By-

Group 8 Aman Chandra Paras Bablani Shailley Firdous Yashi 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

+ves Better recall Help in generating cross selling. The underperforming hotels sales will boost Higher retention of customers Single outlook Increased revenue -ves High marketing costs Loyal customers may feel a disconnect (eg . The Carlyles, New York) Needs cultural change, therefore, damage unique styles of individual hotels. (including: food, customs, styles, etc.) Increased competition Risk is high.

CUSTOMER LIFETIME VALUE

Without Rosewood Branding (2003) 115000 $750 2 32% 1.2 $130 $150 19169 5750 16.67% 470 With Rosewood Branding 11500 $750 2 32% 1.3 $139 $150 24919 11500 21.67% 461

Total number of unique guests Average daily spend Number of days average guests stays Average gross margin per room Average number of visits per year per guest Average marketing expense per guest Average new guest acquisition expense Total number of repeat guests Total number of multi-property stay guests Average guest retention rate Average gross profit per guest

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.

CLV WITHOUT BRANDING STRATEGY

Year Number of Nights per Stay Number of Stays per guest (assuming they are retained) Revenue Per Night Revenue per Customer Gross Profit per Customer Less Cost to Acquire Customer Less Annual Marketing Cost per Customer Cash Flow from Customer if Retained Probability of Being Retained Expected Cash Flow from Customer Discount Factor NPV of Expected Cash Flow from Customer Total NPV of CLTV ($150.00) ($133.90) ($137.92) ($142.05) ($146.32) ($150.71) ($155.23) ($150.00) 1.00 ($150.00) 1.000 ($150.00) $378.49 $476.66 1.00 $476.66 1.080 $441.35 $509.28 0.17 $84.90 1.166 $72.78 $543.97 0.03 $15.12 1.260 $12.00 $580.87 0.00 $2.69 1.360 $1.98 $620.11 0.00 $0.48 1.469 $0.33 $661.84 0.00 $0.09 1.587 $0.05 2003 2004 2.0 1.2 $795.00 $610.56 2005 2.0 1.2 $842.70 $647.19 2006 2.0 1.2 $893.26 $686.03 2007 2.0 1.2 2008 2.0 1.2 2009 2.0 1.2

$946.86 $1,003.67 $1,063.89 $727.19 $770.82 $817.07

$1,908.00 $2,022.48 $2,143.83 $2,272.46 $2,408.81 $2,553.33

CLV WITH BRANDING STRATEGY

Year Number of nights/stay Number of stays/guest (assuming retention) Revenue/night Revenue/customer Gross Profit per Customer Customer acquisition cost Annual marketing cost/customer Incremental marketing cost/Customerb Cash Flow from Customer if Retained Probability of retention Expected customer cash flow
-150 1.0 (150.0) (150.0) (133.9) ($8.96) 518.58 1.0 518.6 (137.9) ($9.23) 553.98 0.2 120.0 (142.1) ($9.50) 591.64 0.0 27.8 (146.3) ($9.79) 631.68 0.0 6.4 (150.7) ($10.08) 674.27 0.0 1.5 (155.2) ($10.38) 719.55 0.0 0.3 2003 2004 2.0 1.3 $795.00 2005 2.0 1.3 $842.70 2006 2.0 1.3 $893.26 2007 2.0 1.3 $946.86 2008 2.0 1.3 2009 2.0 1.3

$1,003.67 $1,063.89

$2,067.00 $2,191.02 $2,322.48 $2,461.83 $2,609.54 $2,766.11 661.44 701.12 743.19 787.78 835.05 885.16

Discount factor NPV of Expected Cash Flow from Customer Total NPV of CLTV

$1.00 ($150.00) $461.09

$1.08 $480.17

$1.17 $102.92

$1.26 $22.05

$1.36 $4.72

$1.47 $1.01

$1.59 $0.22

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