagship brand, Banyan Tree, had won some four hundred international tourism, hospitality, design, and marketing awards, some of which included the "Best Resort Hotel in Asia-Pacific" (Phuket) for four consecutive years from Business Traveler Awards since 2002, "Seychelles' Best Resort" and "Seychelles' Best Spa" from World Travel Awards (2003), "Best Hotels for Rooms" (Bangkok) from UK Conde Nast Traveler (2006), "Best Hotel (Luxury)" (Lijiang) from Hospitality Design Awards (2007), and "PATA Gold Award?Ecotourism Project Category" (Bintan) from Pacific 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. 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 electronics, and property development, competing mainly on cost, and was not dominant in any particular country or industry, while Chang was deeply involved in sociology and social issues. 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 difficult 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 fill. 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 $650 to more than $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 $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 travelers themselves, Ho and Chang 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 Chang 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 2008 its rack rates were typically between $1,200 and $7,000 for the resort in Phuket, and between Euros 1,500 and Euro 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, Chang, and Ho's brother Ho Kwon Cjan, restored it after extensive rehabilitation works costing a total of $250 million. So successful was Banyan Tree Phuket when it was finally 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. 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 fishing village on Lamma Island in Hong Kong, where Ho and his wife Chang 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 Chang thus decided to name their resort Banyan Tree and position it as a sanctuary for the senses. The Service Offering Unlike most other resorts then, Banyan Tree resorts comprised individual villas that came with a private pool or spa treatment room, each designed to offer guests exclusivity and utmost privacy. For example, a guest could skinny-dip in the private pool within his villa without being seen by other guests, putting him in a world of his own.

All Banyan Tree hotels and resorts were designed around the concept of providing "a sense of place" to reflect and enhance the culture and heritage of the destination. This is reflected in the architecture, furnishings, landscape, vegetation, and service offers. To have sense of exotic sensuality and ensure the privacy of its guests, the resorts are designed to blend into the natural landscape of the surrounding environment and use the natural foliage and boulders as the privacy screen. The furnishings of Banyan Tree villas were deliberately native to convey the exoticism of the destination with its rich local flavor and luxurious feel. The spa pavilions in Seychelles were constructed around the large granite boulders and lush foliage to offer an outdoor spa experience in complete privacy. The resorts' local flavor was also reflected in the services offered, some of which were unique to certain resorts. Employees were allowed to vary the service delivery process according to local culture and practices, as long as these were consistent with the brand promise of romance and intimacy. Thus, in Phuket, for instance, 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 Phuket also offered wedding packages in which couples were blessed by Buddhist monks. In the Maldives, wedding ceremonies could be conducted underwater among the corals. Guests could also choose to dine in a castaway sandbank with only their private chefs and the stars for company and watch the sunset toasting champagne on a Turkish gullet returning from a trip watching a school of spinner dolphins. Products and services were conceived with the desired customer experience in mind. One such product was the "Intimate Moments" package, specially created for couples. This was presented as a surprise when guests returned to find their villas decorated with lit candles, incense oil lamps burning, flower petals spread throughout the room, satin sheets on the decorated bed, a chilled bottle of champagne or wine, and tidbits placed next to the outdoor bath which is decorated with flowers, candles, and bath oils. The couple was presented with a variety of aromatic massage oils to further inspire those intimate moments. Another draw of the resorts was the Banyan Tree Spa, found at every Banyan Tree property. The pioneer of the tropical garden spas concept, Banyan Tree Spas offered a variety of aromatic oil massages, and face and body beauty treatments using traditional Asian therapies, with a choice of indoors or outdoors treatment. The spa products used were natural, indigenous products, made from local herbs and spices. Nonclinical in concept, Banyan Tree Spas relied mainly on the "human touch" instead of energy-consuming, high-tech equipment. The spa experience was promoted as a sensorial, intimate experience that would rejuvenate the "body, mind, and soul," and was mainly targeted at couples who would enjoy their treatments together.

In line with Banyan Tree's ethos of conserving local culture and heritage and promoting cottage crafts, Chiang founded the Banyan Tree Gallery, a retail outlet showcasing indigenous crafts. Banyan Tree Gallery outlets were set up in each resort. Items sold were made by local artisans and included traditionally woven handmade fabrics, garments, jewelry, handicrafts, tribal art, and spa accessories such as incense candles and massage oils that guests could use at home to recreate the Banyan Tree experience. Embarking on projects to support the various communities in the locations Banyan Tree resorts are situated, Banyan Tree Gallery worked closely with village cooperatives and nonprofit craft marketing agents to provide gainful employment to the artisans. While acting as a marketing channel for Asian crafts like basket weaving, hill tribe cross-stitching and lacquerware, Banyan Tree Gallery also educated its customers about the crafts with an accompanying write-up. In the course of Banyan Tree Gallery's operations, the community outreach extended from across Thailand to Laos, Cambodia, India, Nepal, Sri Lanka, Indonesia, Malaysia, and Singapore. The result of Banyan Tree's efforts was "a very exclusive, private holiday feeling," as described by one guest. Another guest commented, "It's a treat for all the special occasions like honeymoons and wedding anniversaries. It's the architecture, the sense of place, and the promise of romance."

Its our turn to have our end massageed EXHIBIT 6: Advertisement Showcasing "Spa of the Year" Award from Conde Nast TravellerBANYAN TREE HOTELS AND RESORTS EXHIBIT 5: Banyan Tree Logo