Case study Deng Jinyu 17040190 PDF

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CASE STUDY

Case Study

Banyan Tree: Branding the Intangible

Deng Jinyu 17040190

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CASE STUDY

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Case Study

Banyan Tree: Branding the Intangible

Summary Banyan Tree Hotels and Resorts was established by Ho Kwon Ping and his wife Claire Chiang. Since its establishment in 1994, the company’s flagship brand, it had won over 400 international tourism, hospitality, design, and marketing awards. By early 2009, Banyan Tree holdings managed and had ownership interests in 25 resorts and hotels, 68 spas, 65 retail galleries, and two golf courses in more than 55 locations in 23 countries. Ho determined to craft out something proprietary that would allow the company to become a price maker with the idea that building a strong brand was the only way for him to maintain a sustainable competitive advantage. Ho saw potential for offering an innovative niche product that can also bridge the price gap in the market from the big difference in prices in the luxury resorts market. Privacy and natural environment are perfectly combined by Banyan Tree Hotels and Resorts, with the localization of the designs and services. And the distinctive spa services are also attractive. Banyan Tree Spas offered various aromatic oil massages.

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All Banyan Tree employees were trained to the basic standards of five-star service establishments. Management imposed strict rules in the administration of the resorts, however, at the same time employees were empowered to exercise creativity and sensitivity. Extensive advertising was put out for a short period when Banyan Tree was first launched to gain recognition in the industry. After that, the firm scaled down on advertising and kept it minimal, mainly in high-end travel magazines in key markets. But still, Banyan Tree achieved a global exposure and a high level of brand awareness through the company’s public relations and global marketing programs. Product and service diversification is a significant factor of BTHR’s success.By 2008, Banyan Tree had 65 retail outlets, ranging from Banyan Tree Galleries, Banyan Tree Spa Galleries, e Museum Shop by Banyan Tree, Elements Jewelry by Banyan Tree, and Angsana Galleries to Angsana Spa Galleries. BTHR is a strong advocate of corporate social responsibility. It embraced certain values, such as actively caring for the natural and human environment, revitalizing local communities, which in turn created pride and respect among staff.

Study Questions 1. What are the main factors that contributed to Banyan Tree’s success? 1.1Accurate brand position

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Ho Kwon Ping realized that low-cost strategy was not only difficult to follow but would also not lead the firm to the right routine. He decided to build a strong brand to become a price maker rather than a price taker. And he seized the opportunity that there is a gap in the hotel industry that giant chains could not fill. Depends on his conceive, BTHR become the first entrant of this market and established superiority. 1.2Unique service concept Privacy and natural environment are perfectly combined by Banyan Tree Hotels and Resorts, with the localization of the designs and services. And the distinctive spa services targeted to the couples are also comprehensive and creative. As the pioneer of the tropical garden spas concept, Banyan Tree Spas offered various aromatic oil massages, and face and body beauty treatments based on traditional Asian therapies. 1.3Cost-effective branding Extensive advertising was put out for a short period when Banyan Tree was first launched to gain recognition in the industry. After that, the firm scaled down on advertising and kept it minimal, mainly in high-end travel magazines in key markets. But still, Banyan Tree achieved a global exposure and a high level of brand awareness through the company’s public relations and global marketing programs. 1.4Appropriate globalization strategy BTHR 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, BTHR chose to work only with agents specializing in exclusive luxury holidays targeted at wealthy customers. Banyan Tree launched its own GDS code

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“BY”, a Global Distribution System that is used by travel providers to process airline, hotel, car rental reservations across 640,000 terminals of travel agents and other distribution partners around the world. 1.5Good corporate image BTHR is a strong advocate of corporate social responsibility. It embraced certain values, such as actively caring for the natural and human environment, revitalizing local communities, which in turn created pride and respect among staff. 1.6High level of staff management All Banyan Tree employees were trained to the basic standards of five-star service establishments. Some of them got a taste of the “Banyan Tree Experience” as part of their training, which is considered by the management to help employees understand better what guests will experience. Management imposed strict rules in the administration of the resorts, however, at the same time employees were empowered to exercise creativity and sensitivity. 1.7Product and service diversification By 2008, Banyan Tree had 65 retail outlets, ranging from Banyan Tree Galleries, Banyan Tree Spa Galleries, e Museum Shop by Banyan Tree, Elements Jewelry by Banyan Tree, and Angsana Galleries to Angsana Spa Galleries. 2. Evaluate Banyan Tree ’s brand positioning and communication strategies. Can Banyan Tree maintain its unique positioning in an increasingly overcrowded resorts market?

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BTHR holds two concepts of brand—“Romance of Travel” and a strong advocate of corporate social responsibility. Since these two concepts, the company never looked back. Even though Asia’s travel industry experienced periodic meltdowns, no employee was retrenched and room rates at Banyan Tree rose steadily. The international strategy is also part of having more diverse revenue streams from separate regions and markets of the world. The leisure industry is volatile and Banyan Tree is hedging against unexpected events and cyclical economies by having hotel resorts in different locations. (Banyan Tree – Branded Paradise From Asia,Martin Roll,2014,Pages 1-10 ) Banyan Tree has been consistent in ensuring that its advertising preserves the resorts’ original mission and values. In terms of future developments, Banyan Tree can explored the possibilities cre- ated by emergent niches such as eco-tourism or cultural tour- ism. 3.Discuss whether the brand portfolio of Banyan Tree, Angsana, and Colours of Angsana, as well as the product portfolio of beach 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 the future? The Banyan Tree brand portfolio has increased comprising different business lines, target groups and price segments. 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. With the on-going company ex-

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pansion, there will be a resource allocation trade-off sometime in the future.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.(Banyan Tree – Branded Paradise From Asia,Martin Roll,2014,Pages 1-10) 4.What effect does the practice of corporate social responsibility have on brand equity?

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 1997/98, the events of September 11 and the Iraq War to name a few critical events for the entire hospitality industry. During the SARS outbreak in Asia in 2003, the company still emerged profitable by achieving average occupancy rates of 65-67%. Its aims are to minimize harm, promote good causes and help resolve outstanding social and environmental problems while entities. (Corporate social responsibility and tourism: Hotel companies in Phuket, Thailand, after the Indian Ocean tsunami, Joan C. Henderson,2007,Pages 228-239) 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? Political problem

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In America and Europe, the standards of herbs and spices are different from those in Asia. BTHR’s spa products used were natural, indigenous products made from local herbs and spices. So maybe the spa service will be impeded. Banyan Tree can localize the material used in the spa. The spa department should innovate new variety of services used by the herb legal in America and Europe. Religion barrier Muslim in Middle East may have different moral code and life style with Asian. Some of the behavior normal in Asia can be regarded immoral in Middle East. Banyan Tree can localize the middle manager and form a team of legal analysts to make sure all of the services provided in Middle East is legal and moral.

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Reference Martin Rill.(2014).Banyan Tree – Branded Paradise From Asia,1-10 Joan C. Henderson.(2007).Corporate social responsibility and tourism: Hotel companies in Phuket, Thailand, after the Indian Ocean tsunami,228-239

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