Banyan Tree firms up listing plans

UBS set to execute one of Asia''s more enviable mandates.

One of Asia's best known, home grown, luxury brands is planning to list at the beginning of next year. UBS is believed to have won the mandate to float the Banyan Tree, beating hot favourite Goldman Sachs, which has been advising the group on its listing plans for over a year.

One of the main conundrums faced by the group has been whether to list in Hong Kong, where there is much greater liquidity, or in Singapore where it is based and has been under pressure from the government to go public. It is now believed to be leaning towards Singapore.

The IPO is expected to raise about $200 million and will constitute a mixure of old and new shares. The company plans to sell about 20% to 25% of new capital, while existing seed investors NatSteel, PAMA (Prudential Asset Management Asia) and JAI Hotels will realise their equity investments.

The deal is not large by Asian standards, but will merit attention because the company is so unique. Asia is not well known for creating luxury brands that can compete on an international stage, but the Banyan Tree currently stands poised to make the leap from being a regional resort operator to a global one.

Earlier this year, Banyan Tree was the only Asian brand that made it onto a list compiled by the world's leading branding consultancy Interbrand. In a book called "Uncommon Practice," Interbrand ranked Banyan Tree alongside Manchester United, the Virgin group, Harley-Davidson and as a company that has been able to defy conventional wisdom and develop a world class brand through engendering incredible customer and staff loyalty.

Banyan Tree management often compare themselves to the Virgin group of the UK. Both companies share a similar vision of being the best at what they do rather than simply becoming the biggest.

As Chairman and founder Ho Kwon Ping said at the book launch, "You couldn't get further from the truth if you thought that we've always known what we're doing. It's all been intuitive. We have a vision and this has served as a compass rather than a roadmap.

"Now," he added, "we've created brand that will enable use to compete globally and create a sustainable platform from which to grow even though cheaper copycats have tried to step into our place."

Banyan Tree was the first to introduce the concept of a pool villa and a tropical spa when it first opened its doors in Phuket in 1996. Since then, it has opened luxury high-end resorts in Bintan, the Maldives, Nepal and the Seychelles among others. Banyan Tree Phuket frequently tops the list of the world's top spas and Ho plans to "string a necklace" of Banyan Tree resorts across the world.

The group has advanced plans for China and Sri Lanka and also wants to build up its presence in the US, Europe and Australasia. Resorts are scheduled to open in Morocco and New Zealand by 2006 for example.

Explaining the group's growth strategy, Ho commented, "I would love to open up in Napa Valley or Provence, but the cost structure would be far too high. So what we've decided to do is operate in the backyard of developed countries and turn it into their playground in much the same way that Phuket is to Hong Kong. Therefore, we won't be building a resort in the US, but in Mexico and not in Tuscany but Morocco. We're also examining possibilities in Greece and Turkey."

And he added that Banyan Tree also wants to open its famous spa at select hotels around the world. The group has a spa academy in Thailand and already operates a city spa in Bangkok. This year it has been looking at properties in London, New York and Vancouver.

Ho believes that efficiency and service means nothing if staff do not have their hearts in their jobs. One of the defining concepts of Banyan Tree is that the customer and employee's experience are interlinked - that it is more a question of having the right DNA than an MBA. As part of their training, staff stay in the resort's villas and the company funds numerous community projects in the areas where it operates.

Both Ho and his wife are keen environmentalists and he has described the Banyan Tree as a "search for personal fulfillment rather than a business." Indeed, he named the company after the small village of Yung Shue Wan on Lamma Island Hong Kong, where he and his wife spent their first idyllic few years of marriage. In Chinese it means Banyan Tree Bay.

A profile of Chairman Ho is being published in November's issue of FinanceAsia and a review of the Banyan Tree Phuket in our sister magazine Private Capital. Both will be available from Monday.

Copies of "Uncommon Practice" can be ordered from Interbrand by email at [email protected]

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