Bogawantalawa Tea Estates Plc : Success Joint Venture Strategy with Dilmah.

Abstract

BPL tea estates were started with the development of estate related bungalows in Sri Lankan context which was established with a related objective of enhancing and maximizing revenue and profits related to tea tourism under a merged agreement.Ceylon Tea Trails by BPL and DILMAH are probably the most coveted place to stay in Sri Lanka, and a perfect place for history and tea lovers like us. Nestled among the scenic tea-carpeted hills of the Bogawantalawa region, you’ll find five colonial-era tea planter bungalows which have been turned into a private luxury resort. Each of the historical bungalows has its own distinctive character and offers a boutique luxury experience in Sri Lanka’s Tea Country. Each of the bungalows offers 4 to 6 unique rooms and a dedicated butler, chef, and house staff. Ceylon Tea Trails was the first Relais& Châteaux property in Sri Lanka and remains one of only two in the country. A stay here is worry and bill free as rates include all meals, most drinks, laundry, taxes, and services. A typical day here includes waking up to a traditional Bed Tea each morning served by the butler, spending the afternoon by the pool or taking a scenic hike, and then finishing the day with canapés and an evening drink by the fire before heading off to a 4-course dinner. For the active, there are guided hikes and climbs of Adam’s Peak, day excursions, tennis, croquet, a tour of a tea factory, kayaking, and swimming. For those who crave relaxation, there are swimming pools, the gardens, board games, in-room spa treatments, paneled libraries, and bay windows framing beautiful scenery. The DilmahTea world popular brand named as Ceylon Tea management by Ceylon Tea Services Plc., also had an idea to bring tourists from European Countries to promote their brand through showing the picturesque Tea Plantations in the Upcountry areas in Sri Lanka.With the initial discussion Bogawantalawa Plantations Ltd., and Dilmah had entered into a joint venture and renovated five bungalows spending nearly 200 million. They were targeting a high trend marketing and to cater for that they have upgraded the bungalows of Summerville, Castelreigh, Norwood and Tientsin and thereafter Dunkled. These Bungalows having all facilities including Swimming Pool, Tennis Court, Badminton Court etc. The charges per night is around 500 Dollars per day, per room and all the time the occupants rate of these bungalows are 100%. Other areas have been developed time to time to suite to the Visitors and other competitive advantageous. By this joint venture Bogawantalawa Plantations Ltd., and Dilmah both had a strategic advantage. At present, it is the best example as to how the Tea Tourism could be promoted, especially in the areas of Up-Country. Accordingly, when it comes to the business concept & Tourism is one of the world’s largest economic sectors as providing direct employments over to 100 million as well enormous indirect employments for different sectors and regions (World Travel and Tourism Council). International tourist arrivals grew by 4.4% in 2015 to reach a total of 1,184 million in 2015, according to the latest UNWTO World Tourism Barometer. With the gradual development of the tourism sector, people willing to engage in new tourism experiences and concepts as niche tourism emerged as a new concept (Fernando, 2014; Fernando 2015). Niche tourism refers to how a specific tourism product canbe personalized to meet the needs of a particular tourist segment as Tea tourism has been identified as one niche Tourism segment emerged. Tea could be stated as a beverage, a plant, an art, a meal service, an export, an agricultural product, an industry, a religion or a dedicated pastime (Yang, 2007) and tea is an integral part of food service (Jolliffe, 2007). Tea plant had its origins in China and later introduced to other countries and adopted as a beverage in different cultures and owning tea traditions. A peripheral industry built up around tea focuses on the production of goods for a tea-loving public, including tea accessories, books on tea, and a variety of tea-themed gift wares. Tea combination has developed as an art (Shalleck, 1972) and in some societies, such as Japan, as a religion. For many, the romance and history of tea and the experience of consuming tea is a pastime (Pratt, 1982) as includes collecting, either associated with the purchase of tea and related items such as teapots and teacups, or the seeking out and build-up of tea experiences, individually or as part of an organized tea tour. Tea Tourism noticeably has the potential to enhance the brand image and marketing of tea-producing destinations as contemporary tourists seek out authentic and unique experiences related to the appreciation and consumption of the beverage and tea encourages both consumption and the development of relationships. Climatic and geographic conditions have formed appropriate possibility for tea cultivation and historical evidences proved that tea tree has a long history dates back to the late 19th Century. Ceylon Tea and Tourism are inseparable words as Sri Lanka’s tea growing areas are undoubtedly the most beautiful places in the island as well attractive tourism destinations (Ceylon Tea Land, 2013). Potentials for the development of the segment is enormous with the strengths as the tourism industry needs to push to strengthen Tea tourism being practiced to day to reap the optimum results and benefits, particularly with regard to the focused marketing efforts aimed at the high spending visitors. In the overalldocument,the story is developed related to the chapter wise flow of the business