Rosewood Hotels & Resorts:

Branding to increase customer

profitability and Lifetime Value
Harvard Business School Case
What is Rosewood?

Who is John Scott?

 What is Rosewood

• Hotels & Resort Company

• 13 different properties spread across the globe

• Known for great properties, with each of it’s

property itself as a brand
 Key Players

• John Scott
President and CEO

• Robert Boulogne
Vice President of Sales & Marketing
Current Scenario
 Situation Analysis
• Owns very highly valued properties and resorts

• Customers loves the individual properties and

brands but fail to recognise ‘rosewood’.

• New branding strategy for higher customer

retention rate and multi property visit rate

• Need to evaluate the new strategy and analyse

the future of the company, with and without the
new strategy
Why study this case?
Objective of this case (1/3)

• To analyse the new strategy and discuss it’s pros

and cons for the future of Rosewood group.

• To develop an understanding of collection

strategy and corporate strategy
Objective of this case (2/3)

Understanding concerns of
Loyal Customers and
Resort Managers
Objective of this case (3/3)

• Evaluate the profitability in long term by

evaluating profits generated versus costs
incurred

• Understanding the role of decision on brand

equity
Three Issues to analyse
and understand
 Three Issues
1

Analysing behaviour and POV of Loyal

Consumers and Managers
 Three Issues
2

Revisits and Multi-property visits

 Three Issues
3

Analysing Customer Lifetime Value and

evaluating the profits of corporate strategy
 Behaviour and Point of
View of Loyal Consumers
and Managers
 History

• Selling point : One of a kind properties, Point of

Differentiation

• Hotels with brand name greater than ‘Rosewood’

itself
 Consumers

• Reluctant to go towards bigger brand

• Feeling of exclusiveness

• Emotional attachment towards brand name

 Managers

“Hotel Managers are more inclined to promote

just their own individual hotel brands,
particularly if they have a strong brand”

–Robert Boulogne
 Bottom Line

It is not in the best interest of Managers and Loyal

Consumers to directly switch to corporate
branding strategy and hence certain modifications
are required.
Revisits and Multi-
property Visits
 No identification
“While guests were seeking a unique Rosewood
property experience and product, they were not
making the connection between Rosewood
properties and were increasingly identifying with
other strong hotel brands”

–John Scott
 Limited Market

t B r a n d s
o pl e w an
Pe

e e x c l u s i v e n e s s
t e d se g m e n t v a l u
Smal so p h is t i ca
Testimonies of Travel Agents

Is name Rosewood meaningful in encouraging your clients?

• “Clients are not aware of it. They do not come to

me asking for Rosewood properties”

• “In Dallas, yes it definitely helps”

Strong Individual
Rosewood name
Brand/Property
recognition is low
Recognition
Effect of corporate branding(1/2)
Aman Resorts Case
• “Aman Junkies” take pride in collecting the
Aman Experience

• Preserves uniqueness and at the same time help

customers develop connection b/w different
properties

• More than 10,000 repeat guests with only 500

rooms.
Effect of corporate branding(2/2)

2x
times better
Multi-property
visits
 Bottom Line

Corporate Strategy is the way ahead, it helps us

expand Markets, and we can leverage on our
existing property brand names.

New properties (Acqualina, Tuanovo Bay, La

Solana and Laguna Kai) can leverage on brand
names of ‘The Carlye' and ‘The Mansion’
Customer Lifetime
Value
Analysing CLTV for
next 6 years
 CLTV

• Reluctant to go towards bigger brand

• Feeling of exclusiveness $139

$159
24,919
11,500
• Emotional attachment towards brand name
21.67%
$90 $81
 Analysis (1/2)

• We observe that the overall guest retention rate

improved from 16.67% to 21.67%

• Multi property visits doubled

 Analysis (2/2)

• Although the net profit per guest is reduced, it

might be compensated by the retention rate of
old guests
 CLTV (1/2)
Without Rosewood Branding
Years 0 1 2 3 4 5 6

Gross profit US$ 240.00 US$ 259.20 US$ 279.94 US$ 302.33 US$ 326.52 US$ 352.64 US$ 380.85

per guest
Acquisition US$ 150.00 US$ 153.90 US$ 157.92 US$ 162.05 US$ 166.32 US$ 170.71 US$ 175.23
expense per
new guest
Marketing US$ 130.00 US$ 133.90 US$ 137.92 US$ 142.05 US$ 146.32 US$ 150.71 US$ 155.23
Expense per
guest
Net Profit US$ 90.00 US$ 105.30 US$ 122.02 US$ 140.28 US$ 160.20 US$ 181.93 US$ 205.62
per guest
Churn 83.33 83.33 83.33 83.33 83.33 83.33 83.33
Factor
Discount 8 8 8 8 8 8 8
Factor
Net Present US$ 0.14 US$ 0.16 US$ 0.18 US$ 0.21 US$ 0.24 US$ 0.27 US$ 0.31
Value
Customer US$ 0.14 US$ 0.29 US$ 0.48 US$ 0.69 US$ 0.93 US$ 1.20 US$ 1.51
LTV
 CLTV (2/2)
With Rosewood Branding
Years 0 1 2 3 4 5 6

Gross profit US$ 240.00 US$ 259.20 US$ 279.94 US$ 302.33 US$ 326.52 US$ 352.64 US$ 380.85

per guest
Acquisition US$ 159.00 US$ 163.17 US$ 167.47 US$ 171.89 US$ 176.45 US$ 181.14 US$ 185.97
expense per
new guest
Marketing US$ 139.00 US$ 143.17 US$ 147.47 US$ 151.89 US$ 156.45 US$ 161.14 US$ 165.97
Expense per
guest
Net Profit US$ 81.00 US$ 96.03 US$ 112.47 US$ 130.44 US$ 150.07 US$ 171.50 US$ 194.88
per guest
Churn 78.33 78.33 78.33 78.33 78.33 78.33 78.33
Factor
Discount 8 8 8 8 8 8 8
Factor
Net Present US$ 0.13 US$ 0.15 US$ 0.18 US$ 0.21 US$ 0.24 US$ 0.27 US$ 0.31
Value
Customer US$ 0.13 US$ 0.28 US$ 0.46 US$ 0.67 US$ 0.91 US$ 1.18 US$ 1.49
LTV
 Bottom Line

The increase in rate of Marketing expenses is too

high and even the retention rate is not able to
counter it and we obtain a lower CLTV for
corporate strategy.

Although the assumption of same no. of unique

guest may not hold valid, specially with newer
properties coming up, the visits will be higher for
corporate strategy.
 Disclaimer
Created by Parakh Agarwal, IIT
Delhi.
During Marketing Internship
under Prof. Sameer Mathur