Banyan Group Set to Have Record Year of Luxury Hotel Openings

13.07.2024 - 14:31 / skift.com / Sean Oneill

Banyan Group is set to open a record number of luxury hotels and resorts this year. The Singapore-based luxury hotel operator also plans to expand into the Bahamas and introduce a residential rental offering, according to an update this month.

Banyan Group is partnering with RAV Bahamas Ltd. to create an ultra-luxe resort destination on the Bahamian island of Bimini — roughly an hour’s yacht ride from Miami.

This $245 million resort, which will open in phases starting in 2026, will have 50 rooms and villas.

The marketing claim is that these overwater bungalows are the Caribbean’s first true overwater villas for a major luxury brand.

Banyan Group plans to launch Banyan Living, a residential rental marketing platform, by September. This new venture aims to offer branded residences and villas for short—and long-term rentals, addressing the growing demand for premium residential experiences.

Residence owners can use the group’s marketing portal to generate income when they’re not in their residence by renting it out and having the group professionally manage the process on their behalf.

Banyan Tree’s post-pandemic recovery has legs, but headwinds loom. Last year, the luxury hotel operator saw revenue surge 46% to about $300 million ($405 million Singaporean dollars), surpassing pre-2019 levels. EBITDA more than doubled to about $80 million (S$108 million).

But the group’s exposure to China is a double-edged sword. Revenue there jumped 85% as travel restrictions eased, but geopolitical tensions and economic uncertainty cloud the outlook. Is Banyan Tree overly dependent on China for growth?

Asset-light ambitions are bearing fruit. Fee-based income rose 36% to about $50 million (S$70.8 million) at the end of last year as the company expanded its hotel management business.

Accor holds a 5.8% strategic stake in Banyan Tree Holdings. This partnership, formed in 2016, gives Banyan Tree access to Accor’s global distribution network and loyalty program.

However, this strategy brings lower margins than hotel ownership. Investors should watch whether Banyan Tree can maintain profitability as it shifts its model.

Cash flows have improved, but leverage remains elevated. Net debt fell slightly to about $475 million (S$638.8 million) but still sits at an uncomfortable 5.9 times EBITDA. Further deleveraging is needed to give Banyan Tree financial flexibility.

Fans of Banyan Tree Group will speak about its strong brand awareness and expansion potential. Bears will note the China risk and debt load.

What am I looking at? The performance of hotels and short-term rental sector stocks within the ST200. The index includes companies publicly traded across global markets, including international and regional hotel brands,