Rosewood Hotels and Resorts:Branding to increase Customer Profitability and life timeValueHarvard Business School Case

What is Rosewood?Where is it ?

• Established in 1979, Rosewood Hotels and Resorts is a privately held, ultra-luxury hotel management company based in Dallas, Texas.

• With more than 20 properties around the world, including the U.S., England, Mexico, Saudi Arabia, Dubai and the Caribbean, Rosewood is a recognized leader in the resort industry

• It has 12 hotels worldwide and 1513 rooms• Room Tariffs ranging from $120 to $9000• John Scott is the new president and CEO• Robert Boulogne is VP of sales and marketing

Robert Boulogne John

Scott

Rosewood’s Executive Officers as of 2003

• Caroline Rose Hunt, Honorary Chairman

• Philip Maritz, Chairman of the Board• John Scott, President and Chief

Executive Officer• Robert Boulogne, Chief Operating

Officer• James McBride, Managing Director of

The Carlyle, New York

What Is The present

situation?(SITUATION ANALYSIS)

SITUATION ANALYSIS.Executed through SWOT Analysis. We

will look through the • Strengths• Weakness• Opportunites• Threats

STRENGTHS(1/3)• Monetary assistance provided• Global positioning with one kind of its’s

properties• Strong emotional bonds through current

successful hotels• Unique competitive advantage and

differentiation versus competitors-”Sense of Place”

• Global Flexible data warehouse system• RevPAR is 17.62% higher(exhibit 5) than the

luxury hotel market average(look at the next slide(strengths(2/4)).

STRENGTHS (2/3) :THE CARLYLE •Impressive Icon•Rich history•One third of the carlyle rooms bought by private owners-forming coop

STRENGTHS(3/3)

WEAKNESS(1/2)• Tax structure• Future profitability• Investments in research and development  • 83.9% fewer rooms than market average in

luxury hotel industry• Inconsistent view of corporate culture across

company• Internal resistance in changing corporate

branding strategy• Low brand recognition and low recall ability of

guests• Mixed branding of signals-inconsistent use of

rosewood logo

WEAKNESS(2/2)

Opportunities(1/2)• Growth rates and profitability• New acquisitions• Growing economy• Implementing a corporate branding strategy• Cross property usage• Brand wide performance development • Implementing Reward scheme for loyal

customers• Growing trend in seeking more experiential

hotels

Opportunities(2/2)Type of Reward Immediate Reward Delayed RewardDirectly supports the Product’s Value Proposition

Retailer or Brand Manufacturer promotions(Price promotions)

Airline Frequent-Flyer Cube Coupons and tokens(GM Card)

Other indirect type of rewards

Competitions and lotteries(Instant Scratches)

Multiproduct Frequent Buyer Clubs (Fly Buys)

Threats(1/2)• Increase in labor costs• External business risks • Tough competitors• Increasing rates of interest• Customers are increasingly

connecting with Corporate

THREATS(2/2)• Tough competition from corporate as well

as individual brands

• Corporate brands: St.Regis,One and

Only,Regent,Peninsula,Raffles,Four Seasons,Ritz-Carlton,Fairmont,Park Hyatt,Mandarin Oriental (check the next slide).

• Individual brands: Orient Express,Rock Resort,Rocco

Forte,Auberge Resorts Collection,Dorchester Collection

What is the problem? Rosewood brand was muted, not

very well known but it was not clear what is the best corporate branding strategy without destroying the value of each individually branded hotel and loosing a customer. A new branding strategy proposing an increased customer profitability and lifetime value is needed.

What needs to Change?

• There is a need of innovation and transition in the brand. If you don’t, it will be lost in the clutters of the competitive environment.

• Executive Team is looking forward to elevate and boost up Rosewood.

• Brand Audit was done and opinion of customers, travel agents and employees were taken

Goals• Building Strong Brand Equity• Create Rosewood Junkies• Increase Connection between

Rosewood properties• Increase cross property usage

from 5% to 10%

Strategies

Target Market(1/2)• Customers:

Wealthy families Business travellers,Private Owners

• Collaborators: The main collaborators are travel agencies and travel agents promoting the hotels. These are the guys recommending to the customer , hotel and are very important in communicating the competitive advantage and value added to a customer. Rosewood employees also act as collaborators.

TARGET MARKET(2/2)• Competion: Compare Rosewood % property growth 1996-2003

it is 15% above the average of corporate branded properties and 20% below the average of individually branded ones. This number is pretty high taking into consideration that within the sector of individually branded hotels. Rosewood is the second biggest in a number of hotels.

• Context: Within the industry the number of guests enrolled in frequent-stay programs grew by nearly 13%. This is a non-explored opportunity for Rosewood and some other hotel companies. A brand-wide customer lifetime value was becoming an important issue and within this context management of Rosewood felt a need for a change in the branding strategy as competitors were taking long time customer loyalty improving initiatives threatening Rosewood to loose some opportunities (customers) in a long term.

Tactics• Products:Packaging and hotel attributes include

should both the name of individual hotel and corporate brand.

• Price.: No big changes in pricing policy are recommended.

• Place:. All Rosewood hotels globally and offices of the collaborators such as travel agents. Also if there is enough budget advertisement in media (local and global) would be recommended.

• Incentives : An incentive system to increase overall Rosewood profitability for managers of individual hotels should be established .

• Promotion: Discount rates for current guests going to another Rosewood hotel should be recommended.

Implementation

• From the previous slide it is calculated that that the customer lifetime value(CLTV) is higher for corporate branding.

• Therefore its logical to go for corporate branding

CORPORATE BRANDING

• Collective experience

• Consistent service• Better brand recognition• High customer loyalty

• Internal resistance• Increased short

term marketing costs

• Advertisements

• E-advertizing• Target tv and

magazines

• Travel packages

• Joint events

• Designer logo• H/L profile

amenities

• Uniqueness “Sense of place”

BRAND AWARENESS

BRAND LOYALTY

BRAND ASSOCIATIO

NBRAND

EQUALITY

CONTROL• The key performance indicators

will be the %increase in cross-property usage and the number of loyal costumers acquired per year. Tracking customer behavior and adjusting marketing tactics is very important

SUMMARYWe have seen:• Executive summary• Situation Analysis• Problem faced• Goal• Strategy• Tactics• Implementation• Control

• Created by Tejaswini Sandapolla, NIT Surat during a marketing internship under PROF.SAMEER MATHUR,IIM LUCKNOW