By- Group 8Aman

ChandraParas

BablaniShailley

FirdousYashi Mittal

NEW BRANDING STRATEGY Brand awareness Increase cross-sales Increase Revenue Consumer connect Increase customer retention and revisit rate Leverage its well known brands to increase

sales of underperforming hotels.

PROS & CONS+ve’s

• Better recall• Help in generating

cross selling.• The underperforming

hotels’ sales will boost• Higher retention of

customers• Single outlook• Increased revenue

-ve’s• High marketing costs• Loyal customers may

feel a disconnect (eg . The Carlyle’s, New York)

• Needs cultural change, therefore, damage unique styles of individual hotels. (including: food, customs, styles, etc.)

• Increased competition• Risk is high.

CUSTOMER LIFETIME VALUEWithout Rosewood Branding (2003)

With Rosewood Branding

Total number of unique guests 115000 11500

Average daily spend $750 $750

Number of days average guests 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 $139

Average new guest acquisition expense $150 $150

Total number of repeat guests 19169 24919

Total number of multi-property stay guests 5750 11500

Average guest retention rate 16.67% 21.67%

Average gross profit per guest 470 461

CUSTOMER LIFETIME VALUE Though a decrease in avg. gross profit per

customer, but since retention rate is higher, overall increase in net revenue.

In the long run, increasing guest retention will positively affect company's revenues and will lead to increased brand awareness.

This year, if the number of multi-property guests goes up by 5,750, Rosewood's gross margin will increase from $2.7 million to $53 million

Thus, average gross profit would increase manifolds.

Year 2003 2004 2005 2006 2007 2008 2009Number of Nights per Stay 2.0 2.0 2.0 2.0 2.0 2.0

Number of Stays per guest (assuming they are retained) 1.2 1.2 1.2 1.2 1.2 1.2 Revenue Per Night $795.00 $842.70 $893.26 $946.86 $1,003.67 $1,063.89 Revenue per Customer $1,908.00 $2,022.48 $2,143.83 $2,272.46 $2,408.81 $2,553.33 Gross Profit per Customer   $610.56 $647.19 $686.03 $727.19 $770.82 $817.07 Less Cost to Acquire Customer ($150.00)Less Annual Marketing Cost per Customer ($133.90) ($137.92) ($142.05) ($146.32) ($150.71) ($155.23)Cash Flow from Customer if Retained ($150.00) $476.66 $509.28 $543.97 $580.87 $620.11 $661.84

Probability of Being Retained 1.00 1.00 0.17 0.03 0.00 0.00 0.00Expected Cash Flow from Customer ($150.00) $476.66 $84.90 $15.12 $2.69 $0.48 $0.09 Discount Factor 1.000 1.080 1.166 1.260 1.360 1.469 1.587 NPV of Expected Cash Flow from Customer ($150.00) $441.35 $72.78 $12.00 $1.98 $0.33 $0.05 Total NPV of CLTV $378.49

CLV WITHOUT BRANDING STRATEGY

CLV WITH BRANDING STRATEGYYear 2003 2004 2005 2006 2007 2008 2009

Number of nights/stay 2.0 2.0 2.0 2.0 2.0 2.0

Number of stays/guest (assuming retention) 1.3 1.3 1.3 1.3 1.3 1.3

Revenue/night $795.00 $842.70 $893.26 $946.86 $1,003.67 $1,063.89

Revenue/customer $2,067.00 $2,191.02 $2,322.48 $2,461.83 $2,609.54 $2,766.11

Gross Profit per Customer 661.44 701.12 743.19 787.78 835.05 885.16

Customer acquisition cost (150.0)

Annual marketing cost/customer (133.9) (137.9) (142.1) (146.3) (150.7) (155.2)

Incremental marketing cost/Customerb ($8.96) ($9.23) ($9.50) ($9.79) ($10.08) ($10.38)

Cash Flow from Customer if Retained -150 518.58 553.98 591.64 631.68 674.27 719.55

Probability of retention 1.0 1.0 0.2 0.0 0.0 0.0 0.0

Expected customer cash flow (150.0) 518.6 120.0 27.8 6.4 1.5 0.3

Discount factor $1.00 $1.08 $1.17 $1.26 $1.36 $1.47 $1.59

NPV of Expected Cash Flow from Customer ($150.00) $480.17 $102.92 $22.05 $4.72 $1.01 $0.22

Total NPV of CLTV $461.09

Increase in CLTV per customer of new Marketing Plan $82.60

Multiplied by # of Customers to obtain increase in profit of Rosewood from new brand strategy $94,98,542

Divided by 32% gross margin to obtain increase in Revenue of Rosewood from new brand strategy $2,96,82,943

INDUSTRY & COMPETITION Brands like Four Seasons and Ritz-Carlton are well

established in the market with large no. of rooms. Rosewood stands fairly well against its competition. % Property growth (‘96-’03) has been 100% as against

53% of Four Seasons, and 73% of Ritz-Carlton. The avg daily room rates suggests that Rosewood

hotels are positioned towards the luxury end as their rates are higher than that of other well reputed hotels.

Rosewoods’ occupancy has been showing growth since past two years. Soon it would catch up with the competition.

CUSTOMER BASE & TARGET MARKET Customer loyalty was property specefic. Generally, high end luxury users were predominant for

high end brands. As in case of The Carlyle, one third of its 179 rooms

were booked by private owners. CRS was the tool to gather customer database. Through

this it was possible to keep a note of customer preferences.

Creation of global, flexible data warehouse for all the hotels.

This would enable them to maintain records and service their loyal cutomers in the same manner globally.

Their target market could be frequent travelers, business associates.

OTHER ALTERNATIVES The brands such as Turtle Creek and Carlyle should

add the brand name Rosewood as a suffix. Managerial staff must incorporate the changes very

vigilantly so as not to damage the uniqueness of a well-known brand.

The specialty and ethnicity could be maintained of individual hotels, but a few standardizations in styles and accessories could be made so that the brand name and “uniqueness” would coexist.

It must consider placing its advertisement on travel magazines

Educating customers about their list of hotels and frequent stay programs internally through catalogues placed in rooms.

THANK YOU