2018 04 05 - Rosewood Hotels - Vishwas Sankhe

Rosewood Hotels & Resorts
Branding to Increase Customer Profitability and Lifetime Value
Name – Vishwas Sankhe
Student ID – 118136175
Course Code – MKM805 MMS
Date – 4th April, 2018
E-mail ID: vsankhe@myseneca.ca

What strategic measures can Rosewood take in order to effectively generate brand awareness while preserving the uniqueness and individuality
of Rosewood properties?
2/8/2019 MKM805MMS - ROSEWOOD HOTEL & RESORTS 2
Category:
• The category consisted of luxury hotels which were either corporate or individually
branded
• The category is made up with the “canned and cookie cutter” brand model
• Overall growth for the corporate branded hotels was 85% vs. individually
branded properties which were growing at 120%
Insights:
Category: Though cluttered the category shows possible areas of growth for both corporate
and individually branded hotels
Competition: By utilizing an umbrella branding approach the corporate brands were turning
out to be an immediate threat to Rosewood
Channel: Travel agents were key to retain for Rosewood as influencers since their brand
awareness was low and that was the only point of the information where the consumer
might learn about Rosewood
Company: While the “sense of place” approach got Rosewood access to the audience they
needed to adapt a branding strategy which would enable the consumer to associate our
properties with our mother brand
Consumer: Revisits and multi-property visits were low in the category due to a high expense
per visit and consumers being loyal to properties and the level of service provided to them
with added benefits
Competition:
• The competition in the luxury hotel market was intense
• Rosewood is underestimating the power of corporate brands such as Ritz Carlton,
Four Seasons, St. Regis, One & Only and Mandarin Oriental Hotels
• While Rosewood had a multi-property cross-selling rate of 5%-10% the corporate
branded hotels enjoyed 10%-15% cross-property usage.
Consumer:
- While the consumers wanted the unique Rosewood experience they weren’t making the
connection between Rosewood and its properties
- The consumers loyalty is fostered by additional customized benefits offered by the hotels
and their enrolment in the frequent-stay program has grown by 12% in 2003
- Only 40% of the consumers revisited the property they stayed at which was typical in the
luxury hotel segment
Company:
• Rosewood took pride in owning properties which were created with a “sense of
place” philosophy i.e. each property seeks to capture what’s unique about the
location
• The brand Rosewood wasn’t heavily present across amenities in the properties
• The approach of emphasizing on individual properties isn’t working as effectively
for Rosewood as they thought it would
Channel:
• The key selling point in the category were travel agents
• They played an important role as influencers when it came to recommending a
place to stay for the consumers
• Brand awareness was dependent on them since they acted as the source of
information
Takeaway: Basis the insights it’s critical for Rosewood to assess every parameter affecting
its brand awareness and the role they play in the key marketing decisions for the brand.

Rosewood currently needs to determine their 3 high level decisions which show us their singularity and how it affects the strategic directions
which they can possibly take to achieve their goal of spreading brand awareness and all of these decisions are based on consumers and their
behavior.
In order to derive the 3 high level decisions which Rosewood needs to make we need to
asses...
Category Rosewoods current collection strategy while being different is limiting
them from cross-selling and thereby, expanding further in the category.
Competition The luxury hotel market is affected by a lesser number of cross-property
guests and Rosewood is below market average when it comes to that part
Channel The channel i.e. the travel agent currently determines Rosewoods
awareness in the category basis their recommendation since they decide
whether to mention it or not
Company The unique “sense of place” approach sets us apart but fails when it
comes to the consumer relating back to Rosewood as a brand which
provides it
Consumer The consumer seeks a customized/unique experience since they pay for
it and it’s key for Rosewood properties to deliver the same which it has
been managing so far
Therefore, Rosewoods core competencies can be defined as –
a) The “Sense of place” approach – Deliver an experience
b) Unique look and feel for every property
c) A staff catered to delivering an experience
Targeting: The 3 key target audiences for Rosewood to look into are –
a) Corporate/Frequent travelers who are either out on business trips or vacations and are
seeking the best possible venue for such a trip/occasion
b) International travelers who are looking at experiencing the local culture of the area/place
they’re visiting.
c) Travel agents who should be recommending Rosewood properties to anyone who comes
to them with a demand of “seeking an experience”
Therefore, Rosewoods competitive advantage can be defined as –
a) The “Sense of place” approach which allows them to differentiate themselves from the
competitors in a category with intense competition.
Therefore, Rosewoods singularity can be defined as –
a) The job to be done by the “Sense of place” approach is delivering an experience via.
service and staff which the consumer is seeking when they pay a price to travel and stay at a
Rosewood property.
The key objectives for Rosewood are:
- Increase cross-property visits amongst Rosewood properties
- Increase revisits to Rosewood properties
- Provide a quality of service which differentiates Rosewood from it’s competitors at an
experience level
Takeaway: The consumers are the core factor affecting Rosewoods key marketing decisions and with our singularity now in place we need to determine which factors might affect it and therefore,
how can we deal with it in a most effective manner.

