| Banyan Tree isn’t just about pricey spa vacations in exotic places. It’s an Asian global brand in the making, says Boyd Farrow  For a man who has made his name persuading others to chill out, Ho Kwon Ping was particularly active during the summer. The 54 year-old Singaporean jetted between London and Hong Kong to front an exotic private villa investment plan and a “global destination club” – a sort of timeshare scheme for the very wealthy – and used the announcement of a 55% leap in his company’s first-half profits to unveil plans to treble the number of his hotels by 2010. Even a short break in Ibiza with his daughter became an impromptu property search. Being executive chairman of Banyan Tree Group sounds like no holiday.
The Singapore-based Group’s core business is the management or ownership of 22 resorts and hotels and 58 spas centred around two brands: Banyan Tree and Angsana. Bolstered by a flotation in June 2006 – which gave it a market capitalisation of $2.2bn (€1.6bn) (Ho still owns 50% of the business) – and an envisaged $500m–$700m being raised via a private equity fund, Banyan Tree has been aggressively gobbling up properties and land. But while its earlier investments were largely focused on the lush playgrounds of the Indian Ocean, Ho says that within three years Banyan Tree will have planted roots in 81 locations in 29 countries and will be a significant “global niche player”. “A third of our guests come from Asia, a third from Europe and the US and a third from the rest of the world, so there is a huge potential. Banyan Tree is not an Asian experience,” says Ho – whom everyone calls “KP” – on a two-day London stopover. He has chosen the Savoy Hotel to meet but keeps an apartment nearby as his daughter is studying in London. The global expansion is not simply about finding more destinations in which to offer frazzled bankers a massage. An ambitious series of property deals, including serviced apartments in London and Kyoto and gated communities in Moscow and the Middle East, plus merchandising ventures, are in the works. Ho needs no prodding to espouse why Banyan Tree could become the world’s most famous Asian brand. “Asian companies are good at making things but they are not good at creating brand value, so they are ultimately doomed,” he sighs. Ho’s grandfather founded trading company Wah Chang Corp in New York in 1916, which eventually became Wah Chang International, based in Singapore. In 1981, after studying at Stanford University (he was suspended for joining a Vietnam War protest and did not graduate) and working as a journalist on the Far Eastern Economic Review, Ho became chairman of the family business, which was then a “typical overseas Chinese mini-conglomerate.”  Although he is encouraged by the stories of Samsung, Hyundai and Chinese computer company Lenovo, Ho says that until recently the business model of Asian companies seemed to consist simply of a mission to be the lowest-cost contract manufacturer for Western companies.
“Our family had businesses in Singapore, in Thailand and so on,” he says. “We made TVs for Mitsui, shoes for Nike, engineering, construction, whatever. But, of course, cost competitiveness is only a comparative advantage. I started a sneaker contract manufacturer in Thailand in the 1990s and I had to close it down after 12 months because Indonesia suddenly began producing sneakers for less. “I realised there were two kinds of advantage in business: competitive and proprietary,” Ho continues. “There are two kinds of proprietary advantage: technology or a brand. Because I’m not remotely technological, I decided to create a proprietary brand and I came up with Banyan Tree. My wife and I wanted something that sounded Asian and also evoked the environment. I’m about as much of a tree person as I am a spa person, to be honest – it just sounded like a good name.” The actual resorts that became attached to the brand came about purely by accident. In 1984, while searching for a plot to build a family summer house, Ho discovered a disused tin mine in Phuket, Thailand, written off by the UN as acidic wasteland. Seeing the potential, Ho established Thai Wah Resort Development and bought the 550-acre site. He had seen other hotels managed by other major groups including Sheraton in Thailand and became convinced that “a resort is not a hotel, it’s an experience”. He invested $200m of Wah Chang’s cash and, with his architect brother Ho Kwon Cjan (“KC”), launched Asia’s first upscale resort based around individual villas. The Banyan Tree Laguna Phuket launched in 1994 with branding and values “woven and integrated” into the