1. banyan tree final report
TRANSCRIPT
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TABLE OF CONTENTS
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EXECUTIVE SUMMARY ............................................................................................................................................. 3
PLAN OBJECTIVES .................................................................................................................................................... 3
COMPANY BACKGROUND ....................................................................................................................................... 4
MISSION STATEMENT .................................................................................................................................................................................... 4
ABOUT BANYAN TREE HOLDINGS LIMITED ................................................................................................................................................. 4
FINANCIAL SUMMARY ................................................................................................................................................................................... 4
ENVIRONMENTAL ANALYSIS .................................................................................................................................... 5
SOCIAL FORCES ............................................................................................................................................................................................. 5
ECONOMIC FORCES ...................................................................................................................................................................................... 7
TECHNOLOGICAL FORCES ............................................................................................................................................................................ 7
COMPETITIVE FORCES ................................................................................................................................................................................... 8
REGULATORY FORCES................................................................................................................................................................................... 8
POLITICAL FORCES ........................................................................................................................................................................................ 9
NATURAL FORCES/ ACTS OF GOD ............................................................................................................................................................... 9
S.W.O.T ANALYSIS .................................................................................................................................................. 9
STRENGTHS .................................................................................................................................................................................................... 9
WEAKNESSES ............................................................................................................................................................................................... 10
OPPORTUNITIES........................................................................................................................................................................................... 11
THREATS ...................................................................................................................................................................................................... 13
MARKETING MIX STRATEGIES ............................................................................................................................... 13
CORPORATE STRUCTURE ...................................................................................................................................... 17
COMPANY ORGANIZATION ......................................................................................................................................................................... 17
HIRING/HR ................................................................................................................................................................................................. 17
ESTIMATED COST OF DEVELOPMENT ................................................................................................................... 18
FORECAST AND FUTURE OUTCOMES ................................................................................................................... 18
TIMELINE ..................................................................................................................................................................................................... 18
FINANCIAL FORECAST ................................................................................................................................................................................. 19
GOALS AND OUTCOMES ............................................................................................................................................................................. 19
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EXECUTIVE SUMMARY
Banyan Tree Holdings is a luxury resort operator with various locations all over Southeast
Asia. With numerous awards and accolades, along with strong brand recognition, Banyan
Tree is able to command prices at the high end of the market for the resorts, hotels and
spas that they manage. Having unsurpassed growth in a very competitive industry, the
Banyan Tree brand is looking to reach the fastest growing resort destinations before its
competitors, and one of the quickest growing regions is the island of Palawan in the
Philippines. An island province located in the South China Sea, Palawan was rated by
National Geographic Traveler magazine as the best island destination in the East and
Southeast Asia region in 2007, and the 13th best island in the world, making it only fitting
for the company to expand there. Still being very underdeveloped and traditional, with an
abundance of wildlife, mountains, white sandy beaches, and clear water, it is expected to
see a rapid increase in tourism in the years to come.
Having spacious bungalows, with private plunge pools, and an extra focus on service, it is
reasoning for why the majority of Banyan Tree resorts are members of “The Leading Hotels
of the World”, an award given to only a handful of hotels globally. The expectation of sales
growth and market size for hotels in Palawan, along with the low cost of labor and
resources available, minimal risk and having similar country characteristics to the other
areas of operation, makes Palawan, the perfect choice for the company to invest in.
PLAN OBJECTIVES
The Banyan Tree Palawan, Philippines, is looking to accomplish various financial and non-
financial objectives with the expansion of what will be another successful resort.
Financially, Banyan Tree hopes to obtain steady revenue growth with increasing sales over
the first five years before slow revenue growth for the following years. With the growth,
hotel room prices will also increase over the first couple of years. Additionally, with success
of the Banyan Tree Palawan, we expect it will help boost the stock price of the corporation.
Non-financially, the resort aims to be a successful and well-maintained haven that is a
leading hotel on both the Island of Palawan and also for the Southeast Asian region. The
resort will seek to have healthy hotel bookings for the „low season‟ and reach close to
maximum capacity during the „high season‟. Lastly, the hotel will aim to win the majority
of the market share for high end resorts in Palawan, and aspire to receive superb ratings
from both guests and critiques to win numerous accolades and awards.
