Accor and Banyan Tree Hotel Partnership Could Be a Very Tricky Maneuver


Banyan Tree

Banyan Tree executive chairman Ho Kwon Ping says the hotel chain will oversee brand questions while Accor will take care of operations in new, co-developed properties. Banyan Tree

Skift Take: Will Accor-Banyan Tree be the model for Asian hotel groups to grow globally without losing their independence and brand value? The devil may be in the execution. Hoteliers are watching how this works out and many believe it could be tough-going.

— Raini Hamdi

Editor’s Note: Skift launched a new series, Gateway, as we broaden our news coverage geographically with first-hand, original stories from correspondents embedded in cities around the world.

We are featuring regular reports several times per week from Beijing, Singapore, and Cape Town, and look for us to add other cities soon. Gateway Singapore, for example, signifies that the reporter is writing from that city although her coverage of the business of travel will meander to other locales in the region. Read about the series here, and check out all the stories in the series here.

Does Banyan Tree’s deal with AccorHotels equate to losing your religion, or gaining new followers? Is it a loss of innocence? It depends on whom you ask.

Some see Banyan Tree Holdings’ decision to sell a small stake to AccorHotels as a desperate move by a boutique brand to expand in today’s competitive environment. Others believe the partnership can be transformative if the execution can follow through.

In an interview, Banyan Tree executive chairman Ho Kwon Ping gave us his perspective on the deal [see below].

Whatever the outcome, one thing is certain: Other Asian hotel groups pondering what route to take are watching the deal as they get squeezed by a consolidated industry, online travel agencies, and alternative accommodations.

Unlike the hotel sector in the U.S. or Europe, which have lots of institutional investors, most hotel owners in the region are individuals or family businesses, many passing the baton to the next generation. Banyan Tree is a classic example.

In 23 years, Banyan Tree has built itself up as a niche resort brand with 45 hotels in operation. With another 25 hotels under development, it is not as small as it used to be, or as big as it should be to justify a whole structure that can support global expansion. Last year, it was forced to examine legacy costs, processes and structures, an exercise which saw the most senior people being let go.

Trying to Ease the Squeeze

Its recently announced collaboration with Accor is another step to ease the squeeze.

The deal will enable Banyan Tree to grow a lot faster than before by hinging on Accor’s development and operational infrastructure worldwide, said Banyan Tree executive chairman Ho Kwon Ping.

According to Ho, under the alliance, AccorHotels will manage the daily operations of the co-developed Banyan Tree hotels that it has sourced, while Banyan Tree will manage all brand-related issues. Banyan Tree will ensure the hotels comply with the brand assurance protocols – from the conceptualization of the hotel and working with consultants on interior design and restaurant concepts, to ensuring that operating practices are in line with standards.

AccorHotels will decide on the choice of general manager in consultation with Banyan Tree. General managers in this alliance will report to Accor operationally, but to Banyan Tree on matters pertaining to brand standards.

“On our own, we would never be able to be cost-effective if we go to say, Nigeria. Even opening a hotel in Mexico took a lot of work for us. But if Accor has 20 to 30 [or more] hotels in Nigeria, even if it is of different brands, they can really do the active management on a daily basis because they have the whole infrastructure to support those hotels in Nigeria,” said Ho.

“If brand management is our future, this arrangement would allow me to focus on sharpening, innovating and differentiating the brand experience. After all, the only reason Accor wants to tie up with us is not because of our size but because of our brand and the distinctive experience,” he added.

Banyan Tree will continue to pursue new, solely managed hotels but the idea is, a co-developed and solely Banyan Tree managed hotel will be indistinguishable.

Can this work?

The overall sentiment of several general managers is disbelief. Combine the operational experience of a French global chain with the service culture of an independent Asian group?

Can the partnership manage the property owner, Accor and Banyan Tree and keep all parties happy?

One hotelier said he would not want to be the general manager of a co-developed Banyan Tree.

Others said it can work, but much depends on how the giant looks upon its smaller partner.

Robert Williams, a partner at law firm Withers Worldwide, said, “We know that there is always culture shock and implementation challenge that comes with marrying a smaller business built by a dominant individual entrepreneur with a vastly larger corporate organization. This deal does not involve that level of integration, but the division of responsibilities instinctively looks like it will be tough to manage: Accor on operations, Banyan Tree on brand experience. That will require some careful stewardship.

“But I have no doubt Accor will move quickly and bring new ‘co-developed’ Banyan Tree hotels to market – they are not doing these deals for headlines. Their execution is what is distinguishing them right now.

“Accor is the most dynamic global player at the moment. Its deal activity is that of a fund-of-funds or venture capital player. And I am sure there is more to come from them here.”

