banyan tree resort expansion april 16 th, 2008 banyan tree resort expansion
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Banyan Tree Resort Expansion
Keith Bergh, Brianne McElhiney,Patti Grandidge, Kari Goebel
April 16th, 2008
Banyan Tree Resort Expansion
What is our Business?
Company BackgroundBanyan Tree’s Mission Statement: “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.”
Founded in 1994 with opening in PhuketDevelopment, Management, & Ownership of
luxury Resorts, Spas, & Hotels Received over 300 Awards Dedicated to Preserving the EnvironmentEmphasis 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
Company Background
Financial Summary
Environmental Analysis
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
Social Forces
Culture Family-based Groups Materialism & Leisure
Motivated to Work Hard
Religions 80.9% Roman Catholic
Language Filipino & English
Macro Effects (Philippines)GDP
Average Growth since 2001: 5%2007: 7%$144.13B USD (2007)
PPP298.9B USD (2007)
BOP1.9B USD (2007)
Unemployment is about 7.3% (2007)30% of pop. is under poverty line (2003) “First World Country” by 2020
Economic Forces
Economic Forces
Micro Effects (Banyan Tree) 2005 2006 2007 Revenues $187.3 $335.3 $429.9 (in millions)
2005 vs. 2006-79% increase
2006 vs. 2007- 26% increase
2005 2006 2007Total Expenses $153.4 $224.9 $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. Marriott International Inc.2. Global Hyatt Corporation3. Hilton Hotels Corporation4. Starwood Hotels & Resorts Worldwide, Inc.5. 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 ProblemsTerrorist 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
StrengthsNatural SanctuaryTransportation & TravelCommunicationPeace & OrderFirst AidTestimoniesCompany Growth & Health
WeaknessesPolitics & CorruptionEconomic InstabilityNatural HazardsCurrent Environmental IssuesDisease
OpportunitiesGlobal Prospect for Hospitality InvestmentNatural EnvironmentWellness VacationsPalawan’s Development Program
ThreatsCompetition Aman Group #1 Clientele Similar to Banyan Tree Amanpulo in Palawan – Direct
competition
Marketing Mix Strategies
ProductGrowth Stage of PLC
Rapid Increase in Sales & Consumer Awareness Repeat Purchasers
Product Adaptation Cultural Differences Legal Concerns Local Competition
Brand Personality Sophisticated, Elegant, Innovative, Hospitable, Relaxed
Brand Equity World-Class Accommodations & Service = Brand Loyalty
PriceObjectives
Hit on Profits & Sales
Constraints Price Escalation of Imports Government Intervention Fixed vs. Variable Pricing
Demand-Oriented Pricing Strategy Price Skimming
Implement similar strategy as other resorts
Cost, Volume, Profit Relationships Cost of Development: 92M USD
PriceListed 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
Adjustments in Price Discounts
Seasonal (Low-Season) Quantity Returning Guests = Brand Loyal
PlaceConstruction Channels
Labor & Construction Contracted out
Supply Chain 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
PromotionPull Strategy
Advertising Travel Magazines, Billboards, Select Internet Sites Standardized with minimal changes to adapt to the
culturePublic Relations
Spots on TV Travel Shows; Publicity in News; Draw Celebs to hotel; other Mediums
Push Strategy Direct Marketing
Travel Agents Suggest to Clients Receive discounts / Percentage of sale
PositioningContinue with Banyan Tree Success
Distinguished Luxury Resort Brand
Positioned towards target market Wealthy Families Retired Couples Honeymooners
Grow Companies Current Image
Differentiation Be the Leading Luxury Resort for Palawan
In direct competition with Amanpulo and New Entrants
Organization & Hiring Strategies
Company Organization ChartBoard of Directors President & CEO
Resort Operation
s President
Philippines Manager
Palawan President
Supply
Chain
Manager
Front
Office
Manager
Staff
Manager
Head Chef
& Catering
Manager
Resort
Recreation
Manager
Spa
Manager
Guest
Relation
s Manager
Palawan Vice President
Maldives Manager
Indonesia Manager
Thailand Manager
China Manager
Seychelles
Manager
Bahrain Manager
Chief Marketing
Officer
Chief Finance Officer
Director of Sales
Head of HR
Director of New
Business
Many Managers at Resort Strategy of focusing and catering to ensure high quality
Country Managers
Resort Managers
Company Executives
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
Hiring & HR
Costs & Timeline
Cost of Development
Expenditures
Cost (in thousands of USD)
Property, Plant, and Equipment 71000Legal 4000Insurance 800Utilities 200Salaries and Wages Payable 6000Other Expenses 10000Estimate Total Expense 92000
92M USD Capital 60M from Banyan Tree Holdings Limited 32M loan
Timeline
07.01.08 12.01.08 07.01.09 12.01.09 07.01.10 12.01.10 07.01.11
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
Gantt Chart
Would like to open March 2010 Quick process to stay ahead of other new entries
Forecast & Future .
Outcomes
Year 2010 2011 2012 2013 2014 2015 2016 2017Debt $ 85.1 $ 78.0 $ 67.0 $ 53.3 $ 39.0 $ 24.5 $ 11.0 $ -
Operating Expenses $ 6.9 $ 8.0 $ 9.3 $ 10.8 $ 12.5 $ 14.5 $ 16.8 $ 19.5
Revenue $ 14.0 $ 19.0 $ 23.0 $ 25.0 $ 27.0 $ 28.0 $ 28.0 $ 28.0 Profit $ 78.0 $ 67.0 $ 53.3 $ 39.0 $ 24.5 $ 11.0 $ 0.7 $ 8.5
Financial Forecast
Operating Expenses increase 1.16% a year
Based on Inflation Increases
Make profit and pay off debt and loan after 6 years
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
Goals & Outcomes
Questions and Comments
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