One of Asia's most recognized hospitality brands, Banyan Tree faces the typical dilemma of any Asian brand in finding a balance between being distinctively Asian and developing a more globally-oriented image.
From an early start in 1992, Banyan Tree Hotel & Resorts has grown into one of Asia's most successful hospitality brands with numerous international awards and accolades from publications like the prestigious Conde Nast Traveler and others. Banyan Tree is one of the youngest chains of up-market and privately-held luxury boutique hotels and resorts. By successfully blending its environmental concern with unique Asian traditions and heritage and the concept of individual luxury villas offering an intimate experience, Banyan Tree has emerged as one of the leaders in the hospitality industry.
Branding has been part of the strategy from the early start, and was born out of a necessity to differentiate a traditional overseas Chinese family business. Banyan Tree wanted to escape being overrun by cheaper competitors from Indonesia and China on the one hand, and to take the focus away from tough pricing on the other.
These have been the typical challenges for many Asian businesses trying to compete in the new environment and build competitive advantages. It proved to be a successful way of breaking away from an Asian commodity business and changed the focus onto higher value-added revenues. The brand is led by a centralized team headed by corporate management and its promise illustrated in the tagline "Sanctuary for the Senses" is delivered throughout the organization as part of a dedicated business strategy centered around branding.
Background
Banyan Tree was founded by Singapore-based Ho Kwon Ping, who named the brand name after a place in Hong Kong where he and his wife spent idyllic days when he was a reporter and editor for an Asian magazine. He returned to Singapore after his father fell ill. As the eldest son, he had to take on the responsibility of the family business and run it. After a while, Ho Kwon Ping was looking for a new idea to take his father's family-run business, Wah Chang Group, ahead and away from the traditional revenue streams into different areas spanning from property to manufacturing.
In 1994, the couple opened the first Banyan Tree resort in Phuket, Thailand, with some investors and Ho Kwon Ping's brother as the architect. There it began the trademark pool villa concept, which was an innovation at that time and became one of the signatures of the brand. Today, private pool villa concept has proliferated to other resort groups and is used as a benchmark in the hospitality industry.
Factors Contributing to Banyan Tree's Brand Success
- A well-managed balance between brand promise and brand delivery.
- A visionary, guiding and supporting corporate management team involved directly in overall brand decisions.
- Centralized brand management function on senior level.
- Constant innovation - right from coining the original concept of individual villas, the superior feel and quality of service to the unique traditional spa treatments.
- Making use of unconventional methods of brand communications.
- Being a socially responsible and environmentally sensitive organization.
- By combining the Asian culture and heritage with world-class service and luxury, Banyan Tree has been able to build a brand that has appealed to people across countries in Asia and beyond, and successfully capitalize on pan-Asian sentiment.
Brand Building
Given the inevitable turmoil of the volatile hospitality industry, Ho Kwon Ping was convinced from the beginning that a strong focus on branding would give Banyan Tree a sustainable competitive advantage. This was proved right as Banyan Tree withstood the repeated crises of 1997/1998, the events of September 11 and the Iraq War. During the SARS outbreak in Asia in 2003, the company still emerged profitable by achieving average occupancy rates of 65-67%.
The company has based its brand on the two main beliefs of the organization. Banyan Tree resorts would become a "romantic escape for couples" and Banyan Tree would be an environmentally sensitive and a socially responsible organization.
Branding is started right from the locations of the Banyan Tree resorts and has been consistent through the designs, the facilities offered, and the ambience created in each of the resorts. In line with the "romantic escape for couples" theme, Banyan Tree has placed a strong emphasis on the locations as a key element of the brand identity. The company has chosen exotic locations with exclusive access to sun-bathed beaches, exciting environments and a good transportation infrastructure to connect the resorts to main destination highlights.
The resorts offer a unique experience for visitors by providing them a luxury holiday complete with self-indulging and pampering experiences like the Banyan Tree Spas which offer traditional treatments and fresh ingredients. The company operates a training academy in Phuket where all spa therapists must go through the compulsory 400 hours of training, which is above the industry standard.
Concern for the nature and environment surrounding the resorts has been a trademark of Banyan Tree. Many environmentalists appreciate their efforts to burture and protect the surroundings of their resorts. True to its belief that environmentally sustainable and socially responsible tourism is compatible with making profits, Banyan Tree has established the Green Imperative Fund to extend financial assistance to environment conservation and community projects. It has also taken a conscious decision to minimize damage to the natural environment when building new resorts. The company built villas aroung trees and boulders rather than cutting or excavating them.
Brand Communications
Banyan Tree initially resorted to advertising to build awareness in the market, but the advertising budget was soon cut to save costs. In fact, the overall marketing budget of Banyan Tree has been 7% of total revenue, with 60% allocated for trade and 40% allocated for consumer promotions. The entire brand communications strategy has been based on third-party endorsements, word-of-mouth and public relations.
Editorial coverage combined with word-of-mouth recommendations from customers and co-branding activities with strategic partners have since the launch of the company served as the major channels for brand communications. The media coverage has helped build the brand's international awareness and credibility.
Expanding the Brand Portfolio
The strong belief in branding by Banyan Tree's corporate management has started to pay off, and the Banyan Tree brand equity has enabled new revenue streams for the organization. It has enabled Banyan Tree to come out with a brand extension in the form of Angsana Resorts (launched in 2000), targeted towards young families and at different price points - typically 20-30% lower than Banyan Tree resorts themselves. It also operates stand-alone Angsana Spas.
The latest line extension has been Colours of Angsana, a sister chain of resorts under the Angsana brand, which opened in 2003. The hotels are launched in more remote areas of the world including UNESCO's World Heritage Sites. The hotels are located in off-the-beaten-track destination like Laos, Sri Lanka and China.
These measures not only allow Banyan Tree to increase its awareness in new markets and gain international momentum, but also create a strong platform for a portfolio of sub-brands that can be a source of long-term revenue generation.
The future strategy of the Banyan Tree Company is described as "to string a necklace of resorts around the world." It's not about being everywhere, but having a presence in chosen places.
The Future Challenges
Distinctively Asian versus developing a global image. With plans of expanding beyond Asia, Banyan Tree faces the typical dilemma of any Asian brand to find a balance between being distinctively Asian and developing a more globally-oriented image. Though the entire brand is based on the unique Asian touch and cultural heritage, Banyan Tree has to evaluate its relevance and sustainability carefully as it enters new territories.
Consequences of brand extensions: The company's brand portfolio has increased comprising different business lines, target groups and price segments. This is a challenge which goes to the very foundation of the company - management of the brand and allocation of resources. Though Angsana has a lower price point and is targeted primarily towards family guests, these resorts still have much of the typical Banyan Tree feel. The challenge is to balance two distinct brands and differentiate them without diluting the leading brand, Banyan Tree, in particular.
The centralized marketing and branding team is overseeing resorts in different parts of the world, so successful management of the brand portfolio would be extremely challenging and requires stringent procedures and decisions for each of the brands in order to stay in touch with market dynamics.
Keep innovationg and avoid copycats: The market is crowded with many entrants running similar branded resorts in the upper-end. Particularly in Asia Pacific, where Banyan Tree has its stronghold and traditional base, new entrants are facing only small barriers-of-entry other than huge capital requirements and availability of good locations, something Asia is not short of. A new entrant can always try to copy the "romance-intimacy-rejuvenation" theme and replicate the serene locations with beautiful villas providing it at lower prices to gain a foothold in the market.
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