Rosewood hotels and resorts – CLV

Data taken from Exhibit A:

Without
Rosewood
Corporate
Branding
Total number of unique Guests 115,000
Average daily Spend $750
Number of days average guest per stay 2
Average gross margin per room 32%
Average number of visits per year per guest 1.2

Average Marketing expense per guest (system- $130

wide)
Average new guest acquisition (system wide) $150
Total number of repeat guests (s) 19,169
Total number of multi-property stay guests 5750

Average Guest Retention Rate = 19169/115000 = 16.67%

Average Gross Profit = 750 X 2 X 1.2 = $576
Calculating NPV at 8% discount rate,
NPV / CLTV = $388.23 (Directly Using Calculator)

With
Rosewood
Corporate
Branding
Total number of unique Guests 115,000.00
Average daily Spend $750
Number of days average guest per stay 2
Average gross margin per room 32%
Average number of visits per year per guest 1.3

Average Marketing expense per guest (system-wide) $138.70

Average new guest acquisition (system wide) $150
Total number of repeat guests (s) 24,920
Total number of multi-property stay guests 11500
Average Guest Retention Rate = 24919/115000 = 21.67%
Average Gross Profit = 750 X 2 X 1.3 = $624
Calculating NPV at 8% discount rate,
NPV / CLTV = $479.61 (Directly Using Calculator)

Therefore increase in CLTV = $91.38 per customer

Therefore total increase in CLTV for 115000 customers = $10,508,700