Rosewood Hotels and Resorts: Branding to Increase Customer Profitability

Rosewood Hotels and Resorts: Branding to Increase Customer Profitability

1. What are the pros and cons of moving from an individual brand to a corporate brand?

Rosewood identified that they have an untapped asset in establishing the Rosewood Brand by creating brand-wise usage among guests.    As with any focus, Rosewood’s move from an individual brand to a corporate brand will have its pros and cons.  The following list contains the pros and cons in moving to a corporate brand:

1. Pros:

1. An increase in revenue and Customer Lifetime Value with the move to corporate branding as compared to individual branding.
2. Establishment of a connection between all Rosewood properties as a counter to customer identifying with other strong hotel brands.
3. Locations can easily invoke their own identity as part of the corporate brand which will help establish the overall company brand in order to create cross branding among properties.
4. Expand the company to the market of customers who value the distinctive and exclusive ‘collection’ hotel.
5. Development of “Rosewood Junkies” who will seek out the corporate brand and reject other brands.
6. Currently, Corporate –Branded hotels enjoy 10% to 15% cross-property usage rates.  Rosewood will take advantage of this increase in usage as the company is currently at the bottom of the totem pool pertaining to this aspect of the business.

1. Cons:

1. Significant Marketing budget will be incurred in building and promoting the corporate brand due to its low brand recognition.
2. Major culture shock for all properties with regard to the change from an individual brand to corporate brand.
3. Property name changes will cause some guests to feel alienated at some of the most established properties such as The Carlyle and Mansion on Turtle Creek.
4. Major operational changes will cause confusion among employees at first.  Employees will be inclined to market their property first thusly eliminating the need to mention the Rosewood Corporate Brand.
5. Hotel Managers will feel they have lost their autonomy of running their hotel as an individual brand thusly feeling the need to participate in the overall company objective.
6. Resistance from private owners at The Carlyle due to the negative view on being part of a bigger organization.  Personal attachment to the individual brand will cause major dissention.

2. Will the move to a corporate brand maximize customer lifetime value?  

In reviewing the Rosewood Customer Lifetime Value (CLTV) Analysis (See attached file), the move to the corporate brand will maximize the customer lifetime value to $461.09 as compared to $378.49.  The increase of $82.60 in CLTV per customer will result in a 21.82% increase.  The increase will result in an increase of $9.4 Million in additional profit.  Thusly, the increase in Profit will result in $29.7 Million in additional revenue from the new brand strategy.

3. What recommendations would you make to Rosewood (consider how the new strategy could be implemented)?