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COMPANY BACKGROUND
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.”
ABOUT BANYAN TREE HOLDINGS LIMITED
Banyan Tree is a developer of premium luxury resorts, hotels, and spas throughout the
Asia Pacific. Banyan Tree is primarily concerned with the development, management, and
ownership of resorts and hotels, but is constantly improving and expanding the market.
Banyan Tree is associated with 23 resorts, 65 spas, 65 retail galleries, and two golf courses.
In 1994, the first Banyan Tree Resort opened in Phuket, Thailand and since then they
have received over 300 awards for the facilities managed by Banyan Tree. In addition to
receiving awards for their luxury accommodations, Banyan Tree has been recognized for its
dedication to preserving the environment and its emphasis on social responsibility.
FINANCIAL SUMMARY
During the year 2007, Banyan Tree‟s revenue from their resorts and hotels increased 29%.
In the next 2 two years Banyan Tree Holdings plans to expand into 9 more countries and
open 26 new resorts and hotels. In order to further expand their company, Banyan Tree
has nearly $200,000 million in loans and last year issued nearly 16,000,000 new shares of
common stock to help their upcoming projects. Stock prices for Banyan Tree Holdings are
continuing to rise at a steady rate and regularly pay dividends. Later this year Banyan Tree
plans to issue 15,000,000 more shares of common stock to help fund the development of
even more hotels, resorts, and spas around the world. Banyan Tree‟s current ratio is 6.11
which shows their strong ability to pay off short-term debt. Based on the overall success of
Banyan Tree, further expansion into Palawan will bring continued success to the company.
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ENVIRONMENTAL ANALYSIS
SOCIAL FORCES
Demographics
According to the latest population census in July 2007, the population of the Philippines is 91,077,287. Facts and statistics regarding population are as follows:
Age Structure Median Age
0 – 14 years: 34.5% 22.7 years
15 – 64 years: 61.3% Population Growth Rate
65 + years: 4.1% 1.764%
Birth Rate Death Rate
24.48 births/1,000 population 5.36 deaths/1,000 population
Life Expectancy at Birth Total Fertility Rate
Total population: 70.51 years 3.05 children born/woman
As the country moves toward industrialization, the urban population will increase. Since
this is already happening, many people from rural areas are moving to urban areas where
the standard of living is assumed to be higher alongside more opportunities and growth.
This is favorable for us because there will be a larger workforce to recruit from.
Culture
Undoubtedly, the Filipino spirit is full of life. Filipinos are known for their
hospitality. Their friendly, warm, and welcoming, attitude towards others is said to be
extraordinary. A foreigner will feel at home while visiting the Philippines. Another trait
shared by Filipinos is pakikisama, which can be roughly translated as companionship or
being accommodating. One of its many expressions can be tendering support or extending
help to family, friends or neighbors. Filipinos value their friendships and relationships.
Family-based Groups
Closeness within the family is very important in the Filipino culture. Due to the close
family ties, the grandparents live with the family for as long as they like. In addition,
Filipinos treasure their relationships through the large extended family. An individual‟s
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acceptance in society largely relies on the family‟s social status or respectability; more so in
the upper class. Because family ties are sound, there is sometimes the pressure to work
together within the family unit and be weary of relationships with others.
Materialism & Leisure
Filipinos are motivated to work hard and they are known for their strong and disciplined work ethic. A desire for material wealth is a prime motivation to work and it's positive for economic development. Filipinos believe if they work hard, they will be able to provide a better life for their families. There is said to be a positive correlation between intensity of religious belief and belief in attributes that lead to economic growth.
Individualism & Collectivism
It is a general stereotype that Asian countries lean more to the collectivist side. The Filipino culture is associated with interdependence, shared concerns and mutual help. People from birth are integrated into strong, cohesive in-groups, which throughout people‟s lifetime continue to protect them in exchange for unquestioning loyalty.
Religions
Roman Catholic, 80.9%, Muslim 5%, Evangelical 2.8%, Iglesia ni Cristo 2.3%, Aglipayan 2%, Other Christian 4.5%, Other 1.8%, Unspecified .6%, None .1%
Since the Filipino Constitution guarantees freedom of worship, every Filipino can choose which organized religion to join. This leaves less room for religious protests and demonstrations as it even allows members of minor religions to openly practice their faith alongside everyone else.
