Rosewood

Rosewood Hotels & Resorts, a small luxury private hotel management firm running a collection of 12 individually branded hotels and resorts in multiple countries, was wondering how to foster customer retention and loyalty and capture the maximum value from its 115,000 guests. Rosewood had always allowed each hotel to stand as its own individual brand, with the Rosewood name presented as a muted sub-brand, if at all. Now Rosewood's new leadership was contemplating whether the firm should significantly increase the prominence of the corporate identity, making Rosewood a corporate brand. The main challenge that Rosewood's executives face is to assess whether the potential economic benefits from increased guest retention can outweigh the $1,000,000 marketing investment needed to implement the corporate branding strategy. The central focus is a quantitative assignment that asks students to calculate how customer lifetime value would be affected by a shift from individual branding to corporate branding.

Learning Objective

To understand the concept of customer lifetime value (CLTV) and the importance of maximizing a customer's lifetime value for the firm; learn the components of customer lifetime value and how each component can be estimated; calculate customer lifetime value based on a combination of financial and non-financial data; and explore risks and opportunities associated with corporate branding vs. the branding of individual products.

Problem Statement

The private hotel management company, Rosewood Hotels & Resorts (RW) had built a remarkable global reputation with its portfolio of 12 iconic luxury hotels. Every hotel is its own brand and the Rosewood brand is not aggressively promoted to the customers, thus the brand awareness for the Rosewood brand is low [Exhibit 7]. With the new CEO and president, Joe Scott, and the vice president of marketing and sales, Robert Boulogne, new plans for growth of RW were considered. As a potential boost, the idea of...