Banyan
Banyan Tree
Tree Resort
Resort
Expansion
Expansion
Keith Bergh, Brianne McElhiney,
Patti Grandidge, Kari Goebel
April 16th, 2008
What is our Business?
Company Background
“We want to build a globally recognized brand which by inspiring
exceptional experiences among our guests, instilling pride and
integrity in our associates and enhancing both the physical and
human environment in which we operate, will deliver attractive
returns to our shareholder.”
Company Background
Founded in 1994 with opening in Phuket
Development, Management, & Ownership of
luxury Resorts, Spas, & Hotels
Received over 300 Awards
Dedicated to Preserving the Environment
Emphasis on Social Responsibility
Company Background
 Revenue in 2007 increased 29%
 312.257M USD Total
 Net Profit in 2007
 75.831M USD
 Stock prices continuing to rise at steady rate
 Due to future development & expansion
 Issued 16,000,000 New Shares last year
 Issue 15,000,000 for this year
 Current Ratio: 6.11
 Strong Ability to pay off short-term debt
Environmental Analysis
Social Forces
Demographics
Population: 91 Million
Age Structure
0-14: 34.5%
15-64: 61.3%
65+: 4.1%
Birth Rate: 24.48/1,000
Life Expectancy: 70.51
Median Age: 22.7
Population Growth Rate: 1.764%
Death Rate: 5.36/1,000
Fertility Rate: 3.05
Social Forces
Culture
Family-based Groups
Materialism & Leisure
Motivated to Work Hard
Religions
80.9% Roman Catholic
Language
Filipino & English
Economic Forces
Macro Effects (Philippines)
GDP
Average Growth since 2001: 5%
2007: 7%
$144.13B USD (2007)
PPP
298.9B USD (2007)
BOP
1.9B USD (2007)
Unemployment is about 7.3% (2007)
30% of pop. is under poverty line (2003)
“First World Country” by 2020
Economic Forces
Micro Effects (Banyan Tree)
Revenues
2005
$187.3
(in millions)
2006
$335.3
2007
$429.9
2005 vs. 2006-79% increase
2006 vs. 2007- 26% increase
2005
Total Expenses $153.4
2006
$224.9
2007
$301.6
(in millions)
2005 vs. 2006-57% increase
2006 vs. 2007- 34% increase
Technological Forces
Innovation/Changes
Tropical Garden Spa
Restaurants
Facilities
Classes
Rooming Upgrades
Integration of Electronic Systems
Competitive Forces
Competitive Environment
Driven by Business & Tourist Travel
Smaller companies stay competitive through
destination & premium service
Hoover’s Top 5 List of Upscale/Luxury Hotel
Companies:
1.
2.
3.
4.
5.
Marriott International Inc.
Global Hyatt Corporation
Hilton Hotels Corporation
Starwood Hotels & Resorts Worldwide, Inc.
Wyndham Worldwide Corporation
Regulatory Forces
Philippine Environmental Impact Statement
Labor Code
Philippine Immigration Act
Business Registration Procedures
Political Forces
WWII: Japan Rule
1946: Independence
1965-1988: Ferdinand Marcos
Suppression of democratic institutions,
corruption & restriction of civil liberties
1988: Corazon Aquino
Less effective to stabilize nation
2001: Gloria Macapagal-Arroyo
Economic Growth
Still Poverty Problems
Terrorist Threats
Natural Forces/Acts of God
Philippines
Typhoons & Cyclonic Storms
Volcanoes
Earthquakes
Tsunamis
Palawan
Generally safe from natural
disasters, but must always prepare
for the worst
S.W.O.T Analysis
Marketing Mix Strategies
Product
 Rapid Increase in Sales & Consumer Awareness
 Repeat Purchasers
 Cultural Differences
 Legal Concerns
 Local Competition
 Sophisticated, Elegant, Innovative, Hospitable, Relaxed
 World-Class Accommodations & Service = Brand Loyalty
Price
 Hit on Profits & Sales
 Price Escalation of Imports
 Government Intervention
 Fixed vs. Variable Pricing
 Cost of Development: 92M USD
 Price Skimming
 Implement similar strategy as other resorts
Price
 Prices will vary
 Pegged to the US Dollar; Minimize Peso fluctuation