Language
The official languages of the Philippines are Filipino, which is based on Tagalog, and English. There are eight major dialects as well: Tagalog, Cebuano, Ilocano, Hiligaynon, Bicol, Waray, Pampango, Pangasinan.
Holidays
Public holidays in the Philippines make it possible for the Banyan Tree to charge at different rates for high, low, and peak season.
Low season: July - October
High Season: November - June
Peak Season: Christmas & Holy Week
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ECONOMIC FORCES
When performing an environmental analysis, it is important to examine the economic factors of the country as a whole, as well as the economic factors of the company. Despite a turbulent government, GDP growth of the Philippines has averaged about 5% every year since 2001, peaking at 7% growth in 2007. However, despite this national growth and improvement, the Philippines still is a relatively impoverished country with a great imbalance of wealth among the people. According to data produced by the International Monetary Fund, the Philippines had a Gross Domestic Product (GDP) of $144.129 billion (US) in 2007, which ranked 46th in the world. The United States, on the other hand, had a GDP of $13,843.825 billion (US). The main industry sectors, in terms of GDP, are services (54.6%), industrial (31.3%) and agricultural (14.1%). In addition, the Purchasing Power Parity (PPP) is about $298.9 billion (US) in 2007, compared to the PPP of $13.86 trillion (US) in the United States. Similarly, the Balance of Payment (BOP) was $1,917 million (US) in 2007. Unemployment is about 7.3% (2007) and about 30% (2003) of the population is under the poverty line. Overall, the Philippine economy is growing, but the country is not fully stable. On the other hand, the president envisions the country will become a “First World country” by 2020.
The Banyan Tree organization has seen very dynamic and expansive growth in the last few years. Banyan Tree attributes is success as a company to their strong brand recognition, command pricing, and superb management. Revenues increased from $187.3 (million) in 2005 to 335.3 (million) in 2006, which is an increase of 79%. In 2007, Revenue increased another 26% to $429, 859 (million). However, Total Expenses also increased from $153.4 (million) in 2005 to $224.9 (million) in 2006, which is about a 57% increase. In the same respect, Total Expenses increased to $301.6 (million) in 2007, another 34% increase. In addition, Banyan Tree has grown from 5 hotels and resorts in 1994 to 23 in 2007. Overall, Banyan Tree is in an extreme growth phase and increasing recognition globally, but the organization may be growing at too quickly of a rate to sustain profitability.
TECHNOLOGICAL FORCES
A key part to the success of Banyan Tree resorts is the willingness to please and pamper their customers. One main way it attracts customers is its resort spas. Banyan Tree Spa introduced the Tropical Garden Spa concept, which is a non-clinical spa that focuses on Eastern therapies and spiritual, mental and physical harmony. In this practice, a “high-touch, low tech” approached is used, which uses natural ingredients and focuses on human touch. According to the organization, the tropical garden setting helps to awaken a person‟s senses, making them more receptive to the healing power of touch.
Similarly, Banyan Tree resorts have exquisite restaurants with the memorable dining experiences in a romantic atmosphere. In the same respect, Banyan Tree has multiple
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restaurants which add variety to their customer‟s meals. For example, a unique dining experience is the pool bar, where customers can soak up the sun by the pool and dine. Banyan Tree resorts will include many exciting facilities. Such facilities will include a few pools, tennis courts, and a library. In addition, various classes will be offered such as aerobics, yoga, meditation and painting.
COMPETITIVE FORCES
The competitive environment in the hospitality industry is driven by business and tourist travel, which are very much coupled to the status of the economy. The success of individual companies relies on efficient operations and excellent marketing. Bigger firms have economies of scale in operations and sometimes raise more capital due to strong brand recognition. Smaller companies can compete effectively though attractive destinations and premium services.