In order to achieve brand awareness by leveraging the consumers demand for an experience and our unique offering of “sense of place” we can
consider 3 approaches for the long run viz. to run with name branding, to run without corporate branding or to simply rename every property as
Rosewood across locations i.e. corporate branding.
Competitive Rivalry: There are established competitors
in the category who we’ve been competing with over
the years and their branding approach has allowed them
to exploit high awareness (Possible Threat)
Suppliers: The travel agent who if didn’t
recommend our brand or wasn’t aware of it can
cause us a severe dent in spreading awareness
(Possible threat)
Buyer Power: Our occupancy rate vs. the category has grown in-spite
of raising the prices which can be a key pointer for us to leverage
further and indicates the consumer will pay for the experience we
provide (Possible Opportunity)
Consumer Insight: “At least 50% know the name
Rosewood, but only because I educate them on
the brand.
Consumer Insight: “Yes, I once tried one or two hotels, then my travel
agent started telling me if a hotel was Rosewood or not.”
Consumer Insight: “They may know the name, but there
are no positive connotations like there are for Four
Seasons-maybe 60% know the actual name.”
Singularity: “Sense of place” Singularity: “Sense of place” Singularity: “Sense of place”
Alternative 2: To run with name branding and re-
launch the whole line of hotels & resorts as
*property name* by Rosewood.
Alternative 1: To run without corporate branding
and continue the way we’re functioning right
now based on the current awareness.
Alternative 3: Rename the complete chain of
properties as simply Rosewood via. corporate
branding and get rid of their individual identities
without making any changes in
infrastructure/look and feel.
Takeaway: The alternatives are based on the factors affecting Rosewood as threats/opportunities followed by consumer insights derived from consumer quotes and then basing them on the
singularity i.e. the job to be done for Rosewood.

Following our current branding approach which focuses more on individual properties and evaluating its effectiveness based on parameters
which affect Rosewood in the long-term will help us determine the viability of the option.
To run the way we’re currently running
Qualitative Criteria Possible Effects
Positioning (Unbranded) This won’t affect the way we currently position
ourselves since we’ve been functioning with the same
positioning ever since our origin.
Channel (Travel Agents) The travel agents currently aren’t necessarily educating
the consumer about Rosewood and they won’t do so
until the consumer asks them about it, this affects
brand awareness heavily.
Consumer (Their multi-
property and revisiting)
The consumers currently either visit Rosewood
properties because they’re aware of the unique
experience we provide or else because the travel agents
recommend them to, the multi-property visit rate is
lower than category for us and it won’t change if we
continue doing things the traditional way.
Property Managers (Internal
staff)
The staff currently associates themselves with the
properties they work at and take pride in delivering a
unique experience to the consumer, this will continue in
we pursue this alternative.
Brand Awareness Our brand awareness is low due to the consumer not
being able to associate our unique properties with
Rosewood but this maintains the uniqueness for each
property.
To run the way we’re currently running
Quantitative Criteria Possible Effects
Customer Lifetime Value The lifetime value of a customer will be $378.49 in this
approach which determines that basis every customer we
spend on this is the value they add to our business over 6
years.
Internal Rate of Return 211% that is comparatively much higher than the discount
rate of 8% which we’ve considered thus, making the option
seemingly viable.
Payback Period The payback time for the option is 1.31 which is low and
therefore, great for the business to recover costs invested.
Net Present Value The total NPV for the approach is $43,525,884 which
denotes a positive upward growth if we follow this specific
approach for the Rosewood chain.
CLV per customer $378
Internal Rate of Return 211%
Payback Period 1.31
Total NPV $43,525,884
Takeaway: The analysis determines a positive impact quantitively though, qualitatively we might not necessarily benefit from this approach because our key factor to change i.e. Brand Awareness
isn’t changing at all.

