Rosewood Hotels & Resorts: Branding to increase customer profitability and Lifetime Value ||...

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Transcript of Rosewood Hotels & Resorts: Branding to increase customer profitability and Lifetime Value ||...

  • Rosewood Hotels & Resorts: Branding to increase customer profitability and Lifetime Value

    Harvard Business School Case

  • What is Rosewood?

    Who is John Scott?

  • What is Rosewood

    Hotels & Resort Company

    13 different properties spread across the globe

    Known for great properties, with each of its property itself as a brand

  • Key Players

    John Scott

    Robert Boulogne

    President and CEO

    Vice President of Sales & Marketing

  • Current Scenario

  • Situation Analysis Owns very highly valued properties and resorts

    Customers loves the individual properties and brands but fail to recognise rosewood.

    New branding strategy for higher customer retention rate and multi property visit rate

    Need to evaluate the new strategy and analyse the future of the company, with and without the new strategy

  • Why study this case?

  • Objective of this case (1/3)

    To analyse the new strategy and discuss its pros and cons for the future of Rosewood group.

    To develop an understanding of collection strategy and corporate strategy

  • Objective of this case (2/3)

    Understanding concerns of Loyal Customers and Resort Managers

  • Objective of this case (3/3)

    Evaluate the profitability in long term by evaluating profits generated versus costs incurred

    Understanding the role of decision on brand equity

  • Three Issues to analyse and understand

  • Three Issues

    Analysing behaviour and POV of Loyal Consumers and Managers

    1

  • Three Issues

    Revisits and Multi-property visits

    2

  • Three Issues

    Analysing Customer Lifetime Value and evaluating the profits of corporate strategy

    3

  • Behaviour and Point of View of Loyal Consumers

    and Managers

  • History

    Selling point : One of a kind properties, Point of Differentiation

    Hotels with brand name greater than Rosewood itself

  • Consumers

    Reluctant to go towards bigger brand

    Feeling of exclusiveness

    Emotional attachment towards brand name

  • Robert Boulogne

    Hotel Managers are more inclined to promote just their own individual hotel brands,

    particularly if they have a strong brand

    Managers

  • Bottom Line

    It is not in the best interest of Managers and Loyal Consumers to directly switch to corporate branding strategy and hence certain modifications are required.

  • Revisits and Multi-property Visits

  • John Scott

    While guests were seeking a unique Rosewood property experience and product, they were not

    making the connection between Rosewood properties and were increasingly identifying with

    other strong hotel brands

    No identification

  • Limited Market

    People want Brands

    Smal sophisticated segment value exclusiveness

  • Testimonies of Travel Agents

    Clients are not aware of it. They do not come to me asking for Rosewood properties

    In Dallas, yes it definitely helps

    Is name Rosewood meaningful in encouraging your clients?

  • Strong Individual Brand/Property

    Recognition

    Rosewood namerecognition is low

  • Effect of corporate branding(1/2)

    Aman Junkies take pride in collecting the Aman Experience

    Preserves uniqueness and at the same time help customers develop connection b/w different properties

    More than 10,000 repeat guests with only 500 rooms.

    Aman Resorts Case

  • Effect of corporate branding(2/2)

    2x times better

    Multi-property visits

  • Bottom Line

    Corporate Strategy is the way ahead, it helps us expand Markets, and we can leverage on our existing property brand names.

    New properties (Acqualina, Tuanovo Bay, La Solana and Laguna Kai) can leverage on brand names of The Carlye' and The Mansion

  • Customer Lifetime Value

  • Analysing CLTV for next 6 years

  • CLTV

    Reluctant to go towards bigger brand

    Feeling of exclusiveness

    Emotional attachment towards brand name

    $139

    24,91911,500

    21.67%$90 $81

    $159

  • Analysis (1/2)

    We observe that the overall guest retention rate improved from 16.67% to 21.67%

    Multi property visits doubled

  • Analysis (2/2)

    Although the net profit per guest is reduced, it might be compensated by the retention rate of old guests

  • CLTV (1/2)Years 0 1 2 3 4 5 6

    Gross profit per guest

    US$240.00 US$259.20 US$279.94 US$302.33 US$326.52 US$352.64 US$380.85

    Acquisition expense per new guest

    US$150.00 US$153.90 US$157.92 US$162.05 US$166.32 US$170.71 US$175.23

    Marketing Expense per guest

    US$130.00 US$133.90 US$137.92 US$142.05 US$146.32 US$150.71 US$155.23

    Net Profit per guest

    US$90.00 US$105.30 US$122.02 US$140.28 US$160.20 US$181.93 US$205.62

    Churn Factor

    83.33 83.33 83.33 83.33 83.33 83.33 83.33

    Discount Factor

    8 8 8 8 8 8 8

    Net Present Value

    US$0.14 US$0.16 US$0.18 US$0.21 US$0.24 US$0.27 US$0.31

    Customer LTV

    US$0.14 US$0.29 US$0.48 US$0.69 US$0.93 US$1.20 US$1.51

    Without Rosewood Branding

  • CLTV (2/2)With Rosewood Branding

    Years 0 1 2 3 4 5 6

    Gross profit per guest

    US$240.00 US$259.20 US$279.94 US$302.33 US$326.52 US$352.64 US$380.85

    Acquisition expense per new guest

    US$159.00 US$163.17 US$167.47 US$171.89 US$176.45 US$181.14 US$185.97

    Marketing Expense per guest

    US$139.00 US$143.17 US$147.47 US$151.89 US$156.45 US$161.14 US$165.97

    Net Profit per guest

    US$81.00 US$96.03 US$112.47 US$130.44 US$150.07 US$171.50 US$194.88

    Churn Factor

    78.33 78.33 78.33 78.33 78.33 78.33 78.33

    Discount Factor

    8 8 8 8 8 8 8

    Net Present Value

    US$0.13 US$0.15 US$0.18 US$0.21 US$0.24 US$0.27 US$0.31

    Customer LTV

    US$0.13 US$0.28 US$0.46 US$0.67 US$0.91 US$1.18 US$1.49

  • Bottom Line

    The increase in rate of Marketing expenses is too high and even the retention rate is not able to counter it and we obtain a lower CLTV for corporate strategy.

    Although the assumption of same no. of unique guest may not hold valid, specially with newer properties coming up, the visits will be higher for corporate strategy.

  • DisclaimerCreated by Parakh Agarwal, IIT

    Delhi.During Marketing Internship under Prof. Sameer Mathur