Worldwide, Banyan Tree has competitors in luxury hotels, boutique hotels, popular resorts, and renowned spa getaways. These services are located worldwide in Asia, Africa, the Caribbean, Central America, North America, South America, Europe and Oceania. Hoovers‟ top 5 list of upscale and luxury hotel companies include:
1. Marriott International, Inc.
2. Global Hyatt Corporation
3. Hilton Hotels Corporation
4. Starwood Hotels & Resorts Worldwide, Inc.
5. Wyndham Worldwide Corporation
All of the above would be global competition, not just limited to the Asia Pacific region. Specifically in Asia, competition may arise from some of those firms as they do have establishments in Philippines Singapore, Hong Kong, Thailand, Indonesia, Malaysia, India and China.
REGULATORY FORCES
In accordance with Philippine Environmental Impact Statement, Banyan Tree must adhere to the Presidential Decree (P.D.) No. 1586, which requires a project proponent to conduct an Environmental Impact Assessment to ensure that all possible environmental effects of the project are addressed, in line with the country's overall goal of sustainable development.
Banyan Tree must also abide by the Labor Code of the Philippines. Any Banyan Tree managers brought to Palawan to help startup the resort must apply for work visas under the Philippine Immigration Act. Banyan Tree must also comply with the Business
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Registration Procedures which require Banyan Tree to register with the Securities and Exchange Commission, Board of Investments, and the Philippine Economic Zone Authority.
POLITICAL FORCES
The Philippine government fought to gain their independence in 1946 after World War II. Next, the nation became tired of Ferdinand Marcos, who was elected in 1965, after suppressing democratic institutions, continual corruption and restricting civil liberties. The 20 year rule of Ferdinand Marcos ended in 1988, when the people forced him into exile. Corazon Aquino then became president, but her presidency was less effective in returning the Philippines to an economically stable nation due to several coup attempts. In 1998, Joseph Estrada was elected president, but was later succeeded by his vice president, Gloria Macapagal-Arroyo in 2001 because of accusations of corruption. Macapagal-Arroyo was elected president for a six year term in 2004. Since being elected, the government has faced consistent economic growth, but the nation is still plagued with poverty and a great divide in wealth. In addition, the government faces threats from terrorist groups. Some of these terrorist groups have been known for kidnapping foreign tourists, which could pose a possible threat for Banyan Tree. However, the Philippine government has made an intense effort to diminish terrorist threats.
NATURAL FORCES/ ACTS OF GOD
The Philippines is accustomed to about 15 typhoons and about 5 cyclonic storms per year. The Philippines has also been affected by intense earthquakes, volcanoes and tsunamis. However, due to Palawan‟s geographic location, these natural disasters do not seem to be as prominent factors. In the past, Palawan has been safe from these devastating natural disasters.
S.W.O.T ANALYSIS
STRENGTHS
Natural Sanctuary
The islands of Palawan are the Philippines‟ premier destination as it is blessed with marvelous natural scenery. Palawan enjoys tropical rainforests, outstanding dive sites, majestic mountains, ancient caves, and pristine white sand beaches. Highlands and rolling terrain covered with abundant greenery create a cool and scenic landscape. Palawan boasts of exotic flora and fauna too. The island is surrounded by miles of coral reefs that are home to rich and diverse marine life. Palawan‟s clear waters are among the best in the world, for both diving and fishing. Our clientele will want to be invited to these islands and explore the natural wonders it possesses.
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Transportation & Travel
The Philippines is a common destination amongst all international airlines. Once in the Philippines, the province of Palawan is easily reached by air or boat. Travel time to Palawan by air from Manila is 55 minutes. Local domestic airlines (Asian Spirit, Seair, Cebu Pacific, Air Philippines, and Philippine Airlines) have multiple flights daily. With the plans of the government to improve Manila‟s airport to comply with international standards, traveling to Palawan will become easier and faster.
Communication
Telecommunication companies offer local and international services necessary for communication that our guests expect and deserve; telephones, cellular phones, Internet, cable, and television. Inter-island communication is available through the government‟s telegraph network and radio systems. In addition to the government‟s postal network, there are also cargo forwarders to supply air parcel and freight services.
Peace & Order
The locale in Palawan is serene. The military and the government have an amicable and friendly relationship. Crime rates are low and the people are pleased with a simple life. A Peace and Order Council is in place where government officials from the military, church and private business sectors are actively involved. Banyan Tree security staff are on site 24/7 and are required to have a minimum of 3 years experience as a Security Manager.