Robert Hecker, managing director, Pacific Asia Horwath HTL, said, “The description of the arrangement indicates a much stronger involvement of the brand in the property executions than would normally be associated with a franchise arrangement, particularly the part about GMs [general managers] having two reporting lines, so I have doubts about how sustainable that level of brand involvement can be without difficulties/friction arising. But it’s not beyond the realm of possibility for it to be pulled off if Accor effectively adopts and treats Banyan Tree as one of its own and into its culture, drawing respectfully upon Banyan Tree’s brand guidance.”

Is this a model for other Asian hotel companies to grow? Said Hecker, “I suppose it will depend on the success of this example, but ultimately, if brands are created with a strong enough identity and following, I don’t see why they can’t expand on their own and at their own pace, or partner on a more integrated basis with others to do so.”

Challenges facing smaller brands

The journey is getting tougher though. Just ask Mark Edleson, president, Alila Hotels and Resorts.

“It is increasingly difficult to survive as a relatively small, independent boutique brand creating dreams but short on cashflow in today’s competitive environment,” he said.

“We, at Alila Hotels & Resorts, have experienced similar difficulties with the slow growth that resulted from our focus on small, crafted resorts that provide exceptional experiences to our guests in unique destinations. We required growth in revenues to be able to continually upgrade our people and systems to meet the demands of owners and the market.”

Thus, Alila’s alliance with another small independent group, U.S.-based Commune Hotels & Resorts, although larger than Alila, represented strength in a geographic region it didn’t exist in but had market synergies with. But within two years, Commune felt that, together with Alila, it still lacked the critical scale to survive in today’s environment, hence its merger last year with Destination Hotels, a slightly larger company. The new merged entity, Two Roads Hospitality, has nearly 100 hotels under management in North America and Asia.

“With several brands to work with we expect to be able to grow faster and share best practices and cost efficiencies among our brands. We hope this strategy will allow us to maintain the brand identities and strengths and benefit from scale,” said Edleson.

He added, “It is somewhat a loss of innocence, so to speak, for a leading boutique brand such as Banyan Tree to create an alliance with an industry giant like Accor. I am sure it is the end of a dream for KP [Kwon Ping] but certainly understandable.”

Suphajee Suthumpun, group CEO of Dusit International in Thailand, said “nothing should be ruled out” when asked for her views on the best way forward for Asian hotel groups in a fast-changing industry.

“Dusit Hotels and Resorts is still a relatively small player and we are looking at all alternatives in collaborations/partnerships to ensure that we can sustain and continue to grow in the future.

“Size does matter as it relates to customer loyalty programs. Small- to medium-sized companies will not be able to organically grow their own customer base fast enough to level the playing field. To join an alliance or a company with a much larger customer base is probably the fastest and most efficient way to reach out to much larger customer audience resulting in more direct bookings.

“Many big brands are constantly looking at how they can further leverage their huge customer database, infrastructure [technology and operational structures] and financial capability to deliver a higher return on equity. There are many opportunities and the traditional business model of owning and managing hotels will certainly change in the very near future.”

But another Thai homegrown chain, Minor Hotel Group, believes it can go on its own.

Minor Hotel Group CEO Dillip Rajakarier said, “Our view on this is different as we’ve strong brand presence and equity, also the infrastructure and logistics to support the drive and growth of our business which is under our control and not out sourced to another operator.”

Top Stories

Middle East, African Airlines Impose Restrictions on Electronic Devices on U.S. Flights

This new policy on electronic devices, unless there is an imminent threat, seems like an overreach in terms of passengers' safety and security. The complete lack of information provided to travelers so far by airlines and authorities only creates confusion for international travelers. -Andrew Sheivachman
  • 4 days ago
  • 39

Report: Shots Fired in London in Apparent Terrorism Incident Near Parliament

Multiple shots were fired near the U.K. Parliament on Wednesday in London during an incident that also saw people hit by a car on Westminster Bridge. Police said it was a terror attack. Images aired by Sky News and the BBC showed people on the bridge and on the sidewalk near Parliament laying down on […]
  • 2 days ago
  • 18

How Travel Marketers Are Measuring Content Marketing Success

With content marketing's move into the mainstream the next step for companies to master is measuring its performance and success. -Dave Montali
  • 4 days ago
  • 10

New Zealand Doesn’t Have Enough Hotel Rooms to Accommodate Crush of Tourists

New Zealand needs to come to terms with its infrastructure problems in hospitality or it will be maxing out tourism opportunities. Although sometimes that can be a good thing if a destination gets overrun with visitors. -Dan Peltier
  • 5 days ago
  • 9

Behind The Rise of Diversity in the Meetings Industry — Meetings Innovation Report

