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City&Country: Cover Story-- A signature development

Banyan Tree brand grows with BTSP


The first thing that struck City & Country when the elevator door opened on the 55th floor of Marina Bay Sands Hotel in Singapore,where Banyan Tree Spa is located, was the peace and quiet, a sharp contrast to the hustle and bustle of the hotel lobby.

The soothing scent of lavender envelops one in an air of tranquility, an atmosphere that is further enhanced by the rainforest-inspired design with its earthly tones, vines and creepers on the wall, and the Tree of Life sculpture in the centre of the lobby.

As promised in Banyan Tree’s tagline — a Sanctuary for the Senses — all its resorts and hotels, spas and other products offer an intimate retreat experience with its signature blend of romance, rejuvenation and exotic sensuality. Banyan Tree’s branding is considered by many to be a true success story.

Now, the group is ready to bring the brand to Kuala Lumpur with Banyan Tree Signatures Pavilion Kuala Lumpur (BTSP), a brand collaboration between Banyan Tree and Kuala Lumpur Pavilion Sdn Bhd (KLP), the manager of Pavilion KL mall. BTSP will be developed by local developer, Lumayan Indah Sdn Bhd.

Banyan Tree is a company that shuns what Arthur Kiong, managing director of Hotel Operations (Asia Pacific) and senior vice-president of group marketing services, calls “the obvious markets”.

When Banyan Tree opened its first resort in China in 2005, it wasn’t in the big cities like Shanghai or Beijing but in Ringha Valley in the Yunnan province. Embracing the environment, Banyan Tree Ringha was constructed using discarded, original Tibetan farmhouses and decorated with Tibetan arts and crafts. The resort offers 32 rustic Tibetan suites and lodges.

“We like first-mover advantage. We want to make the destination — that is our modus operandi,” Kiong tells City & Country over lunch at the Marina Bay Sands in Singapore.

Its modus operandi can be traced back to its roots. In 1981, former journalist Ho Kwon Ping took over the family-owned Wah Chang Group and sought to steer the business in a new direction. He is now the executive chairman of Banyan Tree.

In 1984, Ho; his wife, Claire Chiang, senior vice-president of Banyan Tree Holdings Ltd; and his brother Ho Kwoncjan,senior vice-president and managing director of design services, acquired an abandoned 600-acre tin mine in Bang Tao Bay in Phuket, Thailand. As dedicated environmentalists, the trio cleaned up the polluted site and transformed it into the first integrated resort in Asia — Laguna Phuket — in 1987. Some seven years later, the first Banyan Tree resort, Banyan Tree Phuket, opened its doors in Laguna Phuket.

Today, Banyan Tree has ownership interest in and manages more than 30 resorts and hotels, over 60 spas,and 80 retail galleries, and two golf courses around the world. But that’s not all. Following the success of its property sales in Banyan Tree Phuket in 2004 and 2005, Banyan Tree Residences was launched in 2006 to cater for a growing segment of global investors and buyers.
Banyan Tree Residences offers investors the opportunity to invest in a villa or suite in Banyan Tree’s hotels and resorts. Investors can opt to receive an annual return of 6% for six years or 4% for 10 years or receive a share of the actual room revenue — along with capital appreciation on their investments.

An innovative concept
BTSP is the first Banyan Tree project branded under the “Signatures” concept. It is a 55-storey high-end development that comprises 441 private residences, 51 serviced residences and 50 hotel suites. It is located at the junction of Jalan Conlay and Jalan Raja Chulan and has a gross development value of RM1.4 billion. The development is expected to be completed in 2015.

“Signatures is a rather innovative concept, developed as part of our strategy to enter key cities. The cost of land in cities is very high, so a pure hotel project may not be able to give us the return on investment as a mixed-use residential project like BTSP could. With this model, we are able to include a residential component that we can sell at a premium because of our value add,” says Kiong.

Banyan Tree will manage the hotel and serviced residences, and oversee the operations of the private residences to maintain the standard of service Banyan Tree is known for. The development will also feature the award-wining Banyan Tree spa, a retail gallery, a destination rooftop restaurant and a link bridge to Pavilion shopping mall.

“Signatures allows us to get the economies right to maintain the quality and standard that we are known for. If we were to open just a spa in a location like this, it would be near impossible because it would have to be a very expensive spa,” says Kiong, who believes that the luxury consumers will find the product attractive and appealing.

The 1,076 to 2,195 sq ft residences are priced at an average of RM2,000 psf. Despite the volatile global economy and the cautious sentiment in the market, over 80% of the residences has been sold since the preview in August last year.

According to Tracey Lai, sales and marketing director of 1Pavilion Property Consultancy Sdn Bhd, the sales and marketing consultant of BTSP, the high take-up was a pleasant surprise.

“The majority of the buyers are Malaysians, which we find interesting because Malaysians are often quite careful about investing in or buying such high-end properties, particularly in times like this. And we have not done much advertisement, we rely mostly on word-of-mouth, referrals and repeat customers,” she says.

Lai attributes the success to the two strong brands as well as the location and couture concierge services.

