Kester Vidal
Banyan Tree Hotels and Resorts were created to suit their guests different needs and lifestyle and was built on the foundation of sustainability. The company is very proud to have created 3 different brands, which are Banyan Tree, Angst and Cassia. Ever since Ho Swoon Ping started the Banyan Tree Hotels and Resorts, they have based their brand on two main factors for the organization which is to be the ideal resort for couples who would like to go on a romantic escape and most importantly that the company itself would be environmentally sensitive ND an organization who is socially responsible.
Branding started exactly from the several locations of the Banyan Tree Hotels and Resorts, which were made to be consistent with the facilities they offer, the designs and the ambiance built in each of the resort. The company’s goal is to build a diversified hotel chain or a niche market. They are also fully involved with their community by assisting the local craftsmen, artisans, traders and the whole of the community by giving them possible employment.
Not only that, the company only uses biodegradable rodents which are mostly locally made materials for their day to day operations so that they could somehow lessen the impact their wastage can do to the environment. The hotel and resort itself offers a unique kind of experience for its clients by making their guests experience a luxury vacation. A good example for this complete luxury is the self-indulging and Of course the pampering services the Banyan Tree Spas could give their guests.
Equipped with the knowledge and experience, the well-trained employee’s offers traditional treatments with the locally produced ingredients all guests ill surely have the time of their lives. There are several factors that have contributed to the current success of Banyan Tree Hotels and Resorts. First they have selected a good target market. Second is the company’s brand positioning and branding strategy. Third are the services and products that they are offering. Fourth, they have a very effective internal and external marketing strategy, and lastly they have the full support of the local community around them.
Recently they have just launched their new brand Cassia. Cassia is basically serviced apartments but Mr.. Ho chooses to call it hotel residences instead. It was designed specifically to target families, modern travelers, and young couples who are looking for longer holidays. Cassia isn’t your typical Banyan Tree hotels which provides an all villa concept, Angst brand cheaper contemporary hotels and resorts while Cassia a fully furnished apartments will provide leisure and business travelers who are interest for longer stays.
Focused Differentiation Strategy: This strategy is a mixed of two out of three business strategies of Michael Porter. One factor which lead to the success of Banyan Tree Hotels and Resorts is when Ho Swoon Ping applied focused differentiation strategy to the company because it can be considered the best way to maintain a sustainable competitive advantage. A focused strategy based on differentiation aims at securing a competitive advantage by offering customers a product they perceive is better suited to their own unique tastes and preferences (Toffee & Hammerlock 2009).
Loyalty of customer is one of the benefits that focus strategy could give a company. It tailors your firms to all the needs and wants of an existing market. When Banyan tree opened to the public, they have revived products and services with attributes most valued by their targeted niche market. Niche market according to (Phillips & Peterson 2001) is a completely new marketing strategy that uses product differentiation to appeal to a very specific group of clients. They have successfully established a quality reputation, excellence and services basing it from the needs of the specific market.
Banyan tree for instance generated the loyalty of their customers by offering consistent Asian Touch mixed with the undying friendly services of their well-trained employees. (Lineman 1 991) said that impasses that have targeted niche markets have been claimed to be more profitable. Superior quality is achieved when a niche firm knows the requirements of customers in the niche better than its broadly based competitors, and has the skills to tailor its resources to meeting precisely the unique needs Of this group (Toffee & Hammerlock 2009). High Margins Of Banyan Tree is very evident.
They have succeeded in providing excellent products and services with a very strong reputation to their targeted market. Improved stakeholder relationships bring in new guests or clients as well as ewe investment opportunities enabling companies to charge premium prices (Barnett 2007). Banyan Tree has started several services which are much more expensive that are not the Usual services that but are much better than their competitors. This only shows that their customers are willing to pay the premium prices because they can see and experience the extra value added when they perceive the products and services of Banyan Tree. Rooter’s Five Forces: A. Supplier Power Very high because of their products of high quality and unique locations Not a lot can provide the products and services they are offering B. Buyer Power Just moderate Guests and clients are very few in number = High Buying Power There are few available substitutes = Low Buying Power C. Competitive Rivalry Competitors of Banyan tree are Mama Resorts, One & Only Resorts, Com Hotels and Six Senses Hotels & Resorts Competitors of Angst are Shanghai- la Hotels & Resorts and Four Seasons D.
Threat of Substitution Since the company has a niche market and concept, they should be fully aware of the readily available substitutes in the market. E. Threat of New Entry Very high because of the requirements of huge capital investment and a lot of overspent rules and regulations PEST Analysis Political The company is somehow affected by the various existing laws in every country they are in such as the taxes, ownership/property rights and different laws in each country. Economic Economic factors can have a large influence on every business.
The economy’s stability in each country, rates of taxes every company has to pay, and the crisis and disasters (Financial Crisis, 911, CARS, Tsunami, Bola Virus) Social Tradition and culture, people’s lifestyle, education and size of population are also to be considered. Banyan Tree focuses on their CARS programs like their existing Green Imperative Fund, which was founded in the year 2001. Technological Banyan Tree makes sure that they are always updated with the latest technology in all of their hotels. An example is they world class IT infrastructure they had installed in their hotel in Maldives, Banyan Tree Binaural.
