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    Rosewood Hotels & Resorts: Customer Lifetime Value (CLTV) Analysis Inputs

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    Dost Muhammad
    The document analyzes the customer lifetime value for a hotel chain both without and with a new corporate branding strategy. It calculates the net present value of expected cash flows from customers over several years. With the new branding strategy, the average guest retention rate is expected to improve from 16.67% to 20%, and additional annual marketing costs of $1 million are required. This is estimated to increase the customer lifetime value and profits for the hotel chain.

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    Rosewood Hotels & Resorts: Customer Lifetime Value (CLTV) Analysis Inputs

    Uploaded by

    Dost Muhammad
    289 views10 pages
    The document analyzes the customer lifetime value for a hotel chain both without and with a new corporate branding strategy. It calculates the net present value of expected cash flows from customers over several years. With the new branding strategy, the average guest retention rate is expected to improve from 16.67% to 20%, and additional annual marketing costs of $1 million are required. This is estimated to increase the customer lifetime value and profits for the hotel chain.

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    3S Rosewood

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    The document analyzes the customer lifetime value for a hotel chain both without and with a new corporate branding strategy. It calculates the net present value of expected cash flows from customers over several years. With the new branding strategy, the average guest retention rate is expected to improve from 16.67% to 20%, and additional annual marketing costs of $1 million are required. This is estimated to increase the customer lifetime value and profits for the hotel chain.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    289 views10 pages

    Rosewood Hotels & Resorts: Customer Lifetime Value (CLTV) Analysis Inputs

    Uploaded by

    Dost Muhammad
    The document analyzes the customer lifetime value for a hotel chain both without and with a new corporate branding strategy. It calculates the net present value of expected cash flows from customers over several years. With the new branding strategy, the average guest retention rate is expected to improve from 16.67% to 20%, and additional annual marketing costs of $1 million are required. This is estimated to increase the customer lifetime value and profits for the hotel chain.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 10

    NOTE: The company used 8% discount rate and assumed marketing costs increased at a rate of 3% per year a

    ROSEWOOD HOTELS & RESORTS: CUSTOMER LIFETIME VALUE (CLTV) ANALYSIS


    Inputs

    Total Number of Unique Guests


    Average Daily Spend
    Number of Days Average Guest Stays per Stay
    Average Gross Margin per Room
    Average Number of Visits per Year per Guest
    2
    Average Marketing Expense per Guest (system-wide)
    Average New Guest Acquisition Expense (system-wide)
    Total Number of Repeat Guests
    of which: Total Number of Multi-property Stay Guests
    Additional Costs Required per annum
    Discount Rate
    Average Guest Retention Rate

    NPV of Expected Cash Flow from Customer


    Total NPV of CLTV
    costs increased at a rate of 3% per year and guest revenues at a rate of 6% per year

    LUE (CLTV) ANALYSIS

    Without Rosewood Branding (2003) With Rosewood Corporate Branding

    115,000 115,000
    $750.00 $750.00 growing at 6%
    2.0 2.0
    32% 32%
    1.2 1.3
    $130.00 growing at 3%
    $150.00
    1 $150.00
    19,169
    3
    5,750
    $1,000,000
    8% 8%
    4
    16.67%
    Sourcce

    Exhibit 8
    Exhibit 8
    Exhibit 8
    Exhibit 8
    Exhibit 8
    Exhibit 8
    Exhibit 8

    Improves from 5% under individual branding to 10% with Corporate Branding


    Page 5
    Exhibit 8
    ate Branding
    CLTV Calculation With No Changes to Brand Strategy

    Total Number of Unique Guests


    Average Daily Spend
    Number of Days Average Guest Stays per Stay
    Average Gross Margin per Room
    Average Number of Visits per Year per Guest
    Average Marketing Expense per Guest (system-wide)
    Average New Guest Acquisition Expense (system-wide)
    Total Number of Repeat Guests
    of which: Total Number of Multi-property Stay Guests
    Discount Rate
    Average Guest Retention Rate