Testimonies
Palawan was rated by National Geographic Traveler in 2007 as the best island destination in both East and South East Asia. The National Geographic Traveler also rated Palawan as No. 13 on the list of best islands globally. Distinguished underwater explorer Jacques Cousteau has described Palawan as having one of the most beautiful seascapes in the world.
Company Growth & Health
The Banyan Tree is a rapidly growing company with lots of investment all across the globe. Their expanding nature, coupled with a positive stock price, solid financial earnings, and continual success at all resort locations, is exceptional in the competitive hotel and resort industry. Not many hotel companies can brag about recent success like the Banyan Tree.
WEAKNESSES
Politics & Corruption
The Philippines was ranked No. 131 in Transparency International‟s Corruption Index. Corruption continues to be a serious problem in the Philippines in spite of the various
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efforts by the government and civil society to control it. It is said that most politicians possess a conflict between vested interests and the national good. Martial Law, coup d‟états, and recent rebellions are some examples of wanting personal power regardless of what‟s good for the nation. The embezzlements and cheating reported in the most recent elections are acts desperate for power, not acts that convey genuinely wishing to serve the country.
Economic Instability
Much to its disadvantage, the Philippines have averaged a 3.1% annual GDP growth over the past 25 years. Other Asian countries have far surpassed this, China with a 9.7% average growth and Singapore with 7.7%.
Natural Hazards
The Philippines sits astride the typhoon belt, which means it‟s prone to be struck by
dangerous storms. In addition, the country is known to be home of active volcanoes.
Other natural hazards known to occur are landslides, earthquakes and tsunamis.
Current Environmental Issues
Existing issues that the Philippines are dealing with, and trying to combat, are uncontrolled
deforestation, soil erosion, air and water pollution, coral reef degradation and increasing
pollution of coastal mangrove swamps.
Disease
Some may say that the degree of risk for major infectious diseases is high in the
Philippines. Food or waterborne diseases common in the country include bacterial
diarrhea, hepatitis A and typhoid fever. Common vector borne diseases include dengue
fever and malaria.
OPPORTUNITIES
Global Prospect for Hospitality Investment
Emerging markets in Asia is the focus of new hospitality investment and development.
Overall hotel investment strategy is said to be directed by those arranging services for the
luxury and upscale sector of the industry. Due to tourism being a key segment in a large
number of Asian countries, the future outlook is bright for our company. With our
unique concept implemented well, we can broaden our locations in the Asian region.
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Natural Environment
Given the natural environment stated in Strengths, varied activities may take place and
different market needs may be accommodated. Water sports, diving excursions, island
hopping, trail hiking, outdoor spa facilities, and cultural and historical sightseeing are
activities and adventures our customers are welcome to enjoy.
Finance
We see opportunities for more international banks to open up branches in Palawan. The
banking community is steadily growing, which means we can tap into this market while
potential is present. We see an opportunity in this indication of increasing economic
activity.
Several banks that are already located in Palawan include:: Universal Bank, Metro Bank,
Bank of the Philippine Islands, Philippine National Bank, Allied Bank, Banco Filipino,
Development Bank of the Philippines and Cooperative Bank of Palawan.
Palawan’s Development Program
The province of Palawan has drafted a list of action statements that will help them achieve
continuous success in their efforts as they move forward in the travel trade and toward
economic development. The following list leads us to believe that Palawan is a great
prospect for a Banyan Tree location.
Employment opportunity development
Incentives to attract capital investments in Palawan
Community-based tourism with the participation of local people shall be encouraged
Tourism promotion and marketing programs shall be intensified with private sector participation
Educational opportunities shall be expanded to include technical and technological courses essential to development
Environmental protection and enhancement shall concentrate in preventing the destruction and over-exploitation of resources
Safety measures against terrorism shall be intensified
The laying down of necessary infrastructure will promote investments
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THREATS
Competition
Although Palawan already has a few hotels to its name (Club Noah Isabelle, Club Paradise,
Crystal Paradise, El Nido, Princessa Holiday Resort), there is only one other resort that is
comparable to the Banyan Tree: Amanpulo.