evolution in the business venture connected to the development of the target market. Bogawantalawa Tea Estates Plc originally named as Bogawantalawa Plantations Ltd., was formed in 1992 with the state owned Janatha Estates Development Board and Sri Lanka State Plantations Corporation Estates were handed over to 22 Regional Plantation Companies. With Bogawantalawa Plantations Ltd., taking over of 11 estates in the Up-country area, mainly in Bogawantalawa Region and Lower Dickoya and 17 Estates in low Country. Bogo Valley is famous as Golden Valley of Ceylon Tea surrounded with Adams Peak mountain range and the Horton Place virgin Jungle. The picturesque Tea Estate is one of the most attractive area for the locals and tourists. With Bogawantalawa Plantations Ltd., managing Estates after about 10 years time have identified the management of core-business alone as a challenge and have a great impact to the bottom line since there were numerous internal & external factors beyond their control. There were about 5 – 6 bungalows as in excessive and maintenance of those were additional expenditure for the Company. With the availability of the bungalows and the natural resources the Board of Directors have decided to do a Tea Tourism by using the above bungalows. In terms of the highlighted flow of the story,Ceylon Tea Trails by BPL and DILMAH are probably the most coveted place to stay in Sri Lanka, and a perfect place for history and tea lovers like us. During the first year of the establishment, the initial profits were at a significantly lower levels ranging to a - 5% to + 3% ROCE reported on the invested capital . Also the two companies had a high staff turnover nearing to 13% on quarterly basis which has inclined the wage costs nearing to 45%. The joint venture initially had a calculated payback period of 6 years which had to be re 4estimated toa nearof 11 years with the drop of the market. The tourism inflow rate has declined by a near of 16% in the initial two quarters where the business had to reschedule for its costs to enhance the profit margins. Also, the business had to seek for additional borrowings worth of 56 million LKRS after thefirst 3 quarters since the sales and revenue patterns were declining compared to the original estimates. The business needed a recovery plan with enhanced promotional and marketing strategies connected to the foreign market and the tourism based niche market segment It can be held that Ceylon tea trails by DIMPAH AND BPL in Sri Lanka has a relatively higher potential of growth which shall be rendered in terms of the tea plantation based eco-tourism . As aresult with the developed context of ecotourism and tea plantation with regards to the enhancement of tourism investment both the government and private sector need to agree and work on a collative basis of industrial and sectored based investment actives. Planning Proper planning guides to be the success in all the cases. Here also customer can satisfy as well as possible when having a proper planning since it guide to more convenience and quality service Protected nature area Natural environment has given a better opportunity to the tourism industry since most of the tourists are willing to travel to see the natural beauty. In the case of having a protected natural area, the tourists are automatically attracted to those suitable hotels to have fun as well as for the protection. Financing Most of the tourists are willing to pay additional chargers also for having ecofriendly environment to travel by them. Understanding when one party implements the ecofriendly practices, it guides to others also to follow the same practice. In this case also when tourism industry uses this practice, other parties also aware about the value of having this kind of environmental friendly practice and they also motivate to act as that. Therefore, it can be held that thejoint venture by DILMAH AND BPL is one of the most profound business ventures which has targeted itself in the successful brand development pioneering many future ventures in the niche business segment of eco-tourism and tea tourism. The business with its recovery strategies was able to ensure that the excepted targets were neared by 87% by the end of 6th quarter . Hence they business seemed to be growing from its fetes and the board of management had to come up with exclusive high end marketing and service strategies focusing on supreme and premier quality. With the development of the new strategic approach the company was then able to minimize any financial risks and capital risks with labor management to ensure that the business will achieve its targeted ROCE in the 5 yearned plan nearing to 25% on annual basis Currently, business is rated as the 3rd highest revenue and profit earning tourism venture in terms of tea tourism and other general tourist based ventures conducted at corporate level. The business also have future plans connected to venturing in a joint form with an international brand to ensure the necessary liquidity and expansion growth for the business can be achieved and ensure a higher brand awareness and equity will be extended to the European market.In conclusion it can be held that the overall development in the tea tourism based venture of Dilmah and BPL has paved profound pioneering business model in the tourism industry with alternative substitution of existing resources and business process of the two companies to a novel degree of enhancement in business re development . As a result it it’s expected that with the achievement of the corporate goals of the venture it will set space and complementary scope for other substitute and competitive businesses to arise nourishing the industry.