Rosewood

Bhavini Bhakta

MGMT 582 – Marketing Strategy

Rosewood Hotels & Resorts Case Analysis

1. Estimate customer lifetime value under the current strategy and under the proposed strategy.

| Without RosewoodBranding (2003) | With RosewoodBranding |

Total number of unique guests | 115,000 | 115,000 |

Average daily spending | $750 | $750 |

Number of days average guest stays | 2 | 2 |

Average gross margin per room | 32% | 32% |

Average number of visits per year per guest | 1.2 | 1.3 |

Average marketing expense per guest | $130 | $139a |

Average new guest acquisition expense | $150 | $150 |

Total number of repeat guests | 19,169 | 24,919b |

Total number of multi-property stay guests | 5,750 | 11,500c |

Average guest retention rate | 16.67% | 21.67%d |

Average gross profit per guest | $470e | $461f |

Average gross profit (based on the number of repeat guests) | $2,702,500g | $5,301,500h |

a [(115,000*130) + $1,000,000]/115,000 = 138.7

b 19,169 + 5,750 = 24,919

c 115,000*.10% = 11,500

d 24,919/115,000 = 21.67%

e $750-($130+$150) = $470

f $750-($139+$150) = $461

g 5,750* $470 = $2,702,500

h 11,500* $461 = $5,301,500

2. Why is Rosewood considering a new branding strategy?

Rosewood Hotels and Resorts (Rosewood) began operations with a “collection growth” strategy that was established to accomplish the following;

1.“Convert existing…hotels with strong brand equity which needed to be re-positioned and re-launched with professional management”. 2.“Help developers…create the next generation of luxury hotels and resorts…and in doing so create brand equity in the property itself”. This strategy led to a collection of distinctly branded properties that reflected the character and charm of the location in which they were built. Customers developed strong emotional connections to individual properties where they expected a certain experience that was unique to that property. This branding strategy was based on “A Sense of Place”...