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