In just five years, Banyan Tree Resorts and Hotels (BTRH) grew from a single resort into one of Asias top 50 brands. The group is now branching into regions outside of Asia, such as the Caribbean, and across new channels and services. How did they build a top brand so quickly with limited investment? Chua Chei Hwee, Research Associate, Peter Williamson, Professor of International Management and Asian Business, and Arnoud De Meyer, Akzo Nobel Fellow in Strategic Management and Professor of Technology Management and Asian Business, explore this question in this new Case Study.
BTRHs origins stem from unlikely beginnings when Ho Kwon Ping (KP) stumbled upon a vacant tin mine in Phuket, Thailand, while searching for a suitable place to build a summer home. Though a UN team had written it off as impossible to rehabilitate when it surveyed the property in 1977, KP saw possibilities. He and younger brother Ho Kwon Cjan (KC), an architect, transformed the area into Asias first integrated resort through an investment of US $200 million. The duo continued to build other properties in the same area, but lacking hotel managerial experience they contracted the management to established hoteliers.
The brothers properties joined other already existing high-end luxury resorts in Phuket. Looking at the competition, KP recognized a gap between the high end ($400 to $4,000 per night) and the rest of the resorts. His vision for a market segment in the US$250 US$500 per night range translated into Banyan Tree Phuket, a property that would be managed by the brothers, with 109 private villas, many with private gardens, Jacuzzis, and pools. Eventually the resort expanded to include a golf course and spa.
In explaining the vision for the Banyan Tree experience, one general manager said, We promise our guests a haven for the body, mind, and spirit where they can indulge and rejuvenate themselves. We seek to deliver luxury without excessive indulgence. In whatever we offer, we must live this concept. Through heavy reliance on public relations, competing for awards, and direct marketing programmes, all run by a small central team in Singapore that ensured the messages were consistent and reinforcing, BTHR built a strong brand rapidly and with limited investment.
Recognising that the Banyan Tree brand they had created was an under-utilised asset, BTHR set out to expand into other regions. In 1994 it opened a second resort in the Maldives and another in Bintan (an Indonesian island close to Singapore). As the chain expanded, management adopted a flexible approach to its offerings. Avoiding a cookie-cutter approach, BTHR adapted properties to the local architecture, landscape and vegetation. In terms of the physical product, standardization was imposed at the hardware level, such as the concept of individual villas, private pools, Jacuzzis and gardens, but each resort was free to deliver the software. Managers are free to create their own personal touches, as long as they enhance the romantic ambience of the villas. BTHRs local approach also extended to training, staffing, and product development (many of their spa products were developed at a local site and rolled out across resorts). The values and marketing message, however, remained a consistent umbrella for every BTHR operation and were managed from the centre.
Looking forward to the next phase of development to build on this success, KP and his team faced some hard questions. Would further expansion into new areas like Napa, California or Tuscany, Italy dilute the Banyan brand? Would the company need to go public in order have enough capital to expand, and if so, might Banyan risk degenerating into just a nice chain of resorts?
This Case Study is particularly appropriate for discussions on defining and building a powerful new brand and implementing a rapid internationalisation strategy.