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Rosewood's Brand-Wide CLTV Calculation: 5,750 11500 16.67% 21.67% Average Guest Retention Rate

This document compares key customer metrics and financial projections for a hotel brand both without and with a proposed $1 million investment in corporate branding. Some key findings are that with corporate branding, the average guest retention rate is expected to increase from 16.67% to 21.67%, and the estimated increase in customer lifetime value per guest is $82.64. Over a 6 year period, the total estimated increase in profits from this investment is $9,503,796.

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Gunjan Shah
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257 views4 pages

Rosewood's Brand-Wide CLTV Calculation: 5,750 11500 16.67% 21.67% Average Guest Retention Rate

This document compares key customer metrics and financial projections for a hotel brand both without and with a proposed $1 million investment in corporate branding. Some key findings are that with corporate branding, the average guest retention rate is expected to increase from 16.67% to 21.67%, and the estimated increase in customer lifetime value per guest is $82.64. Over a 6 year period, the total estimated increase in profits from this investment is $9,503,796.

Uploaded by

Gunjan Shah
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLS, PDF, TXT or read online on Scribd
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Rosewood's Brand-wide CLTV Calculation

Discount Rate
Mktg. Cost Increase Rate
Revenues Increase Rate
Additional Mktg. Cost for Corporate branding

Item
Total Number of Unique Guests
Average Daily Spend
Number of Days Average Guest Stays per Stay
Average Gross Margin per Room
Average Number of Visits per Year per Guest
Average Marketing Expense per Guest (system-wide)
Average New Guest Acquisition Expense (system-wide)
Total Number of Repeat Guests
Of which: Total Number of Multi-property Stay Guests

Average Guest Retention Rate

Total Revenue Per Guest


Gross Profit (margin) Per Guest

8%
3%
6%
$1,000,000.00

Without Rosewood
Branding (2003)

115,000
$750.00
2.0
32%
1.2
$130.00
$150.00
19,169
5,750
16.67%

$1,800.00
$576.00

With Rosewood
Corporate Branding

115,000
$750.00
2.0
32%
1.3
$138.70
$150.00
24,919
11500
21.67%

$1,950.00
$624.00

Without Rosewood Corporte Branding


Year
Average Daily Spend
Number of Days Average Guest Stays per Stay
Average Number of Visits per Year per Guest
Total Revenue per Customer
Gross Profit (margin) Per Guest
Average Marketing Expense per Guest (system-wide)
Average New Guest Acquisition Expense (system-wide)
Cash Flow Per Guest

2004
$795.00
2.0
1.2
$1,908.00
$610.56
$133.90
$150.00
$326.66

2005
$842.70
2.0
1.2
$2,022.48
$647.19
$137.92
$509.28

Retention Factor
Expected Cash Flow from Customer

1
$326.66

0.16669
$84.89

Discount Factor
PV of Expected Cash Flow from Customer
NPV (Customer Lifetime Value)

0.9259
$302.46
$389.61

0.8573
$72.78

With Rosewood Corporte Branding


Year
Average Daily Spend
Number of Days Average Guest Stays per Stay
Average Number of Visits per Year per Guest
Total Revenue per Customer
Gross Profit (margin) Per Guest
Average Marketing Expense per Guest (system-wide)

2004
$795.00
2.0
1.3
$2,067.00
$661.44
$142.86

2005
$842.70
2.0
1.3
$2,191.02
$701.13
$147.14

Average New Guest Acquisition Expense (system-wide)


Cash Flow Per Guest

$150.00
$368.58

$553.98

Retention Factor
Expected Cash Flow from Customer

1
$368.58

0.2167
$120.04

Discount Factor
PV of Expected Cash Flow from Customer
NPV (Customer Lifetime Value)

0.9259
$341.28
$472.25

0.8573
$102.92

Increase in CLTV with Rosewood Corporate Branding

Increase in Profits (Over 6 years)

$82.64
$9,503,796

t Rosewood Corporte Branding


2006
$893.26
2.0
1.2
$2,143.83
$686.03
$142.05

2007
$946.86
2.0
1.2
$2,272.46
$727.19
$146.32

2008
$1,003.67
2.0
1.2
$2,408.81
$770.82
$150.71

2009
$1,063.89
2.0
1.2
$2,553.33
$817.07
$155.23

2010
$1,127.72
2.0
1.2
$2,706.53
$866.09
$159.88

$543.97

$580.87

$620.11

$661.84

$706.21

0.02778
$15.11

0.00463
$2.69

0.00077
$0.48

0.00013
$0.09

0.00002
$0.02

0.7938
$12.00

0.7350
$1.98

0.6806
$0.33

0.6302
$0.05

0.5835
$0.01

Rosewood Corporte Branding


2006
$893.26
2.0
1.3
$2,322.48
$743.19
$151.56

2007
$946.86
2.0
1.3
$2,461.83
$787.79
$156.10

2008
$1,003.67
2.0
1.3
$2,609.54
$835.05
$160.79

2009
$1,063.89
2.0
1.3
$2,766.11
$885.16
$165.61

2010
$1,127.72
2.0
1.3
$2,932.08
$938.27
$170.58

$591.64

$631.68

$674.27

$719.55

$767.69

0.0470
$27.78

0.0102
$6.43

0.0022
$1.49

0.0005
$0.34

0.0001
$0.08

0.7938
$22.05

0.7350
$4.72

0.6806
$1.01

0.6302
$0.22

0.5835
$0.05

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