Rosewood Hotels And Resorts Case Study Spreadsheet Examples

Rosewood Case Solution

1626 WordsMay 18th, 20117 Pages

I-INTRODUCTION / STATEMENT OF THE PROBLEM

a-) Introduction:
Luxury hotel segment is getting more competitive. Rosewood Hotels & Resorts have been competing in this segment more than 25 years with its distinctive individual hotel brands. On the contrary, guests want to see one unique brand, same quality and service at every hotel that they stay under one corporate brand name.
One corporate brand strategy help companies increase their retention rate, make multi-cross selling and have loyal repeat buyers. Guests also tend to tie the brand of hotels that they stay before with a corporate brand that they are familiar with.
Above mentioned issue signals that current trend in g and competition side is a threat for Rosewood`s future growth…show more content…

Exhibit 1 proves our argument that higher concentration on retention activities will bring more customer life time value. By applying corporate branding strategy, Rosewood will get the most of its own brands and their existing guests.

Exhibit 1 Rosewood’s Brand-wide Customer Lifetime Value Spreadsheet Model

Without Rosewood Branding (2003) With Rosewood
Corporate Branding
Total number of unique guests 115.000 115.000
Average daily spend $750 $750
Number of days average customer stays 2 2
Average gross margin per room 32% 32%
Average number of visits per year per guest 1,2 1,3
Average marketing expense per guest $130 $139
Average new guest acquisition expense $150 $150
Total number of repeat guests 19.169 $24.919
Of which: Total number of multiproperty stay guests 5.750 $11.500
Average Guest Retention Rate 16,67% 21,67%
Average Gross Profit per Guest $576 $624

IV. RECOMMENDATIONs:
Only 8% increase in

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ROSEWOOD HOTELS & RESORTS: CUSTOMER LIFETIME VALUE (CLTV) ANALYSISInputs

Total Number of Unique GuestsAverage Daily Spend Number of Days Average Guest Stays per StayAverage Gross Margin per RoomAverage Number of Visits per Year per GuestAverage Marketing Expense per Guest (system-wide)Average New Guest Acquisition Expense (system-wide)Total Number of Repeat Guestsof which: Total Number of Multi-property Stay GuestsAdditional Costs Required per annumDiscount Rate

Average Guest Retention RateCLTV Calculation With No Changes to Brand StrategyYear

 Number of Nights per Stay Number of Stays per guest (assuming they are retained)Revenue Per NightRevenue per Customer 

Gross Profit per Customer

Less Cost to Acquire Customer Less Annual Marketing Cost per Customer 

Cash Flow from Customer if Retained

Probability of Being RetainedExpected Cash Flow from Customer Discount Factor 

NPV of Expected Cash Flow from CustomerTotal NPV of CLTVYear

 Number of Nights per Stay Number of Stays per guest (assuming they are retained)Revenue Per NightRevenue per Customer 

Gross Profit per Customer

Less Cost to Acquire Customer Less Annual Marketing Cost per Customer Less Additional Marketing Cost per Customer 

 b

Cash Flow from Customer if Retained

Probability of Being Retained

CLTV Calculation With New Brand Strategy

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