Amanpulo is situated on a private island in Palawan. The island boasts white sand, crystal
clear water and tropical vegetation. The Aman group has the No. 1 spot in Leading
Chains, Hotels, Resorts & Spas in Zagat‟s 2007 survey. Amanpulo, specifically, received
the 2007 Gallivanter‟s Award for Excellence and it also received the No. 1 spot in Best
Resorts of South East Asia. Amanpulo‟s clientele is almost identical, to that of Banyan
Tree. Their services compare to ours in the sense that they offer a cozy environment of
privacy and intimacy, a variety of sea, sand, and tropical island-retreat pleasures, delectable
dining, and holistic body treatments. They, too, respond to a leisurely lifestyle for the
affluent and rich worldwide. In addition, Amanpulo is just as concerned as we are in
building environmentally friendly and aesthetically pleasing resorts.
MARKETING MIX STRATEGIES
Product
Looking to expand the company after having numerous successful operations around the
region, Banyan Tree is in the growth stage of the product life cycle. This stage is
characterized by rapid increases in sales and consumer awareness. More vacationers are
starting to learn about the Banyan Tree and are excited to experience the award winning
resort chain. This phase of the PLC is influenced by repeat purchasers, which will include
those who have experienced other Banyan Tree resorts and want to visit this new location.
With a product going into a new country, often times there need to be a degree of both
standardization and adaptation among the product so that it maximizes revenues. Factors
encouraging adaptation include differing consumer behavior patterns, cultural differences,
legal concerns, local competition, and true to the marketing concept. Adaptation for the
Banyan Tree will include having the resort reflect the culture of Palawan through its
architectural style, artwork, layout and amenities, while at the same time staying true to the
overall style and features that separate the Banyan Tree from other hotel chains in the area.
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Legal concerns might include meeting a certain standard of building and what materials
might or might not be acceptable, along with what can or cannot be built in a resort.
Competition will also drive the resort to differentiate itself, making sure not to have similar
traits to the other high-end resorts in the area.
Lastly, with the Banyan Tree Palawan, we want it to have a strong sense of brand
personality and brand equity. Brand personality for the Banyan Tree would include
sophisticated, elegant, polite, innovative, warm, hospitable, and relaxed. Brand equity,
which is the added value a given brand name gives to a product beyond the functional
benefits provided, also helps with the resort opening. Banyan Tree is distinguished as being
a leading hotel having world-class relaxing accommodations coupled with excellent service,
amenities and facilities in the best vacation settings. This instills a sense of brand loyalty
for those that visit time and time again.
Price
Pricing is the next key step in the marketing mix strategy. When looking at the price
objectives, Banyan Tree wants to hit on profits and sales for the resort in Palawan.
However, there are some pricing constraints for opening a resort internationally. The price
escalation for any imports to the resort, such as wine, specialty linens, and other goods that
are imported to the resort, can make the price fluctuate substantially. Also, the changing
values of currencies can make the price of the resort be more or less expensive for visitors
outside of the Philippines. Additionally, different degrees of government intervention can
occur, as it is possible that the government may set a maximum price that hotels cannot
exceed. Lastly, there are differences in fixed versus variable pricing practices. In the
Philippines, it is common for bargaining to occur, and therefore rooms will have to be
priced a bit higher in order to account for discounts and bargaining by the customer.
The next step in pricing is determining the cost, volume and profit relationships. For this,
we need to estimate the cost of development. We will discuss this later, but the total cost
for development, staffing and other expenses totals close to 92 million. The next step is
selecting the approximate price level. Since the company is in the growth stage of the
product life cycle, and based on the other prices that the company charges at the other
resorts, a price skimming strategy will be implemented. This involves charging a high price
for the new product by aiming first at consumers willing to pay the price, and then either
lowering the price if sales aren‟t as high as expected, or raising them if the resort is
consistently reaching maximum capacity.
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The fifth step in pricing is setting the listed or quoted price of the product. All prices will
be pegged to the US Dollar with the rate in Philippines Pesos adjusted accordingly. This
will help minimize the changing value of currencies globally. Since the resort will offer
different room types, prices will vary significantly. Prices vary for hotels based on the
weekend versus weekday, high season versus low season, how many guests are staying in a
room, and other factors, there will be a flexible-price policy. The standard beach villas will
be priced anywhere between $350 USD and $550 USD, beach villas with plunge pools
between $450 USD and $650 USD, duplex beach villas between $800 USD and $1000
USD, and over water bungalows priced between $650 USD and $850 USD. These prices
take into account both the costs needed for the resort, along with the premium of staying
at a distinguished and reputable brand resort.