Following branding at the end of the hotels name which focuses more on capturing individuality with an overall branded experience and
evaluating its effectiveness based on parameters which affect Rosewood in the long-term will help us determine viability of the option.
To run with name branding e.g. Hotel Carlyle by Rosewood)
years and its higher compared to our previous approach.
seemingly attractive as the difference from the previous
option is higher.
Net Present Value The total NPV for the approach is $53,025,902.30 which
Payback Period 1.29
Total NPV $53,025,902
Takeaway: The analysis determines that qualitatively this alternative allows us to harness our “individuality” that every property offers and by adding Rosewood at the end the brand presence is also
reinforced in a way that generates association while quantitatively giving us positive results and helping us achieve our goal of spreading brand awareness.
To run with name branding e.g. Hotel Carlyle by Rosewood)
Criteria Possible Effects
Positioning (Individuality
with brand integration)
This will allow us to position ourselves as the brand which
delivers the unique experience the consumers seek and also aids
our presence in it as Rosewood with the name addition.
Channel (Travel Agents) The travel agents will introduce the property with Rosewoods
name at the end which will ensure that the consumer knows that
these properties with their experiences are delivered to them by
Rosewood.
Consumer (Their multi-
property and revisiting)
The consumers loyalty in the category are property-specific and
once they prefer one property by Rosewood there’s a chance
that we might gain word of mouth publicity or consumer
preference in terms of visiting a Rosewood property again or in a
different region.
Employees The staff/property managers might not necessarily mention the
fact that their property is “by Rosewood” since they associate
deeply with their brand and the service which they provide
reflects it, this might affect brand relevance.
Brand Awareness Our brand awareness via. this measure can be increased in order
to associate the “Rosewood Experience” with “Properties by
Rosewood” thus, giving us the room to expand and tackle our
issue of building association with our mother brand.

Following corporate branding and changing all names to Rosewood will focus on an umbrella approach thus eliminating the individuality
approach completely and evaluating its effectiveness based on parameters which affect Rosewood in the long-term will help us determine
viability of the option.
To run with corporate branding
years and its higher compared to the unbranded approach.
seemingly attractive as the difference from the unbranded
approach.
Net Present Value The total NPV for the approach is $53,025,902.30 which
CLV per customer $461.09
Payback Period 1.29
Total NPV $53,025,902
Takeaway: The analysis helps us determine that this approach might result in creating a conflict between our approach of “individuality” amongst properties and make all of them seem like a similar
offering thus, not necessarily creating exclusivity though quantitatively the results are attractive compared to the unbranded approach.
To run with corporate branding
Criteria Possible Effects
Positioning
(Consistency)
This will give us the scope to position ourselves on par with our
competitors who currently run with the corporate branding approach
thus entering a new space but it might affect our individuality in terms
of the different properties and their experiences since the perception
might skew towards thinking that these properties all offer the same
services.
Channel (Travel
Agents)
The travel agents will now be introducing each and every property by
Rosewoods name and then differentiating it basis the service and
location, this allows us to establish our brand early on in the
customers decision making journey.
Consumer (Their
multi-property and
revisiting)
The consumers in the category while being property-specific are also
experience seekers. Branding every property with the same name
might effect our offering of a unique experience with the local flavor
thus, making the consumer try different hotels though it can also build
loyalty.
Employees This kills the individuality the staff and managers who proud
themselves in delivering an experience with a specific brand name and
therefore, might not resonate well with delivering the quality of
service we’re claiming to offer.
Brand Awareness We may maximize brand awareness for us because people start
talking about it or completely throwing Rosewood out of the
consideration criteria when someone is looking for hotel/resort
options because they feel that we have nothing new to offer.