    NPV of Expected Cash Flow from Customer


    Total NPV of CLTV

    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

    Probability of Being Retained


    Expected Cash Flow from Customer if retained

    Discount Factor

    NPV of Expected Cash Flow from Customer


    Total NPV of CLTV
    Brand Strategy

    Without Rosewood Sourcce


    Branding (2003)
    115,000 Exhibit 8
    $750.00 growing at 6% Exhibit 8
    2.0 Exhibit 8
    32% Exhibit 8
    1.2 Exhibit 8
    $130.00 growing at 3% Exhibit 8
    $150.00 Exhibit 8
    19,169
    5,750 5% of total customer base
    8% Page 5
    16.67% Exhibit 8

    2003 2004 2005 2006 2007


    0.0 0.0 0.0
    are retained) 0.0 0.0 0.0
    $0.0 $0.0 $0.0
    $0.00 $0.00 $0.00 $0.00
    $0.00 $0.00 $0.00 $0.00

    $0.00 $0.00 $0.00


    $150.00 $0.00 $0.00 $0.00 $0.00

    1.00
    $150.00 $0.00 $0.00 $0.00 $0.00

    1.000

    $150.00 #DIV/0! #DIV/0! #DIV/0! #DIV/0!


    #DIV/0!
    2008 2009
    0.0 0.0
    0.0 0.0
    $0.0 $0.0
    $0.00 $0.00
    $0.00 $0.00

    $0.00 $0.00
    $0.00 $0.00

    $0.00 $0.00

    #DIV/0! #DIV/0!
    Total Number of Unique Guests
    Average Daily Spend
    Number of Days Average Guest Stays per Stay
    Average Gross Margin per Room
    Average Number of Visits per Year per Guest
    Average Marketing Expense per Guest (system-wide)
    Average New Guest Acquisition Expense (system-wide)
    Total Number of Repeat Guests
    of which: Total Number of Multi-property Stay Guests
    Additional Costs Required per annum
    Discount Rate
    Average Guest Retention Rate

    CLTV Calculation With New Brand 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
    4 Less Additional Marketing Cost per Customerb
    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

    Increase in CLTV per customer of new Marketing Plan


    Multiplied by # of Customers to obtain increase in prof
    Divided by 32% gross margin to obtain increase in Rev
    Without Rosewood With Rosewood Sourcce
    Branding (2003) Corporate Branding
    115,000 115,000 Exhibit 8
    $750.00 $750.00 growing at 6% Exhibit 8
    2.0 2.0 Exhibit 8
    32% 32% Exhibit 8
    1.2 1.3 Exhibit 8
    $130.00 $133.90 growing at 3% Exhibit 8
    $150.00 2 $150.00 Exhibit 8
    19,169
    5,750 Improves from 5% to 10% with C
    $1,000,000 3% Page 5
    8% 8% Exhibit 8
    16.67% 3

    2003 2004 2005 2006 2007


    0.0 0.0 0.0
    0.0 0.0 0.0

    $0.00 $0.00 $0.00 $0.00


    $0.00 $0.00 $0.00 $0.00
    $150.00

    $150.00 $0.00 $0.00 $0.00 $0.00

    1.00 1.00
    $150.00 $0.00 $0.00 $0.00 $0.00

    1.000
    0.08
    $150.00 #DIV/0! #DIV/0! #DIV/0! #DIV/0!
    #DIV/0!

    Marketing Plan
    increase in profit of Rosewood from new brand strategy
    n increase in Revenue of Rosewood from new brand strategy
    es from 5% to 10% with Corporate Branding

    2008 2009
    0.0 0.0
    0.0 0.0

    $0.00 $0.00
    $0.00 $0.00

    $0.00 $0.00

    $0.00 $0.00

    #DIV/0! #DIV/0!

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