The last step is to make special adjustments to the list or quoted price. Discounts will come
in the form of seasonal discounts, during the low season, and quantity discounts, if a
couple or many rooms are purchased. Also, returning guests can receive a discount, as this
will help increase the rate of return of guests, keeping visitors brand loyal to Banyan Tree.
Place
Going into a new country such as the Philippines for a hotel industry requires developing a
strategy to manage the construction and the channels used for the logistics of running the
company. The construction of the hotel, or the selection of distributors used to supply the
materials and labor used for building, will be contracted out to local companies on
Palawan that can build the resort. This will lower costs than using previous builders and
contracted workers that supplied and built the other Banyan Tree resorts.
The geography of Palawan makes it interesting for importing various goods that might be
desired by guests, and invokes the need for an efficient supply chain. Such items that will
need to be imported from overseas includes fine wines and beers, certain foods not
attainable in the Philippines, and the necessary accommodations (such as linens, soaps &
bathroom amenities) that are standard at the other resort locations. Effective inventory
management is needed, with key customers and suppliers relationships intact. Using a just
in time (JIT) system, will reduce inventory costs for goods such as wines and other required
goods by guests. Keeping a limited stock of these goods will require a communicative and
cooperative supply chain in which a quality supply chain manager will be needed at the
resort.
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Promotion
The fourth element in the marketing mix, promotion consists of advertising, personal selling, sales promotion, public relations, and direct marketing. The company will focus on a pull strategy, which relies on mass media, but also incorporate a push strategy.
Advertising will be used the most, with the largest medium being through travel magazines, billboards and on the internet. The advertising program will be standardized globally, with only minimal changes based on some cultural differences to not only reduce costs, but to rapidly enter into different countries. Also, communicating a high-end resort won‟t need many different messages. A conservative, clear, and legally-accepted advertisement that reflects how beautiful and luxurious the resort is, creating a positive reaction from all cultures that view it, is what the company will aim for.
Public relations will play a significant role in how well the brand name of Banyan Tree, along with the awareness of the new resort in Palawan, reaches as many consumers as possible. Having a positive PR person will help advance the product, through getting write ups in magazines, spots in travel TV shows, publicity in the news, drawing celebrities to the hotel, and finding creative means to get the resort name on the internet and through other forms of media.
Lastly, direct marketing will help sell the resort. Numerous individuals at the target market that we are trying to penetrate go through travel agents to book their vacation desires, and often times ask for their request on places to stay and places to travel. Implementing a method which will reach as many high-end travel agents as possible globally, and having them request the hotel to their clients, will reward the travel agent companies in discounts and also a certain percentage of the sale that they have made. Direct marketing will be used to reach the demographic of the target market for the resort, sending mail advertisements and discounts to the wealthy, vacation seeking individuals in the region and also in Europe and America.
Positioning
Positioning is the process by which marketers try to create an image or identity for the target market for its product and organization. Already, Banyan Tree is distinguished as a luxury resort brand featuring quality service, spacious accommodations, extensive amenities, the best spa treatment facilities in Asia, and being extremely social responsible at all of its locations. We want to continue with this positioning strategy for Palawan. Positioned towards the wealthy, retired couples looking for relaxation, Banyan Tree Palawan will better the company‟s existing image, and will also strive to be the leading resort on Palawan in direct competition to the Amanpulo Resort.
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CORPORATE STRUCTURE
COMPANY ORGANIZATION
Banyan Tree Holding‟s present organizational structure appears in Figure 1.1. Since Banyan Tree is a reasonably large, international corporation, this figure focuses primarily on the expansion of the company to the Palawan Resort location. With so many different managers at the resort level, this shows the strategy of focusing and catering to all aspects of the resort experience, to ensure high-quality throughout the resort.