Post analysis, we can determine that the approach in which Rosewood is associated with every property at the end will help us achieve our goal
of generating brand awareness while retaining individuality and providing exclusivity and also help us reap financial benefits in the long-term.
• By adding the Rosewood name to
every property we can establish
Rosewood not as an owner of the
properties but a provider of the
experience which the property
carries within itself.
• It is key for the consumer to
associate the “sense of place”
with Rosewood and this approach
allows us to harness the same at
it’s maximum potential.
• As we proceed Rosewood can effectively brand
all of its properties thus, including the name of
the key brand with the unique touch of the
property
• This retains the local flavors that the properties
are known for while integrating the main brand
• This can appeal to our travel agents while
providing an option to the consumers/travelers
who come to them and the brand name is never
ignored
• The staff/employees will still have their unique
experience offering with a slight twist of adding
the by Rosewood thus, ensuring that they’re not
unhappy or negatively affected by the move.
• One of the major segment of customers of
Rosewood – corporate businessmen and
travelers who travel frequently.
• Because they prefer and are loyal to a property
our individualistic experience will appeal to them
and being represented by Rosewood will show a
consistency in the levels of service provided to
them thus, making our properties an obvious
choice.
• Everybody wants to be associated with
and try a trusted brand which delivers an
experience.
• With this approach Rosewood can
efficiently harness its already available
resources and by investing in marketing
efforts we can gain results far better than
what we’ve been achieving so far thus,
allowing us to sustain in the long-term.
• Increased revenue per customer
• Increased Net profit Value
• Increased Internal rate of return
• Lower payback period
Presenting,
The Carlyle by Rosewood
The Mansion on Turtle Creek by
Rosewood
Hotel Crescent Court by Rosewood
King Pacific Lodge by Rosewood
Jumby Bay by Rosewood
Little Dix Bay by Rosewood
Caneel Bay by Rosewood
Las Ventanas al Paraiso by
Rosewood
Hotel Al Khozama by Rosewood
Al Faisaliah Hotel by Rosewood
Hotel Seiyo Ginza by Rosewood
Dharmawangsa by Rosewood
Brand Awareness
Providing an experience
Customer Attraction/Retention
Keeping the channels and employees happy
Considerable future growth
Financial Performance
Takeaway: The analysis determines that by branding every property with our name at the end we can eventually establish Rosewood as a brand that delivers a unique experience to the consumer for
the cost they pay and does so with every property they have.

Once the properties are branded with the Rosewood name at the end it’s critical for us to analyze the possible gaps that might originate and how
can we solve them in order to ensure effective implementation of the idea.
Takeaway: By successfully forecasting the service gaps which might arise due to employee behavior and customer perception we can safely say that possible solutions will help us tackle those
effectively and enable us to deliver on our promise of “sense of place” without any hurdles in the way.
Gap Problem Cause(s) Possible Solutions
1. Consumer
Expectation –
Managements
Perception
Rosewood in spite of association fails to
provide the “sense of place” experience
to it’s consumer and the management
isn’t motivated enough to maintain the
previous levels of service which made
that experience.
Due to management not feeling
right/happy since their uniqueness was
based on their own approach and now
they’re branded with the Rosewood
name which leaves them no incentive
to invest in the brand since they were
developing it so far as a personal
reflection.
The management can be assured prior
to implementation that their originality
at no cost will be threatened or
affected by this move and that
Rosewood will ensure effective
implementation of any measure
necessary to sustain the image they
managers/staff have created.
2. Management
Perception –
Service Quality
Specification
In spite of promising the management
that they still have their individuality
retained they feel disconnected and not
in charge.
Too many restrictions being imposed
on the individual properties under the
brand making them feel that they’ve
lost their independence.
The properties can be assured that the
only change happening is in the name
and rest shall function as it always has.
3. Service Quality
Specification –
Service Delivery
The experience that the consumer is
looking for is delivered but not overall
just at some aspects by the properties
also the loyal consumer thinks that they
won’t get the same experience anymore.
Some of the staff who is not so
affected by the decision provide a
uniform service whereas others higher
up don’t also, property loyal
consumers start ignoring the brand
because they assume that the service is
no more tailor-made for them.
Train all the staff in delivering the same
level of customized experience to the
consumers to ensure that the loyal
customers stay loyal and the new
comers are motivated to try out other
Rosewood properties.
4. Service
Delivery –
External
Communication
While the properties try and deliver the
services to the best of their effort but any
errors are directly associated with
Rosewood thus, making the promise of
experience by the travel agent and brand
seem redundant.
Since Rosewood is a new addition to
the property name any minor mistake
also will be treated as if its Rosewoods
fault and therefore, communicate the
message that we can’t handle our own
properties it also might lead to
consumers not trusting us to deliver
what they expect out of our properties.
Establish Rosewood as a benchmark for
delivering an experience and not just a
brand name that comes after the
properties which allows us to harness
the image created by the properties
individually in sync with spreading
brand awareness while motivating the
staff to provide optimum service.
Rosewood
Hotel
Employees
“Sense of
place”
Customers
By serving the customer we deliver on the promise
of an experience which nobody else offers
The services triangle and its implication on our
branding approach