business strategy and the slogan “Sanctuary for the Senses.” Chiming with the rising experiential luxury market and baby boomers’ interest in the New Age lifestyle and all things Eastern, five years later Banyan Tree was ranked 18th in Interbrand’s Asian league. The only hospitality brands placed higher were Hong Kong mainstays Regent Hotels, Mandarin Oriental and Shangri-La Hotels and Resorts. While stealthily expanding, Banyan Tree has made a profit every year except 2005: the Asian tsunami of 26 December, 2004 struck nine resorts. In 2000, Angsana was launched as a regional brand, targeting a younger demographic. The spas have subsequently been licensed to hotels in the Middle East and Europe.  “Banyan Tree offers a very special experience that is hard to replicate – it is an emotional response,” says Ho. “Credibility is the most important, yet most sorely lacking, attribute in brand-building nowadays. Of course image and perception is important, but it is secondary to the product quality itself. I think our brand will work anywhere, and we are trying to extend it into as many sectors that will enhance it as possible. We’re not Virgin – we don’t want to overstretch – but we can be very successful in some areas.” Spa and lifestyle products sporting the Banyan Tree and Angsana brands – now only on sale in the 69 retail “galleries” in the spas – are likely to be given a bigger marketing push in the near future.
While Ho is heavily targeting China, the Americas, the Middle East and Europe for the majority of his 40 new hotels, Banyan Tree’s strategy is to focus on residential development and sales and reduce resort and hotel investment. Last December, for example, the company tied up with Kuwait’s deep-pocketed Abyaar Real Estate Development to build a development in the Jumeirah district of Dubai. Banyan Tree, under the Angsana brand, will service and manage the $550m gated community, Acacia Avenues, which will feature villas and apartments, a health club, cafés and shops. This scheme, says Ho, could be a template for Moscow and cities in China and possibly India. Banyan Tree had entered the UAE earlier that year, striking a deal to manage an Abu Dhabi resort built by local real estate developer Aldar Properties. Banyan Tree also has a deal with Greek developer TEAV to manage the 84-room Angsana Resort & Spa set to open in Santorini in 2009, and developments planned for Marrakech and Istanbul. These resorts are being constructed to lure time-strapped European visitors in the same way that new resorts in Punta Diamante and Mayakoba in Mexico are positioned to tempt stressed-out North Americans. Around 60% of new hotel resorts will be managed by Banyan Tree rather than owned by it. Ho says: “We would like a one-third dependence on each of the three sectors: investment income, from our investment in hotels, resorts and so on; property-related income, from the sale of unbranded and branded residences; and fee-based income – hotel management fees, design fees, spa gallery management fees and so on. That model will give us the returns to grow the company further.” Last year Banyan Tree opened the largest spa resort in the Middle East, in Bahrain, and ambitious “property-driven” compounds are planned throughout the Gulf region, China and Vietnam. The company has even signed a land acquisition agreement with the municipal government of Lhasa, Tibet, to develop a resort there – surely the ultimate achievement for a sector that professes a spiritual dimension. To facilitate the announced compound annual growth rate of at least 50% during the next three years, innovations are crucial. With spin-off concierge services and, eventually, yacht charters, Ho aims to squarely take on Europe’s main luxury facilitators as well as its spas, in which two decades ago Europe enjoyed a clear lead. Select properties in Tuscany and Provence are being offered as part of the group’s “destination club”, Banyan Tree Private Collection. High-net-worth investors pay to stay in premium hotels, villas and serviced apartments in Europe, the US and Asia and the initial capital investment is held in trust, where it accrues interest. Under other schemes investors can buy a specific island villa, which they receive a return on and can use for a certain number of days a year. Banyan Tree, meanwhile, services the villas and lets them out the rest of the time. Ho says he is merely applying the same power of branding found in consumer goods to real estate. “Hoteliers are leveraging their brand to create prime residential real estate,” he says. “I am not a hotelier, I am an in the real estate business.” |