Figure 1.1: Banyan Tree’s Expansion Organization Chart
HIRING/HR
With expanding a company into a new international market, it requires positioning
individuals in newly defined work titles and position. Banyan Tree will take a geocentric
approach when it comes to hiring. The geocentric approach seeks the best people for key
positions throughout the organization, regardless of their nationality. This approach will
be used for the positions of the country president for the corporation, along with the resort
president and vice president. At the managing level for the resort in Palawan, a geocentric
approach will also be used for most positions. However, a polycentric approach, which is
the use of host-country nationals to manage, will be implemented for both the staff
manager, resort recreation manager, guest relations manager and also the head chef and
catering manager. Using natives of the country for these positions will help maintain local
motivation and morale, allows for more respect from the people working below them and
allows them to communicate in their native language, and lastly allows the resort to offer
native cuisine, excursions and experiences to reflect the culture of the Philippines.
President & CEO
Director Sales Chief Finance Officer Chief Marketing Officer Resort Operations President
Philippines Manager
Maldives
Manager
Supply Chain
Manager Resort Recreation
Manager
Indonesia
Manager
Thailand
Manager
China
Manager
Seychelles
Manager
Palawan Resort
President
Front Office
Manager Staff Manager Head Chef &
Catering Manager
Head of HR
Spa Manager
Manager
Director of New Business
Bahrain
Manager
Guest Relations
Manager
Palawan Resort
Vice President
Board of Directors
18
ESTIMATED COST OF DEVELOPMENT
The initial development of Palawan will require approximately 92 million USD of capital. 60 million USD will be provided by Banyan Tree Holdings Limited and the remaining $32 million will come as a loan.
Figure 1.2: Banyan Tree Palawan Estimated Costs of Development
Expenditures Cost (in thousands of USD) Property, Plant, and Equipment 71000 Legal 4000 Insurance 800 Utilities 200 Salaries and Wages Payable 6000 Other Expenses 10000 Estimate Total Expense 92000
FORECAST AND FUTURE OUTCOMES
TIMELINE 2008:
Conduct research on the Philippines and industry
Purchase Property
Develop design of resort
2009: -Winter 2009 - Begin construction of resort; Begin advertising
-April/May 2009- Construction of additional facilities, such as pool and
spa; Begin on-sight hiring staff (front desk staff, spa therapists, maintenance staff,
cleaning staff etc)
-August 2009-Add landscaping and decorative features
-November 2009- Start taking reservations for 2010; Give tours of facilities
-December 2009- -Make any last minute adjustments to overall
project based upon feedback from tours
2010: Resort opens March 2010
2011: Conduct research which will help the company improve & remain competitive.
19
FINANCIAL FORECAST
Based on the success of other Banyan Tree Resorts and the growth rate of the company, we
expect Palawan to turn in a net profit after the sixth year of operation. During the year
2011 we plan to spend approximately $8 million in expenses associated with operating and
maintaining the Palawan resort. We expect this amount to increase approximately 1.16%
each year as inflation increases. Revenue should also increase over the first couple years, as
you can see in Figure 1.3 below, with more awareness of the resort, but flatten out after five
to six years from opening.
Figure 1.3: Banyan Tree Palawan Financial Forecast
Year 2010 2011 2012 2013 2014 2015 2016 2017
Debt $ 85.1 $ 78.0 $ 67.0 $ 53.3 $ 39.0 $ 24.5 $ 11.0 $ -
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
Net Profit $ 78.0 $ 67.0 $ 53.3 $ 39.0 $ 24.5 $ 11.0 $ 0.7 $ 8.5
GOALS AND OUTCOMES
The Banyan Tree resort in Palawan would like to achieve a few goals set, besides the
financial forecast goals. The resort would like to win numerous accolades and awards for
design, quality and service, and especially like to be a member of the “Leading Hotels of
the World” a couple years after opening. With this, the resort will strive to be placed in
magazine write-ups, travel documentaries and other TV shows that notify the best resorts in
Southeast Asia. Additionally, with helping bring more tourists to the island, and also being
socially responsible, Banyan Tree would like to receive credentials and recognition by the
government of the Philippines for the positive work it has done for the country as an FDI.
The hotel would also like to see a constant stream of guests staying at the hotel and achieve
an average daily occupancy rate for the year of 75%. The company would also like to
renovate the hotel, as need be, to keep up with competitors in the region. Focusing on
success and innovation, Banyan Tree Palawan would like to be one of the flagship resorts
in the growing portfolio of the corporation.