Rosewood Hotels and Resorts

ASSIGNMENT SUBMISSION FORM
Course Name: MKTS
Assignment Title: Group Case Analysis: Rosewood Hotels & Resorts
Submitted by:
PG ID
61920482 Rishika Khandelwal
61920015 Savyasachi Pandit
61920038 Abhinav Tiwari
61920282 Aakanchha .
61920422 Saikrishna Srinivas Darbha
61920464 Trishta Vardhan
61920842 Kushal Dalal
Rosewood Hotels and Resorts
Purpose/Key Issues
Rosewood hotels were so distinctive from each other that they thrived on their own accord. They
were more widely known as standalone hotels rather as a part of a corporate chain. In 2004,
Rosewood’s new president Robert Boulogne, wanted to create a brand value from their hotels so
that they could cross-sell their properties to recurring and satisfied customers. They wanted to
create an ecosystem when consumers would exclusively seek out Rosewood hotels.
Rosewood’s current value was “muted”. It was not widely advertised in mainstream media and
was known as a corporate name only by the hotel industries professions. Rosewood properties
such as The Mansion in Dallas, and The Carlyle in New York were prime properties; the team had
to ensure that the change in branding strategy did not confuse its current customers or dilute the
distinctiveness of the hotels.
Analysis (Qualitative Comparison)

Individual Brand
Rosewood’s uniqueness was in its ability to cater to localized architecture, culture, trends,
aesthetics, food tastes, and needs. The company did not standardize it’s offering across cities and
ensure each hotel stood in its area. Rosewood conventionally adopted the philosophy of ‘A sense
of place’ where individual hotels could project their own style, brand, uniqueness and local
character in order to give its customers a unique experience at each of its properties. None of its
properties were similar in terms of the experience and value to its customers and this is what set
them apart from their competition. These individual hotels like ‘The Carlyle’ enjoyed a very strong
brand association among its patrons. This was demonstrated by the fact that 40% of its clientele
were repeat customers. A great deal of flexibility was developed in the hotels to reinforce the
values, which were unique and resonated well with its clientele, in the service. This helped them
carve out a niche in the luxury hotel industry by rebranding and repositioning existing properties
with some brand equity.
Hence, the ‘House of Brands’ model worked for them better than the ‘Branded House’ model. Had
they worked under a common hotel chain name, consumers would have expected similar services,
food menus, amenities, and room offerings. That would have not let them excel at their strategy.
Another advantage of this strategy was that a negative feedback to one its hotels did not affect the
reputation of another hotel.
However, individual branding came at a cost. Since the Rosewood branding was always very
subtle, customers failed to take notice of it and did not associate with it. As a result, Rosewood
brand had low brand recall or recognition among its customers. Its patrons loved the ‘one of a
kind’ experience at their hotels but they developed grater brand association or awareness/recall of
competitor brands like Four Seasons etc. Individual branding helped them capture a small share or
a niche market which sought unique experiences. However, in this process they missed out on a
huge chunk of the market which would have helped them capture the bulk of the market, had they
developed a big brand with greater recall. The increasing competition in the luxury hotels market
was easier to fight with a branded name than being a standalone model; especially to acquire new
consumers. This in turn limited their growth prospects.
Corporate Brand
Corporate brand helps create a bigger umbrella brand which has better brand recall and
recognition. Only 5% of Rosewood’s customers stay in more than one of its properties whereas
the same is higher for a corporate brand. It is much easier for a customer to associate with multiple
properties in a brand. The consumer experience in different properties is made uniform in order to
create a standard value proposition across all its hotels. This makes it easier for a consumer to have
a fixed preference at different locations that they visit.
On the other hand, due to a corporate brand, Rosewood risks losing the value that it has been
building for the past few years. For hotels like ‘The Carlyle’ including a corporate brand might
lead to brand dilution. It loses the unique experience of creating a world around the local
environment and surroundings, that it provides its customers and hence might lose the patrons who
value this experience. It is very difficult for a brand with such a diverse portfolio of hotels to
integrate its services and make it uniform across the board. In addition, since Rosewood owns a
smaller set of hotels it would be difficult to introduce a frequent stay customer program as it does
not have a wide variety of locations where its customers can stay.
Quantitative Analysis
CLV without corporate branding - $378
CLV with corporate branding - $461
Switching to corporate branding increases the CLV from $378 to $461. Hence, Rosewood
should move towards corporate branding.
Details Without With
Corporate Corporate
Branding Branding
Total Number of Unique Guests 115,000 115,000

