Reinvention is on the cards for Singapore-based multinational luxury hotel chain Banyan Tree Group as it ramps up its ambitions after a financially challenging time. During the pandemic, the Group suffered almost two years of zero occupancy. As travel returned to pre-pandemic levels, the Group’s co-founders Claire Chiang and her husband Ho Kwon Ping were upbeat, as the latter half of 2022 had shown clear signs of a travel rebound and the company's revenue had jumped 110 per cent to S$118.6 million.
By the end of 2022, the Group operated 65 resorts, 63 spas, 64 retail galleries, and three championship golf courses across 23 countries. The portfolio comprised 10 resort brands, including the Banyan Tree, Angsana, Cassia, Dhawa, Laguna, Homm, and Folio. These do not cater just to the luxury market but to a wider variety of travel budgets. From the initial offerings of luxury in lush resorts, the Group had started offering minimalist concepts in urban locations through the Homm, Garrya and Folio brands in China and Japan. It also launched an intimate eco-luxury resort in Bali in 2022 that offers immersive experiences.
Chiang and Ho had ambitious plans to increase the existing portfolio to 100 hotels and resorts by 2025. Chiang contemplated the feasibility of the proposed expansion. The hotel and resort business had commenced in 1987, with a clear brand philosophy of creating shared value and pursuing sustainability. Would the rapid growth plans pose a challenge to staying true to these values?
Beginnings of the Banyan Group
The story began in 1986 when Chiang, Ho, and Ho’s brother went property hunting for a holiday home in Phuket’s Bang Tao Bay. They fell in love with a piece of barren land with jet-blue waters around it and acquired it – only to discover that the lagoon’s vivid colour was due to pollution from the tin mine that used to be located at the site. They had to spend a huge sum to restore the land and reforest the surroundings as they built their first hotel, the Dusit Thani Hotel, which opened in 1987.
The Banyan Group was thus established, with the banyan tree in the Group’s brand symbolising shade and shelter for weary travellers. It catered to a niche customer segment seeking exclusive and intimate luxury accommodations but without the price tag of glitzy hotel chains. In 1994, Banyan Tree Phuket, known for its luxurious all-pool villas nestled around a lagoon with lush greenery, was launched and became the Group’s flagship property.
A history of building shared value
The Group focused on doing good from the very start by supporting societal progress at every property. Chiang herself headed a corporate social responsibility (CSR) committee with the management from each resort to ensure commitment.
As the Group added properties, brands, and products to its stable, Banyan Tree tried to stay true to its shared value proposition and work with all stakeholders to achieve its aims. For example, for the construction of the Banyan Tree Vabbinfaru property in the Maldives, specially requisitioned light boats carried prefabricated villa elements ashore to protect the island’s fragile coral reefs. The Group also helped restore the reefs with the help of a passionate environmentalist who was appointed the property’s Director of Conservation. It sponsored research and conservation initiatives to protect endangered sea turtles which nested on the beaches of Banyan Tree Mayakoba in Mexico and the Banyan Tree Vabbinfaru.
To ensure that tree-planting was part of the company culture, the Group had 17 resorts enrolled under the EarthCheck advisory, which helps businesses to reduce environmental impact. Accordingly, single-use plastics were removed, and the company created livelihoods for the local community by planting crop trees, installing water-bottling plants, and enabling trash collection.
The Group also offered childcare and education for families working on construction sites, vocational training to youths and low-income women working at its resorts, and commissioned artisans to create handicrafts for sale.
The properties practised the principles of reduce, reuse and recycle. The refuse was recycled where possible. Wastewater was treated and recycled in the irrigation of resort landscapes. Toiletries such as shampoo and body lotion provided in the resorts were made from non-toxic, biodegradable materials, and filled in containers made from celadon or ceramic.
Guests who participated in the various programmes offered at the resorts were encouraged to return several years later to see how they had created impact through responsible tourism.
Banyan Tree also set up a leadership academy to help employees progress in the organisation. “We want all associates from the gardener to the senior management to feel they are a part of the business,” Chiang said, explaining its ethos.
On the cusp of a new phase
The Group’s sustainability and CSR efforts did not go unnoticed. Euromonitor, for example, had named Banyan Tree the ‘World’s Leading Boutique Hotel Brand’ for six consecutive years from 2011 to 2016. Forbes recognised Banyan Tree for its innovative approach to sustainability and commitment to social responsibility. Deloitte named Banyan Tree as one of the ‘Top 100 Global Luxury Brands’ in 2015.
While Chiang was proud of Banyan Tree’s achievements, she was painfully aware that balancing social responsibility, shared value, sustainability, competitiveness, and business growth meant trade-offs. Given the interconnected nature of sustainability challenges, would fostering collaborative partnerships with other organisations be beneficial?
On another note, Banyan Tree wanted to expand its footprint, and while the Group had shifted its business model from owning properties to operating them over the years, with ownership dropping from 66 per cent in 2009 to 23 per cent in 2021, capital investments were still significant given its target market of luxury travellers.
Considering the various tugging tensions, how could Banyan Tree continue to stay true to its business philosophy? Could the firm drive growth aggressively, and if so, should it pursue organic growth and/or growth through partnerships? What could be next in Banyan Tree’s sustainability journey?
The case “Banyan Tree Group: Sustainability through Shared Value” is written by Professor Heli Wang and Lipika Bhattacharya at Singapore Management University (SMU) and Professor Cubie Lau at University College Dubin. To read it in full, please visit the CMP website by clicking here.