The national conversation around the need for more diversity and inclusivity in the technology and advanced industry sectors is moving to the forefront in the meetings industry, as more organizations realize the value of inclusivity to drive success on a global stage. -Greg Oates
  • 2 days ago
  • 9
exclusivetailor - Easy Branches
farawayyachtingcharters - Easy Branches
louiscollections - Easy Branches
botoxfillerveintheraphyinphuket - Easy Branches

Latest in Travel

American Is Leaving Thousands of Standby Passengers Stranded Says Pilots Union

General rule of thumb, given the fact that airlines tend to be more interested in meeting their bottom lines or getting on-time departure records: Try not to fly standby. -Deanna Ting
  • 20 minutes ago

SeaWorld Is Selling a 21 Percent Stake to Chinese Investors

SeaWorld Entertainment has been making all kinds of moves to turn the company's performance around, but results have not paid off yet. Will this new long-term investment help? -Hannah Sampson
  • 3 hours ago

10 Canned Goods You Should Stop Buying—and Healthier Alternatives

In the U.S., the primary source of BPA are canned foods. Here's how you can find better-for-you choices.
  • 3 hours ago

Disney CEO Agrees to Extend His Contract Until 2019

This announcement that Bob Iger is sticking around at Disney an extra year is hardly surprising; he changed his previous tune and said he would be willing to extend his contract earlier this year. With a little extra time to play with, when will the company name his successor? -Hannah Sampson
  • 4 hours ago

You won’t believe how beautiful China’s first green city is

Translated by Megan Davies. This article originally appeared on The post You won’t believe how beautiful China’s first green city is appeared first on VOGUE India.
  • 6 hours ago

3 Links I Love: Richard Branson is Sad, Silly Circular Runways, Ridiculous Ratings

This week’s featured link: Dear Virgin America – Richard Branson’s Virgin Blog Richard Branson is a sad panda. His weepy ... Read More
  • 6 hours ago

Vogue picks the best street style at Fashion Forward Dubai

When it comes to style, the ladies in Dubai always know how to pull all the stops. Whether they are hitting the malls or heading to the bi-annual fashion platform, during Fashion Forward Dubai you can expect only them in the trendiest of wares. From embellished hijabs to covetable Yeezy heels and the quintessential embroidered denim […] The post Vogue picks the best street style at Fashion Forward Dubai appeared first on VOGUE India.
  • 7 hours ago

Anushka Sharma’s beauty game is nothing short of stunning

With film promotions come everyday opportunities for celebrities to try new beauty looks—that make for beautiful Instagrams, of course. Anushka Sharma’s new home production, Phillauri hits theatres today and her beauty looks throughout the promotions have kept us refreshing her Instagram feed every day, for more. We scoured through her Instagram account and those of her […] The post Anushka Sharma’s beauty game is nothing short of stunning appeared first on VOGUE India.
  • 7 hours ago

What to watch on Netflix this weekend: The hopeless romantic edition

Outlander (2014 – present) Is it romance? Science fiction? Adventure? Outlander refuses to limit itself to one genre. Whatever it is, we can’t get enough of this sweeping epic. And a certain Scottish man-candy isn’t the only reason. Clair Randall (Caitriona Balfe), a former British World War II nurse, is mysteriously transported to 1743 Scotland. […] The post What to watch on Netflix this weekend: The hopeless romantic edition appeared first on VOGUE India.
  • 7 hours ago

Nerdy girls, trade your old glasses for these stylish ones

The catwalk’s thirst for adornment extends to the eyes for spring/summer 2017. Tricked-out, bejewelled spectacles lend a nerdish charm to the decorative trend, but early adopters are adding high-brow polish to their look with sleek wire frames. Vogue picks the ten best pairs of spectacles to buy now. This article originally appeared on The post Nerdy girls, trade your old glasses for these stylish ones appeared first on VOGUE India.
  • 7 hours ago

Is India’s fashion community respectful of choices?

At the recently concluded Amazon India Fashion Week, I noticed several boys dressed in women’s clothing—I wouldn’t dare to assign them as transgender—after all, their wardrobe choices don’t define what they identify as. In a city like Delhi where women still find themselves unable to move around without fearing the worst, it was something out […] The post Is India’s fashion community respectful of choices? appeared first on VOGUE India.
  • 7 hours ago

This is the earring all the cool girls are wearing now

As all thing nineties, the ear cuff has also made a major comeback on the red-carpet and the street. Wear it with a princess-like gown to give your look an edge or simply go all-out rock ’n’ roll with a band tee and cropped jeans. We love how Eva Green gave her glittering gold dress […] The post This is the earring all the cool girls are wearing now appeared first on VOGUE India.
  • 8 hours ago