Rosewood Hotels & Resorts_HBS Case Study One of the solution

1. Raman
Dhiman
INDIAN
INSTITUTE
OF
MANAGEMENT(IIM),
SHILLONG

2. Some of the Rosewood properties across the world

3. Introduction
•
A
private
5
star
hotel
management
company
with
luxury
iconic
hotels
headquartered
in
Dallas,
Texas
•
It
has
12
hotel
world
wide
with
capacity
of
1513
rooms
•
Room
Tariffs
Rate
ranging
from
$120
to
$9000.
•
John
ScoU
is
a
new
President
&
CEO
and
•
Robert
Boulogne
is
VP
of
sales
&marke]ng
John
•
Robert
Competed
with
hotels
with
Corporate
branding
and
individually
branded
unique
hotels.

4. Introduction Contd…
• Rosewood’s
“Sense
of
Place”
Philosophy
–
Architectural
details,
interiors
reflected
the
local
character
and
culture.
• Two
strategies
u]lized
by
Rosewood
in
opera]ng
its
proper]es:
I. Reposi]oning
Exis]ng
hotels
with
strong
brand
equity
with
the
professional
management.
Hotel Bel Air, Los Angeles
Hotel Caroline
II. Create
new
genera]on
hotels
having
strong
brand
equity
in
the
property
itself.

5. Introduction Contd…
• 1990
adver]sing
was
property
specific
and
by
early
2000
Rosewood
adver]sing
began
to
feature
in
all
Rosewood
proper]es,
but
secondary
to
hotel
logo.
• Issue
came
in
2003
when
it
realized
that
Rosewood
had
low
recogni]on
and
brand
wide
usage
among
guest
was
an
untapped
asset.

6. Important Factors to taken into account…
Corporate
Branding
Employees
Guests
Agents
Compe]]on

7. External Competition…
• Compe]ng
with
known
chains
and
individually
branded
proper]es,
to
name
few:
• Four
Seasons
with
58
proper]es
• Ritz-­‐Carlton
–
52
proper]es
• Fairmont
–
46
proper]es
• Orient
express
• Rocco
Forte
etc.

8. Agents Perception
o I
book
the
hotel
and
not
the
Rosewood
o Brand
is
not
as
important
as
the
hotels
&
resorts
o The
brand
is
not
as
strong
as
it
was
in
its
past
o Known
only
by
individual
hotels
&
resorts
o Clients
don’t
come
asking
for
Rosewood
as
a
Brand
o Clients
know
Rosewood
only
because
I
educate
them
on
it
o We
have
to
drive
understanding
of
Rosewood.
Once
they
understand
what
Rosewood
is,
it
does
mean
something
—

9. Employees’ Perception
• It’s
a
brand
of
dilemma
–
don’t
see
great
opportunity,
few
business
opportunity
• Secret
club
–
known
by
some
guests
who
go
and
the
industry
• Very
low
awareness.
Those
who
know
are
past
guests

10. Guest’s Perception
• Brand
Rosewood
means
nothing.
• Guests
have
used
various
proper]es
but
couldn’t
realize
that
all
were
a
part
of
same
group
• Even
aier
staying
at
the
property,
guests
don’t
tend
to
know
the
name
Rosewood
• Rosewood
as
a
brand
doesn’t
encourages
me
to
try
different
proper]es
• I
dint
know
un]l
my
travel
agent
men]oned
it

11. Current Issues
Aier
switching
to
automated
data
gathering
through
CRS,
consolidated
guest
data
revealed
that
-­‐
• 5%
mul]
property
return
visit
while
corporate
branded
hotels
enjoyed
10%
-­‐15%
cross
property
usage
rate.
• Rosewood
was
at
the
low
end
of
the
scale
and
there
were
an
opportunity
for
increasing
cross-­‐property
usage.

12. Probable Solutions
• Through
frequent-­‐stay
program
• Corporate
branding
approach

13. Issues observed with Frequent Stay Programme
• This
type
of
program
had
been
successful
only
for
large
mul]
segment
operators
with
broad
geographic
distribu]on.
• Loyalty
through
these
type
of
program
was
fostered
by
offerings
such
as—flexible
check
in,
check
out
]me,
personalized
services,
freedom
to
request
a
specific
room,
capacity
of
employees
to
solve
most
unusual
problem
etc…

14. Advantages of Corporate Branding:
Better Customer Life Time Value
CLV
3000
2500
2000
1500
1000
500
0
2003
2004
2005
2006
2007
2008
2009
CLV
without
branding
317
640
966
1296
1628
1963
2299
CLV
with
branding
364
731
1102
1475
1850
2226
2603

15. Advantages of Corporate Branding (Contd…)
• Collec]ve
experience
• Consistent
service
–
in
all
aspects
• Encourage
guests
to
use
more
than
one
property
• BeUer
brand
recogni]on
• High
customer
loyalty
• As
per
the
survey,
Individual
brand
or
collec]on
hotels
had
5%
to
10%
cross
selling
rates
while
corporate
branded
hotels
enjoyed
10%
to
15%
cross
property
usage
rates

16. Issues in Corporate Branding
• Internal
resistance
:
Few
Hotel
Managers
were
inclined
to
promote
their
own
Hotel
Rather
than
promo]ng
the
Rosewood
• Some
corporate
guests
didn’t
want
to
be
a
part
of
bigger
Organiza]on
due
to
their
emo]onal
aUachment
to
a
par]cular
hotel.

17. Scenario with an Introduction of Corporate Branding
Without Rosewood
brand Name(2003)
With Rosewood corporate
brand name
115000
115000
750
750
No. of days av guest stays
2
2
Av gross margin per room
32%
32%
Av no. of visits per year per guest
1.2
1.3
Av. Mktg. expense per guest (system wide)
130
139
Av new guest acquisition expense (system wide)
150
150
19169
46000
5750
11500
16.67%
40
386
407
138689580
146314155
Total Guest
115000
115000
New Guest
95831
69000
183070246
193134685
Parameters
Total no of unique guests
Av daily spend
Total no of repeat guests
(Of which: total no. of multi property stay guest)
Average Guest retention rate
Average gross profit per guest
Total Expenses
Total Revenue Generated
Corporate Branding proves out to be profitable vis-à-vis Frequest Stay programme

18. Suggestion based of Corporate Branding as a go ahead
• Don’t
dilute
individual
brand
persona
• Subtly
add
Rosewood
to
it
• Get
internal
teams
confidence
• Show
them
a
bigger
picture
• Incen]vize
trade
and
ask
them
to
push
a
brand
• PR
can
do
wonders
• Build
a
Rosewood
membership
plan
• Tie
up
with
travel
agencies/tour
operators
etc

19. Thanks