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Rosewood

Rosewood was considering moving from an individual hotel branding strategy to a corporate branding strategy for several reasons: to establish a stronger brand identity and increase market penetration of its luxury properties, promote cross-selling between properties, and build brand equity. Data showed corporate branding led to higher cross-property guest usage and increased customer lifetime value. However, some concerns included additional costs, potential loss of brand uniqueness, and resistance from property managers who feared losing autonomy. Financial projections estimated a corporate branding strategy could increase customer lifetime value by around 11% for Rosewood.

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330 views7 pages

Rosewood

Rosewood was considering moving from an individual hotel branding strategy to a corporate branding strategy for several reasons: to establish a stronger brand identity and increase market penetration of its luxury properties, promote cross-selling between properties, and build brand equity. Data showed corporate branding led to higher cross-property guest usage and increased customer lifetime value. However, some concerns included additional costs, potential loss of brand uniqueness, and resistance from property managers who feared losing autonomy. Financial projections estimated a corporate branding strategy could increase customer lifetime value by around 11% for Rosewood.

Uploaded by

sriscribd80
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Rosewood was considering a move from an individual branding to a corporate branding strategy for the following reasons: Establish

h brand identity and gain market penetration into corporate branded luxury version. To promote multi-property cross-selling
Create

Rosewood junkies seeking Rosewood properties exclusively. Data showed that individual brand hotels had 5%-10% cross property guest usage whereas corporate brand hotels had cross property usage of 10%-15%.

A move to a corporate brand strategy would build brand

equity
Customers were increasingly identifying well with other strong

hotel brands like four seasons. It was becoming difficult to position Rosewoods properties in an increasingly crowded market.

Increased revenue and greater customer lifetime value

(increase in CLTV by ~11%)*

*see slide 9 for details

Pros
Better Customer Life Time Value (~11% increase in case

of Rosewood*) Enhanced brand equity and brand recognition Increased cross properties usage rates (5-10% v/s 10-15% in case of Rosewood) leading to increased revenue Increased repeat customers Increased customer loyalty

*see slide 9 for details

Cons
Additional costs for Marketing and Brand promotion (~1

million estimated for Rosewood) Loss of the Brand Mantra, Sense of place, which is at the core of Rosewood hotels Potential loss of current brand equity and Points-ofDifferences of Individual Hotels like Carlyle Threat to the rational and emotional bonding of customers to some of the individual brands. Resistance from Managers as they feared loosing autonomy. Co-operative owners not willing to be a part of bigger organization. Bad reputation of one hotel may affect the whole brand

We believe that a move to corporate branding has a

potential to increase customer lifetime value.


Increase by ~11% from $2872 to $3190*

The calculations are based on exhibit 8 and data

provided in the case. As mentioned in the case, the initial analysis showed that multi-property guest stays was anticipated to double from 5% to 10% in the previous year. This increased the average number of visits per guest from 1.2 to 1.3
*See slides 8 & 9 for details

Without current branding


Total no. of unique guests Average daily spend ($) No. of days avg guests stay Avg gross margin per room Avg no. of visits per year per guest Avg marketing expense per guest ($) Avg new guest acquisition expense ($) Total no. of repeat guests Total no. of multiproperty guests Total no. of guests (unique + repeat) Avg guest retention rate Gross profit per guest ($) 115000 750 2 32% 1.2 130 150 19169 5750 134169 16.67% 576.00

With Rosewood Corporate branding 115000 750 2 32% 1.3 138.70 150 24919 11500 139919 21.67% 624.00

CLTV calculations (Without branding)


Years Gross profit per guest ($) Acquisition expense per new guest ($) Marketing expense per guest ($) Net profit per guest ($) 0 $576.00 $150.00 $130.00 $296.00 1 $610.56 $0.00 $133.90 $476.66 2 $647.19 $0.00 $137.92 $509.28 3 $686.03 $0.00 $142.05 $543.97 4 $727.19 $0.00 $146.32 $580.87 5 $770.82 $0.00 $150.71 $620.11 6 $817.07 $0.00 $155.23 $661.84

Retention factor Discount factor NPV ($) Total NPV ($)

16.67% 1 $296.00 $2,871.86

16.67% 0.93 $441.35

16.67% 0.86 $436.62

16.67% 0.79 $431.82

16.67% 0.74 $426.96

16.67% 0.68 $422.04

16.67% 0.63 $417.07

CLTV calculations (With branding)


Years Gross profit per guest ($) Acquisition expense per new guest ($) Marketing expense per guest ($) Net profit per guest ($) Retention factor Discount factor NPV ($) Total NPV ($) 0 $624.00 $150.00 $130.00 $344.00 21.67% 1 $344.00 $3,189.76 1 $661.44 $0.00 $133.90 $527.54 21.67% 0.93 $488.46 2 $701.13 $0.00 $137.92 $563.21 21.67% 0.86 $482.86 3 $743.19 $0.00 $142.05 $601.14 21.67% 0.79 $477.20 4 $787.79 $0.00 $146.32 $641.47 21.67% 0.74 $471.50 5 $835.05 $0.00 $150.71 $684.35 21.67% 0.68 $465.76 6 $885.16 $0.00 $155.23 $729.93 21.67% 0.63 $459.98

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