Banyan Tree offers a unique experience with its hotel and spa experiences in the South East Asian region. Labeling itself as an aspirational brand, the company was established by the Ho family in 1992 and has boasted a gross profit of $52.1 million in 2006. Its superior branding, excellent corporate social responsibility practices and its careful investment and expansion strategies attribute to its success. As the company goes public it faces the new possibilities, offered through increased capital, and new challenges such as demands imposed by shareholders. How will the company continue to expand its profitability while preventing brand dilution through overexpansion? Key issues
Banyan Tree is an exclusive brand, catering to affluent travellers. In order to expand its customer base, Banyan Tree launched a brand, Angsana, which meets the needs of a broader customer base. Angsana does not currently operate in the same regions as Banyan Tree hotels, this separation has occurred to prevent cannibalization and dilution of the brand. While being effective, this reduces the number of locations in a given area. Spreading the company’s resources and knowledge over many regions may not be cost effective. Banyan Tree should continue to be cautious in expansion but not over cautious as to limit the brands` profitability. The brand has also been extended to offer spa services, retail outlets and other shops. The company continues to manage its brand portfolio while preserving its distinctive identity and strong brand image. The strong brand image has allowed Banyan Tree to open 3 brands of spas throughout the world. Opening spas is one way Banyan tree can build an image, gain regional knowledge and assess profitability prior to opening a resort in that area or location. Banyan Tree relies on customer experience as its strongest promotional tool. Delivering a consistent product may be challenging in the service industry because of the products’ intangible product nature, employees must be properly trained in order to continue to deliver superior service. As Banyan Tree continues to grow it must ensure through recruitment and training that the services delivered continue to be consistent, a challenging and important issue in any service offering. Corporate Social Responsibility (CSR)
Banyan Tree operates under strong CSR principles including building and operating resorts with minimal environmental damage and involvement in community development and environmental projects. Banyan Tree is an international company, it is important that it continues to gain the support of local governments, who will assist and support Banyan Tree, should any conflicts arise. The CSR principles also affect the brands image, and the company should continue to operate under these principles to deliver a consistent, positive brand image. These CSR efforts are noticeable in developing countries and the media coverage has helped build the brand's image and credibility. These guiding principles should continue to be implemented as the entire brand communications strategy has been based on third party endorsements and word-of-mouth and public relations. Business operations
Banyan Tree operates a variety of profitable business segments, including hotel investment and management, spa operations, gallery operations, property sales and design and other services. The largest percentage of profits comes from hotel investment and the second largest percentage is derived from property sales. Banyan Tree conducts property sales primarily in Thailand, where laws prevent foreigners from owning land, Banyan Tree sells resort residences on the land, and leases the land to the buyers allowing foreigner investors to “own” property in Thailand under local law. Property sales can be volatile and risky, it is an important factor in the profitability of Banyan for any given year, but the company should continue to realize that hotel investment...
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