Interview with Ho Kwon Ping

Banyan Tree CEO, Ho Kwon Ping talks about how the Thailand political crisis has affected his business and the revenue of his company’s Thailand properties.

Q. How would you describe Banyan Tree and what do you see as being the company’s core businesses?
From the start, Banyan Tree embodied romance and intimacy. It is all about creating unforgettable, deeply personal and cherished memories. It is about the romance of travel and connecting people with a ‘sense of place’ through the design and architecture of our resorts, that promotes the uniqueness of indigenous cultures of the place. That’s the essence of the brand.

As for the company itself, we define ourselves as an international company with a unique corporate culture, rooted in Asian sensibilities and sensitivities, but not limited by our origins. The three core components of the Banyan Tree brand are our hotels, spas and the retail galleries. In our initial years, these components were physically co-located and reinforced each other to deliver the Banyan Tree Experience. As we grew, we wanted the components to stand on their own. Our spas set up shop independently in Guam, Sydney, Hong Kong, Shanghai and elsewhere, and the galleries led to independent ventures like the Museum Shop - building new markets and extending the brand into new areas.

This allowed diversification and growth within our brand strategy. Banyan Tree launched its branded residence label, Banyan Tree Residences, in 2007. Targeted at top tier travelers and investors, Banyan Tree Residences provides investment opportunities in a range of villas, townhouses or apartments in five distinct locations including Phuket and Bangkok, Thailand; Bintan, Indonesia and Lijiang, China.

The latest addition to its portfolio is being launched in Mayakoba, Mexico, and will present investors with an added diverse and exotic setting in which to locate their vacation homes. Today, Banyan Tree Holdings Limited is a leading manager and developer of premium resorts, hotels and spas in the Asia Pacific region, with 25 resorts and hotels, 68 spas, 65 retail galleries, and two golf courses. We have also successfully developed management and/ or ownership interests in niche resorts and hotels that strive to place our resorts among the top three brands in every market we have entered.

Q. Banyan Tree won 60 awards in 2007, including the best 100 hotels in China award. But what award has been the stand out for Banyan Tree?
Since the launch of the first Banyan Tree resort, Banyan Tree Phuket, in 1994, Banyan Tree has received over 400 awards and accolades for the resorts, hotels and spas that we managed. We have also received recognition for our commitment to environmental protection and emphasis on corporate social responsibility. Every award we’ve clinched is a reflection of how well we’ve done and is therefore meaningful us. We are particularly proud that our latest resort, Banyan Tree Sanya, was named as one of the Best of the Best Resort Hotels in the inaugural Chinese edition of Robb Report.

Banyan Tree Sanya joins just five new properties around the world as the best new resort hotels of 2008. Banyan Tree Lijiang continues to do us proud. In 2008, Banyan Tree Lijiang was named China’s Ten Most Favoured Hotels by 21st Century Business Herald, and had the honour of being the Best Resort in China by TTG China Travel Awards 2008.

Q. Banyan Tree runs 65 spas and 23 resorts and plans to open 50 properties globally in the next four years. So where will these properties be located and do you have any other plans for acquisition or expansion?
Currently, the Banyan Tree Group manages interests in 25 resorts and hotels, 68 spas, 65 retail galleries, and two golf courses. Diversification and growth is a central theme of our strategy. 2009 will see us extending our reach to the Americas.
In March 2009, we opened our first Banyan Tree resort in the Americas, Banyan Tree Mayakoba. Located on Mexico’s pristine Riviera Maya, Banyan Tree Mayakoba is the first branded exclusive all-pool villa resort and introduces the signature Banyan Tree Spa to North America.

Banyan Tree Cabo Marques in Acapulco will complement the Mayakoba resort when it opens later in the year. We will also deepen our presence in existing territories like China and Thailand with resort openings in Hangzhou and Koh Samui. Going forward, we will be focused on several broad regions, including Mexico, North Africa, China and South East Asia. We have made good progress in all these regions having secured development projects in all regions.

Q. Banyan Tree sold 44 residences in the first half of 2008 and is currently selling 70 luxury villas in Thailand, Indonesia, China and the Seychelles. But how can investors afford to pay between S$600,000 and S$4 million for a luxury villa in the midst of a global recession?
The price tag of a Banyan Tree Residence is testament to the success of this aspirational lifestyle investment which is a well-known and coveted brand name, situated in choice locations and offers high rental yields. We are hopeful that our Residences, with their exclusive privileges and benefits, remain a value proposition for those looking to invest in a hassle-free vacation home. This is especially so for buyers who are already familiar with our resorts and are looking to replicate the Banyan Tree experience.

Q. Banyan Tree’s profits dropped 51 percent to S$9.2 million in the third quarter of 2008, what happened?
This was a result of the political turmoil in Thailand. The unprecedented closure of the Phuket Airport, followed by the demonstrations in Bangkok has been disruptive to our business, accounting for the lower room revenue for our Thailand properties in the fourth quarter of 2008. Despite this, total revenue for the first 9 months of 2008 increased 23 percent, bolstered by a strong showing from our first half, as well as continuing strong revenue recognition from our branded Hotel Residences segment. Bookings for the fourth quarter of 2008 at Banyan Tree hotels outside of Thailand continue to be robust, with a 45 percent increase from the same period last year.

Q. As the high season passes by into the first half of 2009, how closely is Banyan Tree monitoring the political situation in Thailand? And how much of your low fourth quarter room revenue can be blamed on the political situation in Thailand?
We are closely monitoring the political climate in Thailand. The demonstrations in Bangkok and the closure of Phuket Airport has had a significant impact on our Thai resorts, with our revenue decreasing in what has traditionally been our peak season. However, we are taking concrete steps to attract holidaymakers to Phuket. We have jointly collaborated with the Tourism Authority of Thailand to roll out a number of innovative tactical marketing campaigns and value-adding offers which we believe will incentivise travelers to return to Thailand.

Q. In the second quarter of 2008, Banyan Tree opened its newest retreat in Sanya, China. But how is it any different to your other resorts?
Banyan Tree Sanya is the Group’s latest all-pool villa resort in China and will complement the Group’s two highly-acclaimed properties located in China’s Yunnan province, Banyan Tree Ringha and Banyan Tree Lijiang. With 61 pool villas set amidst a sculpted tropical lagoon on an expansive 30-hectare estate, the resort is designed as an exclusive oceanfront hideaway. The resort comes with a Banyan Tree Spa and Banyan Tree’s first hydrothermal complex in Asia.