Before his foray into luxury resort business, Ho Kwon Ping (Ho), the founder chairman of
Banyan Tree, was involved in his family business, the Singapore-based ‘Wah Chang Group’. As
many of his businesses like shoe manufacturing, retailing of electronic goods and others were
getting hit by low cost competitors from other Asian countries, Ho decided to venture into tropical
luxury resorts that were unique to certain South-East Asian countries like Thailand. He wanted to create
a brand for himself instead of being a distributor of other companies. So he founded Banyan Tree, the
luxury resort chain, in 1995. Starting with a solitary hotel resort in Thailand, Banyan Tree was the first to
introduce the concepts of pool villas and tropical spas to the world. Banyan Tree soon expanded into
a luxury-resort chain with its hotels, resorts, spas and retailing galleries in different places like Singapore,
Bangkok, Shanghai, Bangalore, Sydney and Seychelles.
Banyan Tree earned $114 mn in revenues in 2002 and was projected to earn $130 mn in 2003. With
its diversified services, Banyan Tree became the only Asian company among other world famous corporates
like Virgin, Harley-Davidson, Manchester United and others, to feature in the book Uncommon Practices.
Banyan Tree was also named the ‘Best Asia-Pacific Resort Hotel’ for the second time in the ‘Business
Traveller Asia-Pacific Awards.’ Ho said, “I believed that building a powerful brand was the prerequisite
to, rather than the reward for, success. Indeed, it was the key to our survival as a small company.”
The Wah Chang Group was into the distribution of European, Japanese and Korean consumer
electronic goods in several Asian countries. The trade relationships with the manufacturers were
unpredictable. If the distributors could not meet their targets, the manufacturers would search for
alternatives and if the business was lucrative, the manufacturers used to take over the distribution
business. In the early 1990s, Ho set up a sports-shoe factory (under Wah Chang Group) that manufactured
made-to-order shoes in a joint venture with a Japanese partner in Thailand. Within a year, Ho was forcedto shut down the shop when a competitor from Indonesia started offering cheaper shoes to his
customers. Commenting on his Asian competitors, who were leveraging on their low costs, Ho said,
“I intuitively knew that the writing was on the wall, and not just for Thailand, nor even Indonesia.
Every country in Asia—Burma, Vietnam, Cambodia and, ultimately, China—were all vying for
lowest-cost status. To rely on cost advantages, one would have to run just to stand still.” |
