This presentation is an in-depth marketing analysis of the Harvard Business Case "Rosewood Hotels and Resorts". It has been created by Pallabh Bhura of Jadavpur University during a marketing internship under Prof. Sameer Mathur, IIM Lucknow. It takes into account the various concepts of branding so as to increase Customer Profitability and Lifetime Value of Rosewood Hotels and Resorts.

1. Rosewood Hotels and
Resorts

2. 2

3. • T h r o u g h t h e 1 9 9 0 s ,
Rosewood’s advertising was
property-specific.
• T h e R o s e w o o d l o g o
remained secondary to the
hotel logo.
• Rosewood’s management
believed that the individual
property brand was a
powerful tool to differentiate
Rosewood properties from
competitors.

4. “
“The Rosewood branding was soft
and meant to be complementary,
not intrusive”
Robert Boulogne,
vice president of sales and marketing
Rosewood Hotels and Resorts

6. § I n d i v i d u a l b r a n d
positioning limits
target market.
§ Results in very low
cross property usage
rate.
§ Intense competition in
t h e l u x u r y h o t e l
segment.
6

7. “
“I want to emulate the AmanResorts model
and develop ‘Rosewood junkies’ who will
seek out Rosewood properties exclusively.”
John Scott,
President and CEO
Rosewood Hotels and Resorts

8. ▪ Increasing cross property usage from
5 to 10%.
▪ Creating “Rosewood Junkies.”
▪ Increasing Brand Awareness.
▪ Increasing Brand Equity.
▪ Increasing the customer lifetime value
so as to increase the profit per guest.

9. How can corporate branding help?
9

10. Better brand positioning
and Competitive edge
10

11. 11

12. Greater Brand Awareness
& Loyalty
12

13. A 2003 report from Strategic Marketing Solutions
commissioned by Rosewood showed that a
majority of consumers did not know the brand—
and the few who did had learned the name
Rosewood from their travel agents.

14. “
“Very low awareness, less than 5%. It’s a secret club.”
A Rosewood Employee
“Perhaps 25% of clients know the name Rosewood. They know
the hotel name better”
A Travel Agent
“No, I really do not know the name Rosewood, even after
staying at the property. ”
A Guest

15. Such brand audits again emphasize the need for
corporate branding to develop consistent brand-wide
performance standards while preserving the
uniqueness and individuality of Rosewood properties.

16. Better Customer Lifetime
Value

17. HOW
CLV (Customer Lifetime Value) is a prediction of all the value a business will
derive from their entire relationship with a customer.

18. A Few Assumptions
• Average number of visits per year per guest will
inflate from 1.2 to 1.3.
• A marketing and operations investment of $1 million
per year would be necessary to implement the
corporate branding strategy.
• Double occupancy is treated as one guest.

19. Total number of unique guests 115,000 115,000
Average Daily Spend 15 10
Number of Days Average Guest Stays 2 2
Average gross margin per room
32% 32%
Average number of visits per year per guest 1.2 1.3
Average marketing expense per guest $130
($130x115000+$1 million)/115000 =
$138.70
Average new guest acquisition expense $150 $150
Total number of multi-property stay guests 19169 (19169-5750)+10% of 115000=24919
Total number of multi-property stay guests
5750 10% of 115000=11500

20. TO FIND
1. Average Guest Retention Rate
2. Average Gross Profit per Guest
3. Net Present Value
Guest retention rate: the probability that a guest comes back to a Rosewood hotel the following year (number of repeat
guests/total number of guests).
Average Gross Profit per Guest = (Gross Profit Margin)x(No. of days avg guest stays)x(Avg no. of visits per year per guest )
Few other assumptions
Discount Rate-8%
Marketing Cost increases at 3% every year
Sales Revenue increases at 6% every year

21. Average Guest Retention
Rate
19169/115000=16.67% 24919/115000=21.67%
Average Gross Profit per
Guest
750x2x1.2=$576 750x2x1.3=$624

22. How to find
Net Present Value?
22

23. Year 2003 2004 2005 2006 2007 2008 2009
Revenue per Customer
(increases by 6% every year)
$1800 $1908 $2022.48 $2143.83 $2272.46 $2408.81 $2553.33
Gross Profit per Guest $576 $610.56 $647.19 $686.03 $727.19 $770.82 $817.07
Acquisition Expense per
guest
$150 - - - - - -
Marketing Expense per
Guest
(increases by 6% every year)
($130) ($133.90) ($137.92) ($142.05) ($146.32) ($150.71) ($155.23)
Net profit per guest $296 $476.66 $509.28 $543.97 $580.87 $620.11 $661.84
Retention Factor
(rate=16.67%)
1 0.167 0.028 0.0047 0.0007 0.0001 0.00002
Discount Factor(rate=8%) 1 1.08 1.166 1.260 1.360 1.469 1.587
Net Present Value(NPV) $296 $73.70 $12.23 $2.02 $0.298 $0.042 $0.008
NPV of Customer
Lifetime Value
$384.298
Without
Corporate
Branding

24. Year 2003 2004 2005 2006 2007 2008 2009
Revenue per Customer
(increases by 6% every year)
$1950 $2067 $2191.02 $2322.48 $2461.83 $2609.54 $2766.11
Gross Profit per Guest $624 $661.44 $701.13 $743.19 $787.79 $835.05 $885.16
Acquisition Expense per
guest
$150 - - - - - -
Marketing Expense per Guest
(increases by 6% every year)
($130)
($142.86
+$8.96)
($147.14
+$9.23)
($151.56
+$9.50)
($156.10
+$9.79)
($160.79
+$10.08)
($165.61
+$10.38)
Net profit per guest $335.30 $509.63 $544.76 $582.14 $621.90 $664.19 $709.16
Retention Factor
(rate=21.67%)
1 0.227 0.051 0.012 0.0027 0.0006 0.00001
Discount Factor(rate=8%) 1 1.08 1.166 1.260 1.360 1.469 1.587
Net Present Value(NPV) $335.30 $107.11 $23.82 $5.54 $1.23 $0.27 $0.0061
NPV of Customer Lifetime
Value
$473.282
With
Corporate
Branding

25. $88.98
Increase in CLTV per customer from the new brand strategy
$31,978,625 annually
$10,233,160 annually
Multiplied by # of Customers to obtain increase in PROFIT of Rosewood
Divided by 32% gross margin to obtain increase in REVENUE

26. $31,978,625
Whoa! That’s a big number!!!
26

27. BUT there are RISKS
As always!

28. • Prominently imposing the Rosewood brand might alienate guests at
well-established properties.
• Many hotel managers feel threatened in their autonomy.
• Ensuring product/service quality will be more important than ever to
keep up to the new brand promise.

29. 29
• Greater Brand Equity.
• Better Customer Lifetime Value.
• Enhanced cross property usage.
• Higher PROFIT.
• Higher Marketing Investment.
• Alienation of guests.
• Emotional attachment might cause
resistances.
Corporate Branding

30. However, the PROS clearly outweigh
the CONS.
Corporate Branding is therefore
the way forward!

31. ▪ Standardise product/service quality across all properties.
▪ Set reward programmes for frequent customers.
▪ Undertaking social corporate initiatives.
▪ Establish a strong digital presence.

32. Disclaimer
This presentation is created by Pallabh Bhura of Jadavpur
University during a marketing internship under Prof. Sameer
Mathur, IIM Lucknow.
Prof. Sameer Mathur Pallabh Bhura
Thank You!