“We are not just selling an apartment but a whole new lifestyle. If you want to have a holiday on a yacht or go off somewhere in a private jet, just call and we will arrange everything for you. And if you want to shop, Pavilion mall is just a short walk away. You have the best of everything at your doorstep, and we allow you to keep the character of your own residence while enjoying the services of a hotel,” he adds.

Lai notes that a high percentage of the buyers are investors, most of whom foresee strong capital appreciation and returns in the future similar to the already completed Pavilion Residences. BTSP also provides a safe haven and acts as a good hedge against the uncertain world economy and inflation.

“The project will only be completed in four years. We don’t foresee a drop in value and prices four years from now. That would never happen when the development is in a good location,” says Lai.
While BTSP has not been marketed overseas, it has already drawn interest from foreigners.

“We want an international profile of buyers and we have talked to a few parties in Singapore about the project. We have also received inquiries from Hong Kong and mainland China. So, we are confident of hitting 100% take-up soon,” says Lai.

The collaboration between KLP and Banyan Tree is a result of three crucial things that came together perfectly — the timing, the site and the partnership.

Kiong likens a business partnership to a relationship. “In the early phase of a relationship, it’s easy to say we’re in love and that’s all that matters but then, many components will come into play, whether it’s the in-laws or having children or buying a house. It is when you discuss the myriad of details that you may begin to realise that you can’t come to an agreement with your spouse,” he says.

But not in this case. The two companies share the same quality orientation and vision, making it easy for them to come together, says Kiong.

Kuala Lumpur is not the first or only city Banyan Tree has looked into to launch the Signatures brand. In fact, the company has been and still is in discussions with parties in a number of major gateway cities but it so happened that BTSP came to fruition first.

Banyan Tree has been looking at Malaysia for a long time, particularly in East Malaysia where there are a lot of elements suitable for a Banyan Tree resort, such as eco-tourism.

“Malaysia is not an easy market to get into because we are a very high-end product and there are few such offerings here. Only two or three come to mind — The Datai and Four Seasons in Langkawi. For us to sustain the economies of scale, we need to be able to charge a relatively high rate and there might not be a market for us,” says Kiong.

Banyan Tree is attracted to BTSP because it allows the company to be the first mover in many ways, such as establishing an urban resort in a place where all the luxury hotels are city hotels.
“With 55 floors, it will be the tallest residential building in Kuala Lumpur, and we will offer a seamless service concept where all your needs are taken care of by our host,” says Kiong.

Growing Banyan Tree
Currently, Banyan Tree’s spa business contributes about 10% to overall group revenue, while resorts and property sales contribute 30% to 40% each. Kiong believes the property segment will soon be its biggest contributor. The company’s property segment also includes pure development land sales or development land sales that are fully or partially developed with infrastructure, and the development and sales of standalone vacation homes in Laguna Phuket.

While the majority of Banyan Tree’s resorts, spas and developments are in Asia, Kiong says this was by opportunity rather than design.

“Our mission is to be a global company with a string of iconic resorts around the world. That is why we are working hard to look for opportunities in the Middle East, Europe, the Mediterranean and even South America. The problem is that with these places, projects come in but they always tend to stall. In Asia, things happens faster than you can say Banyan Tree,” he says, adding that Banyan Tree is also looking at a shift from selling secondary homes to primary homes.

The largest market for Banyan Tree is China, which will house 50% of its sites in the next three years. Growth has been so great there that the company is beginning to be cautious. As Kiong says, with success comes opportunities and challenges.

“We do not want be boxed in as a China-centric or Asia-centric company. But expanding in China is a natural course for us because there is so much demand,” he explains.

Banyan Tree’s focus in China has gone beyond just resorts. Apart from the low-hanging fruit of resort development, there are the urban resorts in the city centres with the Signature model or a straightforward hotel development, and residential development.

“We have raised a China fund, the Banyan Tree China Hospitality Fund, which closed with capital commitments of S$214 million (RM522.38 million). We are using this fund as seed money to develop our own projects. Within the next few years, we expect to have close to 15 or 17 projects in China,” says Kiong.

He believes the company is on track to double its sites worldwide in the next three to four years.
“The next frontier is quite exciting. We are spending a lot of time looking at opportunities in India, Vietnam and the Philippines, and we have opportunities coming up in Japan, where we hope to make an announcement soon,” shares Kiong.

He is particularly excited about the 280ha integrated Laguna Lang Co in Vietnam, which is scheduled for completion in 2014. It will include seven luxury hotels, an 18-hole golf course, spas, convention facilities, a town centre and about 1,000 luxury villas and residences. The project is targeted at new wealth in Vietnam as well as the returning Vietnamese.

Kiong remains unfazed by the global economic turmoil, believing that the high-end market is resilient to economic changes.

“We have found this to be true. The people who can afford million-dollar homes are not worried about whether they can pay the mortgage. They generally respond to three things — quality, opportunity and mood. In the case of BTSP, the prospects for Malaysia is very bright and buyers were attracted to the location and brand,” says Kiong.

He cites Singapore as another example. Despite the cooling measures introduced by the Singaporean government and the rather cloudy economic environment, property prices continue to climb, albeit at a slower rate.

“And people still continue to buy. It’s not just the foreigners, but the locals too. But the mass market is a different story,” says Kiong.


 

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 894, Jan 23-29, 2012

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