Rosewood Hotels & Resorts: Branding to increase profitability and lifetime value
BACKGROUND
Rosewood Hotels and Resorts is a private hotel management company established in 1979 by the Caroline Rose Hunt Trust Estate. It is a well known company in the luxury hotels market which owns 17 iconic properties in 7 different countries (http://www.rosewoodhotels.com/en/the_company/). The first hotel was The Mansion on Turtle Creek in Dallas; afterwards the company expanded its “collection of unique properties” all over the world by converting and repositioning existing sites and by building up brand new luxury hotels. The distinctive feature of this collection is the so called “A sense of Place”. In fact in a Rosewood hotel every single …show more content…
It equals the present value of the difference between the contribution margin from a customer and the costs of acquiring and retaining the customer, taking into consideration the customer lifetime expectancy. Thanks to a corporate branding strategy Rosewood Hotels and Resorts will be able to increase the number of multiproperty cross-selling rate from 5% to 10%, to raise the number of visits per year per guest from 1.2 to 1.3 and therefore to boost the number of repeat guests. This will cause a significant increase in the revenues of the company . On the other hand in order for the corporate branding strategy to be implemented the company will necessarily have to invest an additional $1 million in operations and marketing expenses, causing the average marketing costs per guest to increase from $130 to $138.70. Eventually the economic impact of this strategy will be positive though: the CLV with the new strategy is actually $84.47 greater than before.
CONCLUSIONS AND SUGGESTIONS
From my point of view the corporate branding strategy is more effective as the competition in the luxury hotels market is becoming more and more intense. In fact the Rosewood brand is a valuable asset that the firm already has but it is note exploiting in the right way. On the whole I believe that the greater advantage of the corporate branding strategy is the ability to extend the benefits of branding, that the organization is already experiencing in