Financial Analysis: Base from the (Banyan Tree 2013) financial report the company showed an increase in profit from operations but not very impressive. Revenue from operations showed an increase of 5% from 938. MM in 2012 to $356. MM in 2013. Although it was a positive increase for the three business segments, it should be noted that it was only the hotel segment that increased by 18%. The Property Sales Segment and the Fee Based Segment both decreased by 22% and 6% respectively. Also, if we are going to see and analyze the comprehensive income, it showed a negative figure of $MM.
Also, net assets decreased by $16. MM while liabilities increased by $13. MM. Looking at the performance of Banyan Tree by dividing its annual earnings by its total equity will indicate of how profitable it is relative to shareholder’s investment. Return on Equity is only . 03 or 3%. Many professional investors look for a ROE of at least 15%. So, by this standard Banyan Tree’s ability to squeeze profits from shareholders’ money appear low. Year Total Asset Liabilities Net Assets 2013 693,030,000. 00 2012 I ,391 679,1 51 ,oho. O Current Ratio = Current Assets / Current Liabilities 494,597 1 . 9 249,015 Quick Ratio – – Current assets – inventories / Current Liabilities 482,070. 00 1 . 94 249,015. 00 Return on Assets = Profit Before Tax / Total Assets 74,097. 00 0. 05 Return on Equity profit Before Tax / Total Equity 18, 155. 00 0. 03 695,948. 00 Brand Positioning (Lynch & De Charleston 2004) said that brands based on intangible, emotive characteristics are more seen as a durable and less likely to suffer from competitive erosion and the intangible emotive aspects of brand equity may be an important source of sustainable competitive advantage.
Product differentiation is important because it creates barriers to entry, protection against imitation and customer loyalty (Beebe & Baring Cruz 2010). Also firms can easily develop rare, valuable, and most important difficult to imitate image by establishing a relational link or strong commitment with the immunities in which their niche market belongs (Barney 1991 Corporate Social Responsibility Strategic CARS seeks to create competitive advantages by positioning a firm’s products in the minds of its customers by building a reputation as environmentally or socially responsible (Beebe & Baring Cruz 2010).
Another effect of corporate social responsibility is to create customer satisfaction and also CARS initiatives constitute a key element of corporate identity that can induce customers to identify or develop a sense of connection with the company (Lou & Apothecary). Companies like Banyan Tree are focusing heir competitive edge on the social causes and these have both positive and negative effects because when you look at the disadvantage of it while the company is trying to be sustainable and environmentally conscious and that limits their chances of possibly having a new extension somewhere.
Banyan Tree has this certain standard that has to be met to be able to maintain their wholesome image. While the advantage of it is the people are more inclined in supporting such firms rather than spending their money on a company that doesn’t give back. CARS according to (McMillan, Siegel & Wright 2006) would somehow be considered by companies as a way in forming strategic investments that could be seen as a form of maintenance or building a company’s reputation and customers do value their associations and transactions with companies that are highly reputable (Roberts & Dowling 2002).
Future Problems and Recommendations: Banyan Tree could have several potential problems in the future. These problems might hinder their success in the Europe, Middle East, and America. Their brand equity in Asia is very strong in fact it has been tried and tested so many times. It withstood a couple of crises and has successfully managed to maintain their excellent track record despite of the things that happened. It might take them some time to be fully recognized in those specific markets they want to enter since they do not do full advertisements.
Companies that have low brand equity should consider investing more in promotional activities and advertising to be able to maintain its position and survive in the Americas market (Roar et al. 2009). (Bill Xx & Chain 2010) has also suggested that through advertising word of mouth, and most specifically excellent service performance would be the best tool in building up a company’s brand equity in the service industry. Another factor they might have problems with is Customer Equity.
Transporting the “Asian Inspired” service to a nevus place specifically the Western Areas could be something very difficult for them since all of their future employees will obviously no longer be Asians and surely will come from a vast range of cultures. The company is well know to have a traditional “Asian touch” with all the services they are offering and maintaining the consistency in their service is something that the management will have trouble with in the future.
One of the possible solutions IS to give intensive raining to the employees to somehow maintain the quality of service they offer even if its quite obvious that the Asian touch still wouldn’t be present since culture relates to different norms, behaviors, customs and values of the people. Creating a new global brand image that could cater specifically to the western market or any other territory is something they could actually consider but they have to be sensible enough about their plans of localization.
Finding out the characteristics between the well developed countries and developing ones could be considered in terms of the quality of valuations and service perceptions (Ford et al. 2005). Brand positioning in new territories will not much be a problem for them since they have already proved that all over their Asian market but still shouldn’t be taken for granted. All they have to do is alter their existing marketing strategies in all the new territories they are planning to penetrate in order to easily achieve the goals and still maintain their current position in the hotel and service industry.
Banyan Tree’s brand perception is an Asian inspired service and not your typical luxury hotel. Lastly their community focused strategy can be affected n such way if the community perceives incongruence between the allegedly supported values and values reflected in or imputed to any of the focal firms actions including deterioration of community trust (Blamer et al. 2006) and the destruction of relationship based intangible assets that a community focused strategy generates (Palazzo & Bass 2007).
