Banyan Tree Brand Expansion Essay
1. Identify the primary issues in the case.
When expanding the brand globally, the existing methods and new methods need to ensure that brand image and core value must not be diluted by too generic target market or vague market position. When expanding the brand into different countries and regions, the competition within a specific location and competition between different locations are impossible to neglect. 2. What value propositions does Banyan Tree offer as an experiential brand? By leveraging the natural surroundings unique to each location and adding consistency in the designs, facilities (including spas), ambience (including romance), and services (including warm hospitality) offered, Banyan Tree created strong brand identity and a unique value proposition that was associated with self-indulgence and pampering experience.
3. Evaluate Banyan Tree’s expansion plan. What are the potential risks that Banyan Tree should be aware of and how can it mitigate such risks? Banyan Tree’s expansion plan is fast and ambitious. It ensures the brand exist globally in most popular destinations. The positive aspect of the geographic expansion is that it helps to reduce low-revenue period caused by seasonality. It also allows the company to take advantage of cross-marketing opportunities.
Besides the expansion plan of new resorts, existing resorts expansion also helps to increase the revenue, and it requires less capital expenditure and cash flow. To offset the investment layouts, plans were in place to commerce selling resort residential properties in Lijiang, China and Bangkok, Thailand. But there were risks involving in it. These include various uncontrollable circumstances other than natural and man-made crises. To mitigate such risks, management agreements are good approaches that can reduce the risks of loss and responsibilities of development and maintenance. Based on current resources, is it realistic and achievable?
It is realistic and achievable, but requires time to complete it. Since at present Banyan Tree hotel or resort generally have interest on ownership dependent on a list of variables including familiarity, profitability and partner. It takes time to lease the ownership and to only focus on the management, and it also needs consideration on the benefits and drawbacks comparing with the ownership management. 4. Please take a look at the financial statements and make recommendations for its growth strategy. According to Banyan Tree’s revenue by geographic region, it shows that there is a large potential market in North-East Asia. At present, the company has done successful business especially in South-East Asia. One of the reasons would be the geographic and cultural similarity.
However, the North-East Asia is farther, and the political and economic reasons may also affect the business. What is more, the culture there is slightly different from the one in South-east Asia. However, the North-East Asia market is so big and potentially profitable. First reason is that people are getting richer and more purchasing power in this area, such as people in China. Second, there are abundant beautiful natural scenic destinations where are good locations for building new resorts. Third, at present the service standard in Singapore is still higher than the average level in this area. Therefore, Banyan Tree’s next step should invest on the resorts and hotels in this area, or establish management agreement in order to get into this market quicker with lower capital risks. 5. Explain Banyan Tree’s facilities design style.
Banyan Tree’s facilities design style offers a more traditional, luxurious environment with a classic design. This especially is reflected in Banyan Tree Spas.
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