Rosewood

Rosewood Hotels & Resorts is a private hotel management company with a collection of twelve boutique hotels across North America, Caribbean, Latin America, Middle East, and Asia Pacific with plans for a thirty-three percent growth within the next three years. Each luxury hotel is known for its own one-ofвЂ"a-kind brand, and the reflection of the local character and culture in its’ architectural details, interiors and culinary concepts. Rosewood’s current brand marketing strategy has been to place the Rosewood name secondary to the individual property brand which has resulted in a lack of market awareness of the Rosewood brand. Guests who have stayed at Rosewood properties were aware only of the property brand and not of the corporate brand.

Given this lack of brand awareness, Rosewood has not been able to capitalize on repeat and multi-property guest stays in the way that a corporate-branded hotel with clear brand recognition such as that of Ritz Carlton or Four Seasons. Rosewood’s leadership saw an opportunity to increase their market share in the number of repeat guests and multi-property guests. Two possible approaches were considered: a frequent stay program вЂ" an idea which they quickly rejected; and a corporate branding approach вЂ" which they believed would encourage both repeat guest stays and multi-property guest stays.

The corporate branding approach would require a marketing and operations investment of one million dollars per year. To assess the long term financial implications of the required investment to implement the corporate branding strategy, Rosewood needs to compare the forecasted Customer Life Time Value for six years with and without the branding campaign

(Appendix A). The cumulative six-year-forecasted CLTV with the corporate branding campaign is $109.5 million compared to that without the branding campaign of $86.3 million; yielding a net gain of $23.2 million dollars. Working with the constraint that the only cost information we have is aggregate and is averaged across the number of unique guests, we are taking a conservative approach and including the new guest acquisition cost in the cost per unique guest. We are also assuming the average number of visits per year per guest remains at 1.3 from year one through year six and the number of multi-property guests and repeat guests also remain constant. With these assumptions, Rosewood can expect to realize a 27% greater cumulative CLTV with the corporate branding campaign than without. The actual gain however, is likely to be greater in magnitude as a successful branding campaign will result in retention rate growth and thus higher multi-property and repeat guests over time.

Given the CLTV analysis, Rosewood Hotels should move forward with the corporate brand marketing strategy. However, building brand awareness and recognition will first require that Rosewood define a clear brand identity.

The Strategic Marketing Solutions Report revealed Rosewood had a lack of brand identity with guests, travel agents and employees. Therefore, it will be crucial to the overall success of the corporate branding campaign for Rosewood to invest in learning how their guests and employees define the Rosewood brand culture and brand value, and then draw from that to develop the corporate brand identity. Without this assessment of guest and employee views, any brand identity Rosewood leadership develops will be meaningless. They will also need to ensure that the corporate brand identity continues to allow for individual property “flavor” as this is what sets them apart from the Ritz’ and Four Seasons’ of the world and is their differential advantage.

Secondly, Rosewood will need to contend with the potential lack of buy-in from hotel managers, employees, and even guests. Managers’ and employees’ concerns about loss of autonomy with a corporate brand structure will need to be addressed; they will need to be empowered to continue to anticipate and meet guest needs; and they will need to be educated on other Rosewood properties so they can promote those properties as well as their own. Rosewood