Banyan Tree Holdings is a limited company that manages various hotels, resorts and Spas. It was started in 1994 and was listed in the Singapore Stock Exchange in 2006. After its Initial Public Offer, Banyan Tree Holdings Limited recorded tremendous growth in their revenue collection. The company had aimed at using the IPO to finance its ambitious growth strategy. The expansion plan had projected to open other twenty one resorts in the non-Asian regions within a period of four years.
The expansion plan was aimed at diversifying risks that faced the company. The region had been affected by various economic crises and Banyan Tree Holdings was not exempted from their effect (Enz, 2009). The tourism and travel industries were affected by these crises and therefore, being in the hotel and resort business, Banyan Tree Holdings could not be spared. Management of the company had thought of applying diversification plan to manage the risks. They would attain this by establishing various other branches in different geographical locations, a move that would be facilitated by the funds generated from the IPO.
Besides, there are other challenges that faced the expansion plan of Banyan Holdings Limited. The management of the company was concerned about the way growth ould be managed and attained without compromising on the quality of their brand. To begin with, the company had to deal with the issue of sufficient labor and infrastructure network, in order to go on offering a reliable Banyan Tree service to its customers. In addition, the company management was concerned about the risks of dilution of their brand value in case they sought to establish their businesses in areas that had a negative blow on their products and services (Enz, 2009).It was important that the culture and value of Banyan Tree brand would not be lost throughout the expansion plan.
The provided graphical information can help to analyze how travel and tourism industry has been performing in the world and particularly, for Banyan Tree Holdings (Enz, 2009). The first graph illustrates the steady growth that has been experienced in this industry since 1995 to 2005. The figure shows that the value of inbound tourism international tourist arrivals was less than five hundred and fifty million in 1995 (Enz, 2009). However, the value rose to more than eight hundred million in 2005. This is an incredible increase within just a decade (Enz, 2009).
On the same note, the second graph shows more specific and detailed information concerning the travel and tourism industry. The graph shows tthe general percentage change of the inbound tourism international arrivals (Enz, 2009). Between the year 2002 and 2003, this value had declined to a negative value perhaps owing to the SARS crisis of 2003. Nevertheless, this value rose sharply to a significant ten percent in 2003 to 2004 (Enz, 2009). The value fell later to five percent between 2004 and 2005. Other economic blocks in the world experienced almost similar values to the generalized world financial trends already discussed above.
For instance, Asian block and the Pacific recorded a negative ten percent in the travel and tourism industry between 2002 and 2003. The value rose sharply to 27 percent between 2003 and 2004 only to fall about seven percent between 2004 and 2005 (Enz, 2009). Variation in these values can be attributed to the financial crisis that had hit Asian countries during this period. Times of economic crises are difficult ones for businesses and their profit margins are relatively low (Enz, 2009). By focusing on the future projections, there are higher opportunities for growth in the industry and therefore, it is recommendable for the company to venture in the proposed areas (Enz, 2009). This will not only help it to diversify its risks but will also help it to attain its vision of establishing its brand in almost all parts f the world.