Appendix 1 – Overall financial implication of the branding approach and its impact on NPV, CLTV, IRR and Payback Period.
Total Analysis
Without
Corporate
Branding (2003)
With Corporate
Branding (2003)
With Branding at
End (2003)
Total Number of unique guests 115,000 115,000 115,000
Average daily spend $750 $750 $750
No. of days average guest stays 2.00 2.00 2.00
Average gross margin per room 32% 32% 32%
Average number of visit per year
per guest 1.2 1.3 1.3
Change - Average number of visit
per year per guest % 8.33% 0.00%
Marketing expense $14,950,000 $15,950,000 $15,950,000
Additional marketing expense $0 $1,000,000 $1,000,000
% Change in marketing expense 3.00% 3.00%
Average marketing expense per
guest $130 $138.70 $138.70
Average new guest acquisition
expense $150 $150 $150
Total number of repeat guests 19,169 24,920 32,396
% Change in total number of
repeat guests 30.00% 30.00%
Total number of multi-property
guests % 5% 10% 10%
Total number of multi-property
guests 5,750 11,500 11,500
% Change in Total number of
multi- property guests 100% 0%
Average guest retention rate 16.67% 21.67% 28.17%
Average gross profit per guest $576 $624 $624
Average revenue per customer $1,800 $1,950 $1,950
NPV without corporate branding 2003 2004 2005 2006 2007 2008 2009
Revenue per customer $1,800.00 $1,908.00 $2,022.48 $2,143.83 $2,272.46 $2,408.81 $2,553.33
% increase in revenue 6.00% 6.00% 6.00% 6.00% 6.00% 6.00%
Average gross profit per guest $576 $611 $647 $686 $727 $771 $817
Acquisition cost $150.00
Marketing cost $130.00 $133.90 $137.92 $142.05 $146.32 $150.71 $155.23
% increase in marketing cost 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Net profit per guest $296.00 $476.66 $509.28 $543.97 $580.87 $620.11 $661.84
% increase in Net profit per guest 61.03% 6.84% 6.81% 6.78% 6.76% 6.73%
Retention factor 1 1.000 0.167 0.005 0.000 0.000 0.000
Average guest Retention rate 100.00% 16.67% 2.778% 0.46% 0.077% 0.01%
Discount factor 1.00 1.08 1.17 1.26 1.36 1.47 1.59
Discount rate 8% 8% 8% 8% 8% 8%
NPV -$150.00 $441.35 $72.78 $12.00 $1.98 $0.33 $0.05
CLV per customer $378.49
Payback Period 1.31
Total NPV $43,525,884

Appendix 2 – Overall financial implication of the branding approach and its impact on NPV, CLTV, IRR and Payback Period.
NPV With Corporate Branding 2003 2004 2005 2006 2007 2008 2009
Revenue per customer $1,950 $2,067 $2,191 $2,322 $2,462 $2,610 $2,766
Average gross profit per guest $624 $661 $701 $743 $788 $835 $885
Marketing cost $138.70 $142.86 $147.14 $151.56 $156.10 $160.79 $165.61
% increase in marketing cost 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
% increase in Net profit per
guest 54.66% 6.83% 6.80% 6.77% 6.74% 6.72%
Retention factor 1 1 0 0 0 0 0
Average guest Retention rate 100.00% 21.67% 4.70% 1.02% 0.22% 0.05%
Discount factor 1.00 1.08 1.17 1.26 1.36 1.47 1.59
Discount rate 8% 8% 8% 8% 8% 8%
NPV -$150.00 $480.17 $102.92 $22.05 $4.72 $1.01 $0.22
Payback Period 1.29
Total NPV $53,025,902.30
NPV With Corporate
Branding At End 2003 2004 2005 2006 2007 2008 2009
Revenue per
customer $1,950 $2,067 $2,191 $2,322 $2,462 $2,610 $2,766
Average gross profit
per guest $624 $661 $701 $743 $788 $835 $885
Marketing cost $138.70 $142.86 $147.14 $151.56 $156.10 $160.79 $165.61
% increase in
marketing cost 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
% increase in Net
profit per guest 54.66% 6.83% 6.80% 6.77% 6.74% 6.72%
Retention factor 1 1 0 0 0 0 0
Average guest
Retention rate 100.00% 21.67% 4.70% 1.02% 0.22% 0.05%
Discount factor 1.00 1.08 1.17 1.26 1.36 1.47 1.59
Discount rate 8% 8% 8% 8% 8% 8%
NPV -$150.00 $480.17 $102.92 $22.05 $4.72 $1.01 $0.22
Internal Rate of
Return 242%
Payback Period 1.29
Total NPV $53,025,902.30

2018 04 05 - Rosewood Hotels - Vishwas Sankhe

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