Banyan Tree Essay

587 Words3 Pages
1.0 Introduction Banyan Tree is a leading operator and developer of premium resorts, hotels, residences and spas. Starting out in Phuket as its first boutique resort, BT currently owns 35 hotels, 70 spas, and 83 galleries in 27 countries around the world. Despite its tremendous success and well-known brand, 78% of its business is concentrated in Asia. 1.1 Business Model Banyan generates revenue from various sources. A bulk of their revenue (62.3%) is derived through hotel investments via their ownership and management of their signature hotels. This key revenue driver is where Banyan’s expertise in hotel management, design & architecture and unparalleled customer experience differentiates itself from many other hotel and resort chains. Property sales of existing hotels and development sites make up 9.8% of their turnover and lastly, 27.8% of their revenue is derived from fee-based management. Fee-based revenues encompass design fees for designing other hotels, management fees from operating golf and management clubs and perhaps most importantly, sales from Banyan Tree Gallery. Banyan Tree Gallery is its retail arm which focuses on the sale of local and indigenous products wihin each resort that gives local communities a source of livelihood. It is part of their core focus on social sustainability, which is emphasised in its business operations. Fee-based management is a point of interest as revenue from this area has been steadily increasing. 1.2 Financial Highlights from FY 2014 2014 was not as successful as previous years. Banyan experienced an 8% drop in revenue from 2014 and a 31 % drop in earnings (EBITDA) signalling that value to shareholders was poor in the recent financial year. The drop in financial performance was especially surprising considering Banyan’s steady rise in revenue from 2010 to 2013. The poor performance can be attributed to weak demand

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