Rosewood Hotels & Resorts

Branding to Increase Customer Profitability and Lifetime Value

A Sense Of Place

1. 12 hotels worldwide with a capacity of 1513 rooms.

2. Room Tariffs rate range from $120 to $9000.

3. John Scott is Rosewood’s new presidentand CEO, and Robert Boulogne is vice president of sales and marketing.

4. Headquarters in Dallas, Texas

5. Over 25 years ago, Caroline Rose Hunt opened The Mansion, the first Rosewood hotel, by transforming an old Dallas mansion into a world-class restaurant & hotel.

6. Rosewood competed with two groups of luxury hotels:• i) Corporate branded:- Ritz-Carlton, Four

Seasons, St. Regis, One&Only, and Mandarin Oriental hotels

• ii) Individually branded:-Unique hotels, such as Auberge, RockResorts, and Orient-Express.

What were the strategies used by Rosewood in operating its properties?

1. Repositioning existing hotels.

2. Building new world class hotels and restaurants with a “sense of place”.

What is the issue?

John Scott recognized that the Rosewood brand had low recognition and brand-wide usage among guests was an untapped asset.

Their emphasis on individual property brands was not working from a number of fronts.

5% of Rosewood guests had stayed inmore than one of Rosewood’s

properties while corporate-branded hotels enjoyed 10% to 15% cross-

propertyusage rates.

Rosewood was at the low end of the scale and management felt

there was anopportunity for increasing cross-

property usage.

What are the possible solutions?

1.Frequent stay program

• Proved successful for large multiple-segment operators with broad geographic distribution.

• Loyalty was fostered by offering benefits like room upgrades, flexible check-in and check-out, personalized services, etc.

2.Corporate Branding Approach

What are the pros and cons of corporate branding approach?

Pros:• Collective experience

• Encourage guests to use more than one property

• Better brand recognition

• High customer loyalty.

Cons:• Internal Resistance: Few hotel managers are

inclined to promote their own hotels rather than promoting Rosewood

• Some corporate guests didn’t want to be a part of a bigger organization due to their emotional attachment to a particular hotel.

Scenario with an introduction of corporate branding-Parameters Without Rosewood

Branding (2003)With RosewoodCorporate Branding

Total number of unique guests 115,000 115,000Average daily spend $750 $750Number of days average guest stays 2 2Average gross margin per room 32% 32%Average number of visits per year per guest 1.2 1.3Average marketing expense per guest (systemwide)

$130 $139

Average new guest acquisition expense (systemwide)

$150 $150

Total number of repeat guests 19,169 24919Of which: Total number of multi-property stay guests

5,750 11500

Average Guest Retention Rate 16.67% 21.67%Average Gross Profit per Guest $576 $624

Suggestions for Corporate Branding:• Don’t dilute individual brand persona• Subtly add Rosewood to it• Get internal teams confidence• Build a Rosewood membership plan• Tie up with more travel agencies

Thank You

DISCLAIMER

Created by Tamishra Ray, BPPIMT, Kolkata, during a marketing internship by Prof. Sameer Mathur, IIM Lucknow.