 Standard Beach Villa:
$350 USD - $550 USD
 Beach Villas w/ Plunge Pools: $450 USD - $650 USD
 Duplex Beach Villas:
$800 USD - $1000 USD
 Over Water Bungalows:
$650 USD - $850 USD
 Discounts
 Seasonal (Low-Season)
 Quantity
 Returning Guests = Brand Loyal
Place
 Labor & Construction Contracted out
 Efficient
 For imported wines, beers, certain foods, accommodation
necessities at other resort locations
 JIT System
 Reduce inventory costs of goods
 Need a communicative & cooperative supply chain
 Quality Supply Chain Manager
Promotion
 Advertising
 Travel Magazines, Billboards, Select Internet Sites
 Standardized with minimal changes to adapt to the
culture
Public Relations
 Spots on TV Travel Shows; Publicity in News; Draw
Celebs to hotel; other Mediums
 Direct Marketing
 Travel Agents
 Suggest to Clients
 Receive discounts / Percentage of sale
Positioning
 Distinguished Luxury Resort Brand
 Positioned towards target market
 Wealthy Families
 Retired Couples
 Honeymooners
 Grow Companies Current Image
 Be the Leading Luxury Resort for Palawan
 In direct competition with Amanpulo and
New Entrants
Organization & Hiring
Strategies
Board of Directors
President & CEO
Resort
Operations
President
Company
Executives
Country
Managers
Philippines
Manager
Palawan President
Resort
Managers
Supply Chain
Manager
Maldives
Manager
Indonesia
Manager
Chief Marketing
Officer
Thailand
Manager
China
Manager
Chief Finance
Officer
Seychelles
Manager
Director
of Sales
Head of HR
Director of New
Business
Bahrain
Manager
Palawan Vice
President
Front Office
Manager
Staff Manager
Head Chef &
Catering
Manager
Resort
Recreation
Manager
Spa Manager
Guest Relations
Manager
 Many Managers at Resort
 Strategy of focusing and catering to ensure high quality
Geocentric Approach
For Country President, Resort President & VP
Relocated from other Banyan resort or corporate
Polycentric Approach
For Staff Managers, Resort Recreation Manager,
Guest Relations Manager, & Chef/Catering
Manager
Help maintain local motivation, respect,
communication & help reflect culture in fields
Costs & Timeline
Cost of Development
92M USD Capital
60M from Banyan Tree Holdings Limited
32M loan
Expenditures
Property, Plant, and Equipment
Legal
Insurance
Utilities
Salaries and Wages Payable
Other Expenses
Estimate Total Expense
Cost (in thousands of USD)
71000
4000
800
200
6000
10000
92000
Timeline
07.01.08
12.01.08
07.01.09
12.01.09
07.01.10
Conduct Research
Purchase Property
Develop Design of Resort
Construction of Facilities
Advertising
Hiring On-Sight Staff
Landscaping & Decorative
Take Reservations
Tours to Critics/Special Guests
Last Minute Adjustments
Open to Guests (March 2010)
Begin Research to Improve Resort
Would like to open March 2010
Quick process to stay ahead of other new entries
12.01.10
07.01.11
Forecast & Future
.
Outcomes
Financial Forecast
Year
Debt
Operating
Expenses
Revenue
Profit
2010
2011
2012
2013
2014
2015
2016
2017
$ 85.1 $ 78.0 $ 67.0 $ 53.3 $ 39.0 $ 24.5 $ 11.0 $
$
6.9 $
8.0 $
9.3 $
10.8 $
12.5 $
14.5 $
16.8 $
19.5
$
$
14.0 $
78.0 $
19.0 $
67.0 $
23.0 $
53.3 $
25.0 $
39.0 $
27.0 $
24.5 $
28.0 $
11.0 $
28.0 $
0.7 $
28.0
8.5
Operating Expenses increase 1.16% a year
Based on Inflation Increases
Make profit and pay off debt and loan after 6 years
Goals & Outcomes
 Win 10 Reputable Accolades & Awards by 2013
 Including membership into the “Leading Hotels
of the World”
 Featured in write-ups and travel documentaries
 Credentials & Recognition from Government
 For Social Responsibility & Attracted Tourists as FDI
 Average Daily Occupancy Rate: 75%
 Be one of Banyan Tree’s flagship locations
Questions
and
Comments