Average Daily Spend $750.00 $750.00
Number of Days Average Guest Stays per Stay 2.0 2.0
Average Gross Margin per Room 32% 32%
Average Number of Visits per Year per Guest 1.2 1.3
Average Marketing Expense per Guest (system-wide) $130.00 $138.69
Average New Guest Acquisition Expense (system- $150.00 $150.00
wide)
Total Number of Repeat Guests 19169 24919
Of which: Total number of multiproperty stay 5750 11500
guests
Average Guest Retention Rate 16.67% 21.67%
Additional Costs Required per annum $1,000,000
Revenue per Customer $1,800.00 $1,950
Average gross profit per customer $576.00 $624
Without Corporate Branding

Years 0 1 2 3 4 5 6
Gross profit per customer $610.56 $647.19 $686.03 $727.19 $770.82 $817.07
Acquisition expense per customer -$150.00
Marketing expense per customer $133.90 $137.92 $142.05 $146.32 $150.71 $155.23
Net profit per customer $476.66 $509.27 $543.98 $580.87 $620.11 $661.84
Retention factor 1 16.67% 2.78% 0.46% 0.08% 0.01%

Discount factor 8% 0.926 0.857 0.794 0.735 0.681 0.63
NPV ($150) $441.35 $72.78 $12.00 $1.98 $0.33 $0.05
With Corporate Branding

Years 0 1 2 3 4 5 6
Gross profit per customer $661.44 $701.13 $743.19 $787.79 $835.05 $885.16
Acquisition expense per customer -$150.00
Marketing expense per customer $142.85 $147.14 $151.55 $156.10 $160.78 $165.60
Net profit per customer $518.59 $553.99 $591.64 $631.69 $674.27 $719.56
Retention factor 1 21.67% 4.70% 1.02% 0.22% 0.05%

Discount factor 8% 0.926 0.857 0.794 0.735 0.681 0.63
NPV ($150) $480.17 $102.92 $22.05 $4.72 $1.01 $0.22
Recommendations
• To capture a greater share of the luxury hotel segment, Rosewood needs to create a
corporate brand with which people can associate.
• Retaining some of the unique characteristics of its hotels, Rosewood can standardize some
of the services which it offers across all the properties in order to promise its customers a
unique experience yet meeting all the basic expectations. This will help its customers to
consider Rosewood properties when they go to different places.
• Extend the Rosewood hallmark branding to different items like mugs, towels, toiletries,
pens etc. This would help in the subconscious marketing of the brand and increase the
brand recall in the consumers mind.
• Based on its guest recognition service database, all its regular patrons or frequent staying
patrons can be provided specialized/addon services across all its properties to increase the
incidence rates at other properties. This can be done by recommending them all the
property offerings at different places and the service package available for regular patrons.
This would help create a segment of ‘Rosewood Junkies’ who look forward to stay at
different Rosewood properties.
• Developing a program where the repeat guests can get a more personalized service catering
to their specific needs and help create the unique value proposition for them which cannot
be imitated by competitors.
• In addition, switching to corporate branding increases the CLV from $378 to $461. Hence,
Rosewood should move towards corporate branding.

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ASSIGNMENT SUBMISSION FORM

Course Name: MKTS

Assignment Title: Group Case Analysis: Rosewood Hotels & Resorts

Analysis (Qualitative Comparison)

Total Number of Unique Guests 115,000 115,000

Without Corporate Branding

Retention factor 1 16.67% 2.78% 0.46% 0.08% 0.01%

With Corporate Branding

Retention factor 1 21.67% 4.70% 1.02% 0.22% 0.05%

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