Rosewood Case Study

ROSEWOOD – 72618168

1)How would a corporate branding strategy relate to “The Four Things a Service Business Must get Right” framework. Feel free to use other Operations concepts if they are relevant?

The “Four things a service business must get right” framework appropriately lends itself to corporate branding strategy. In Rosewood’s context, it is important to ensure perfect product and service performance consistency to deliver an impactful corporate brand. Rosewood’s offering is defined by its unique properties customized as per the given location which helped it differentiate itself from the competitors. It is important that Rosewood subtly fuses the corporate brand and it does not kill the strong individual brand image that its properties command. Investing in a corporate branding strategy can lead to a rise in multi property guest stays providing a viable funding mechanism. Employing process improvement tools such as Lean and process mapping and using a central reservation system (CRS) can lead to cheaper and better customer service and can help increase in CLTV for rosewood. Better guest recognition capabilities and cross property usage can further help increase average revenue per customer. It is evident that many hotel managers are apprehensive about the corporate brand strategy fearing the loss of individual brand and autonomy, however Rosewood can address this concern by discussing the long-term benefits of increased CLTV for the managers, their teams, and the property itself. Rosewood should also invest in training its employees across all locations for smooth enactment of the corporate brand strategy. Finally, focusing on the customer management system, Rosewood should ensure that it does not dither its loyal customers by insistent brand alterations. A large portion of Rosewood’s customers have an emotional bond with individual properties and a conspicuous change in brand strategy may result in loss of these customers. Hence Rosewood should optimize its soft branding initiatives and work closely with travel agents to push the brand and to make certain that it minimizes the effect of change. Effectively integrating these four elements can help Rosewood reduce variability and better predict customer behavior and preferences by aggregating data from all locations.

2) Using info from the case and exhibit 8 as a guide, calculate Customer Lifetime Value for six years with and without Rosewood corporate brand

Please refer to Appendices

3) Is the difference in CLV with vs. without corporate branding significant/meaningful? Is it worth pursuing?

Yes, the difference in CLTV with vs. without corporate branding is significant and meaningful.  The case suggests that even though a few properties enjoyed up to 40% return visits from guests, multi-property stay guests were limited to a mere 5% where as the industry standard for corporate branded hotels was 10%-15%.  Individual brand strategy kept Rosewood on the lower end of the scale and presented an opportunity to increase cross property usage.

As per the analysis (Appendices) the CLTV with Corporate Brand Strategy is $ 461.09 whereas without that it is 378.49. The increase in CLTV per customer is $82.60 translating to $ 9499480 for total number of unique guests. The gain is significant even after factoring in a spend of $1000000 each year and discounting the value by 8% annually.  The analysis further confirms that investment in service quality can increase repeat usage, margins, and profits.

4) Would you implement a corporate branding strategy? Why or why not?

Yes, I recommend that Corporate brand strategy be implemented. Foremost is the CLTV analysis (Appendices) which provides substantial data in favor of Corporate branding strategy. The investment in corporate strategy provides better CLTV which outweighs the marketing and operations cost associated with it, making it a viable choice.  Only 5% of rosewood guests had stayed in more than one property at Rosewood versus corporate branded hotels which had 10%-15% multi-property usage rates. It is always cheaper to retain a customer than to acquire a new one. Loyalty helps generate more profit each period from that customer. Besides the quantitative analysis, it can be inferred that Rosewood has untapped brand value which, if efficiently developed, could translate in to higher loyalty levels. Individual brand strategy focuses only on a subset of Luxury market and does not leverage the network of Rosewood hotels which drastically limits its market penetration. The case also suggests that a large part of luxury segment is drawn to hotels with a corporate brand as it offers more options across different geographical locations and assures consistency owing to presence of a corporate brand.  The case points towards the lack of awareness, clarity, and enthusiasm about Rosewood brand amongst the guests, employees, and travel agents. However, it also suggests that if communicated properly, Rosewood as a brand does have a positive effective on guests’ preferences. There is an evident opportunity that Rosewood has not yet seized and an information gap which needs to filled to fully utilize the potential of Rosewood Brand. The company has also recently shifted to a central reservation system to improve its guest recognition capabilities and presence of a corporate brand will augment the utility of this tool as it will enable the Rosewood to deliver consistent and quality service across all locations and by using the data to drive cross selling.