Banyan Tree’s founder and chairman Ho Kwon Ping is busy planting 50 new hotels as the global tourism industry looks primed to come roaring back.
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otels across Asia will see the return of Chinese tourists starting in the second quarter, with a “real surge” expected during the country’s Labor Day holiday in early May, according to luxury hotelier Ho Kwon Ping.
“Air fares are still very high and the availability of flights is limited, so while we all expect—and are already seeing—a pick up in Chinese arrivals, we expect that it will really take off after Chinese New Year and probably in the second quarter onwards,” says Ho, the founder and chairman of Singapore-based and -listed Banyan Tree Holdings. “The May holidays will see a real surge.”
The journalist turned hotelier has steered his luxury hotel chain through plenty of ups and downs during his almost three decades at the helm. And now, he’s busy preparing Banyan Tree for the return of the international tourism market to its pre-pandemic levels—which got a sudden boost recently when China abruptly started rolling back its zero-Covid policy.
Ho says his Banyan Tree is on track to grow its portfolio to 100 hotels and resorts by 2025, almost doubling what it owned and managed just a year ago. In 2022, the company added 8 hotels across China, Indonesia, Japan, Saudi Arabia and Thailand, bringing its portfolio of properties to 65 in total across 17 countries.
“The pipeline is strong,” says Ho. “So that’s how I measure success, not so much by market cap, not by profitability, but by a more holistic view of where we are positioned today, and we’re positioned in a good place for growth.”
A Banyan Tree-branded resort on Indonesia’s Bintan Island.
Banyan Tree Holdings
Banyan Tree had suffered almost two years of zero occupancy, according to Ho, but its existing hotels in Asia were already performing close to pre-pandemic levels at the end of 2022 as visitors from Russia, India and Arab countries filled the rooms. The company’s properties in Thailand saw a 277% year-on-year surge in revenue per available room (RevPAR), a key measure of profitability, in first quarter’s advance reservations. Meanwhile, their occupancy in forward bookings jumped 28% during the same period.
Banyan Tree’s financial results in the first six months of 2022 showed clear signs of the travel rebound gaining momentum when its revenue jumped 110% to S$118.6 million ($89.7 million), allowing it to narrow its loss by almost 90% to S$6.8 million during the same period. Banyan Tree is scheduled to release its full-year results in February.
Now, the world’s largest outbound tourism segment is finally on its way back as well. Chinese officials have removed quarantine entry requirements and resumed issuing passports to people so they can travel abroad. Trip.com, the country’s leading online travel platform, said in early January that bookings for overseas travel during the Lunar New Year skyrocketed 540% from the same period a year ago.
Banyan Tree announced in June 2022 that it was venturing into Japan with five new hotels.
Banyan Tree Holdings
But China’s re-opening is still ongoing. The country, which currently restricts foreign arrivals to people traveling for work, business, study or family visits, has yet to outline a roadmap to reopen its border to international leisure tourists. Its recent suspension of visa services for visitors from Japan and South Korea in retaliation for Covid entry curbs on Chinese travelers added uncertainty to a full reopening.
Banyan Tree’s hotel business in China is mainly driven by domestic tourism, while inbound travel accounts for “just a fraction,” says Ho. The central government has been promoting domestic tourism as part of its efforts to boost the Covid-hit economy. And the sector is already showing signs of a recovery, posting a 0.4% rise year-on-year in domestic trips to 52.7 million during the three-day new year holiday ended January 2, with revenue generated up 4% to $4 billion, according to data from the tourism department.
Banyan Tree’s network of properties in China includes the Garrya Huzhou Lucun.
Banyan Tree Holdings
To cater to China’s booming middle class and younger generations, the hotel chain has been introducing new brands, such as Garrya, which are aimed at budget-conscious travelers. And the strategy has served the company well—its Chinese hotels reported a 23% increase in RevPAR in the third quarter of last year compared to the same period in 2021. “The brands we introduced are intended for really solid, affordable hotels, but of a high quality,” says Ho. “That’s where we see the growth will be.”
Robert Hecker, Singapore-based managing director at consulting firm Horwath HTL, is optimistic about Banyan Tree’s growth potential. “All hotel companies with cross border operations or aspirations are looking to grow and finally being able to do so without constraint with China’s reopening,” he says. “Banyan Tree is still a relatively small company in terms of its network, so there’s plenty of opportunities still to grow with both its core brand and its diversification into demand segmented brands.”
We’ve gone through the tsunami, we’ve gone through SARS, we’ve gone through the financial crisis…Everything we’ve done in the past were like rehearsals for the big one and [the pandemic] was the big one.
Ho planted the roots of Banyan Tree almost four decades ago when he built his first hotel on an abandoned tin mine land in Thailand’s Phuket. He started the company in 1994, after he couldn’t find an operator for his fourth hotel that lacked a beach front. The venture was named after Banyan Tree Bay, a village on Hong Kong’s Lamma Island where Ho had spent three idyllic years with his wife, Claire Chiang, while he was working as a journalist and she was a grad student.
Ho Kwon Ping and his wife, Claire Chiang.
South China Morning Post via Getty Images
Banyan Tree today not only owns and manages hotels, but also has spas, galleries, golf courses and luxury residences. It partnered with European hospitality giant Accor to develop and manage its hotels around the world, while in China, it has a joint venture for a similar arrangement with property developer China Vanke. Ho attributes the company’s success to Chiang, who serves as the senior vice president, for making the hotels feel like “homes,” while he focuses on building the business.
“What’s the difference between a house and a home? It’s the people in it. It’s the warmth. It’s the feeling between the people who inhabit that house,” Ho explains. “That captures actually very well the role that my wife and I have played in the company all along.”
Ho celebrated his 70th birthday last August as Banyan Tree was spreading its branches to almost 70 hotels and resorts. The hotel veteran joked that having 80 hotels when he reaches 80 is far too slow. “I can’t afford it to be so slow,” Ho says with a laugh. “My colleagues promised to double it, having 160 hotels when I’m 80. So I said, ‘we’ll see.’”
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Source: https://www.forbes.com/sites/zinnialee/2023/01/19/singapore-hotel-tycoon-ho-kwon-ping-to-double-banyan-trees-branches-as-china-reopens/