Rosewood Hotels And Resorts Case

ROSEWOOD HOTELS AND RESORTS CASE Strategic issues and problems: The following report will describe and analyze the case of a private hotel management company called “Rosewood Hotels and Resorts”. Rosewood hotels have 12 distinctive hotels worldwide with a strong brand image that makes each property unique. The dilemma found in this case is whether to keep the current individual branding strategy or create a corporate branding strategy, without undercutting the distinctiveness of each hotel. To do so the following points will be covered: • • • Recommendation on individual versus corporate branding strategies. Qualitative analysis considering pros and cons of each branding strategy Quantitative analysis estimating the impact of Rosewood’s corporate branding strategy on customer lifetime value (CLTV) Recommendations: As we will observe in the qualitative analysis there are many disadvantages if the new strategy is implemented. However from an economic point of view we will see that implementing a new branding strategy is better for the company as the NPV per guest is higher (see quantitative analysis). Taking into account the Customer Lifetime Value Model Rosewood should implement a corporate branding strategy. However to minimize the disadvantages it would be essential to keep the name of some emblematic hotels such as “Carlyle” in order for the clients to remain loyal. These hotels can add the name “Rosewood”, to keep its clients aware that they belong to this chain. 1

Customers developed strong emotional connections to individual properties where they expected a certain experience that was unique to that property. Rosewood’s leadership. Enter into a bigger market (luxury market). This branding strategy was based on “A Sense of Place” concept. Moreover. and Robert Boulogne.Qualitative analysis: The pros and cons of creating a new branding image are the followings ones: Advantages: • • • • • Increase cross-selling rates (guests who stay at one of Rosewood properties to stay at some of the others) from 5-10% to 10-15%. at the same time. High customer loyalty Every hotel will become more standardized and.. Vice President of Sales and Marketing – noticed that the Rosewood brand had low recognition and brand-wide usage among its guests. There were missed opportunities within the marketplace that resulted from this strategy. Increase the brand-awareness of Rosewood. nowadays its target is a subset of the luxury market (only exclusive “collection” hotels). Their customers were not making the connection between individual Rosewood properties while. Rosewood’s leadership – comprised of John Scott. the new CEO and President. .. As such.. This strategy led to a collection of distinctly branded properties that reflected the character and charm of the location in which they were built. the overall Rosewood brand did not. Goals In order to capitalize on current trends in the luxury hotel market. increasingly identifying with other luxury hotel brands. and it was used to differentiate the Rosewood collection within the competitive luxury hotel market. research suggested that most customers within the luxury hotel market valued the corporate-branded hotel. Rosewood Hotels and Resorts (Rosewood) began operations with a “collection growth” strategy that was established to accomplish the following: (1) “Convert existing…hotels with strong brand equity which needed to be repositioned and re-launched with professional management”. This customer-property dynamic made it more difficult for Rosewood to compete with luxury hotel chains. such as the Ritz-Carlton and the Four Seasons. Rosewood’s original brand strategy was out of touch with the current marketplace. (2) “Help developers…create the next generation of luxury hotels and resorts…and in doing so create brand equity in the property itself”.. While Rosewood’s individual properties had strong brand recognition.

Customer Lifetime Value.859 1. Repeat guest numbers. Individual branding is limiting Rosewood`s growth opportunity. S: Very well-known individual hotel brands. Market Segment Share may be lost.513 % of decrease in Room #s 100 92 (-8%) 81 (-11%) . Their expansion is %120 on average. Above mentioned issue signals that current trend in g and competition side is a threat for Rosewood`s future growth and profitability. guests want to see one unique brand. Huge growth opportunities lay in Retention rate. W: Low awareness of Rosewood and low cross property usage compared to industry. One corporate brand strategy help companies increase their retention rate. same quality and service at every hotel that they stay under one corporate brand name. T: The increasing competition between individually branded hotels. On the contrary. b-) Statement of the Problem Which marketing strategy will enable us to grow and turn competition threat to an opportunity with increased revenue. Rosewood Hotels & Resorts have been competing in this segment more than 25 years with its distinctive individual hotel brands. Total revenue.714 1. Also this can be turned to an opportunity if Rosewood can shape its future strategy towards operating under Corporate Branding. retention rate and customer equity without undercutting the distinctiveness of each individually branded hotel? II-SITUATION ANALYSIS a-) Company & Competition Information: 2001 2002 2003 # of Hotel Year End 13 13 12 # of Rooms Year End 1.Rosewood Case Solution I-INTRODUCTION / STATEMENT OF THE PROBLEM a-) Introduction: Luxury hotel segment is getting more competitive. Guests also tend to tie the brand of hotels that they stay before with a corporate brand that they are familiar with. O: Guests in luxury market segment value corporate brands. make multi-cross selling and have loyal repeat buyers.

each property marketed itself under its own brand name in addition to ..low awareness of the corporate brand .656 $328. Rosewood Rosewood Case 1.$378 RevPAR $197 $204 $217 Total Revenue (RevPAR * # of Rooms) $366. Make an overview of the pros and cons of the tow different branding strategies (i.Each hotel and resort featured architectural details..individual brand can be very powerful . Brd. .CLTV in 2003 w/Ind.customers are not making the connection between the corporate brand and the individual brand ..brand-wide usage among guests and was an untapped asset .participating in Rosewood-related advertising . individual branding and corporate branding) 1) Individual branding: .223 $349.difficult to position a collection of properties in an increasingly crowded field of luxury operators ..e.Some degree of flexibility and creativity . . interiors and culinary concepts that reflected local character and culture and defined Rosewood’s ‘Sense of a Place’ (each of the properties seeks to capture what is unique about the given location).Powerful tool to differentiate Rosewood Properties from competitors .321. limits their market .global data warehouse .status symbol .fear of managers to lose their autonomy .co-op owners don’t immediately see being part of a corporate brand as something positive.resistance of local managers to adopt the corporate brand .higher cross-property usage .less connected to the individual aspect of the hotels ..need to ensure a perfect product/service performance consistent across all properties . they.people do not tend to visit other properties of the same corporate brand 2) Corporate branding: . .increased marketing costs because then they also have to promote the corporate brand .stimulate multi property guest stays and increased effectiveness of frequent-stay programs .

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