Slides about corporate based model for Rosewood hotels Co.

2. Why study the
case?

3. To devise a model to
increase the customer
profitability by increasing
the re-visits per customer
and to increase the lifetime
value of Rosewood

4. How Rosewood started
Mrs. Caroline Rose Hunt opened The Mansion on Turtle Creek, the first Rosewood
hotel, by transforming an old Dallas mansion in peril of being demolished into a
world-class hotel, in the year 1980.

5. Expansion Strategy of
Rosewood
Rosewood expanded their business by
following ways:
 Buying existing properties and then
turning them into world-class high
valued hotels
Example :- Little Dix Bay, The Turtle etc
 Building new hotels from the scratch
Example :- The Lanesborough, Las
Ventanas etc

6. The individual brand/collection strategy

7. Rosewood operated a collection of unique properties, each with its own name and
brand.
Each hotel and resort featured architectural details, interiors, and culinary concepts that
reflected local character and culture and defined Rosewood’s “Sense of Place”
philosophy.
From the carefully crafted menu to how a guest is greeted, “A sense of place”
philosophy was employed.

8. All the properties of Rosewood
(as of 2003)

10. Competitors of Rosewood

12. Brand visibility of Rosewood

13. The Rosewood branding was soft and meant to be complementary, and not intrusive.
The rosewood logo appeared discreetly on low-profile amenities such as clothes
hangers or stationery.
Higher profile amenities, such as bathrobes and towels bore the logo of hotel.
Hotel greeting also did not mention the Rosewood name.
In 2000s, Rosewood’s advertising began to feature a list of all Rosewod properties, but
the Rosewood logo remained secondary to the hotel logo.
This was ensured to give their hotels “A sense of Place” and not intrude with their
individual identities.

15. While guests were seeking a unique Rosewood property experience and product, they
were not making the connection between Rosewood properties and were increasingly
identifying with other strong hotel brands.
While some properties of Rosewood enjoyed return of 40% of guests, only 5% of the total
guests had stayed in more than one of Rosewood’s properties.
While repeat guests in a ‘collection’ based Hotels ranged from 5 to 10%, the corporate
based hotels enjoy 10 to 15% customers choosing more than one of their properties.
Rosewood was at the low end (at 5%) and they had to change the way things were done.

16. How to encourage customers to
visit more than one of Rosewood’s
hotels

17. Two ways to encourage customers were identified
 Set-up of frequent stay programs
 Employing corporate based model
After jolting down pros and cons of both the approaches, the setting
up of frequent stay program was rejected
Thus, it was decided that Rosewood would employ corporate based
model

19. Apart from having a great brand which only needs subtle exposure, the change to
corporate model also brings certain risks on the platter.
Prominently imposing the Rosewood brand might alienate some of their guests at well-
established properties such as the Carlyle or The Mansion on Turtle Creek
Many of the hotel managers had mixed feeling about spreading the Rosewood corporate
brand in their properties. They were more inclined to promote just their own individual
hotel brands, particularly if they had a strong brand.
They also ran on the risk to devastate the suite owners at specific hotels like The Carlyle
where 179 were purchased by private owner and they were not keen to have the brand
‘Rosewood’ add infront of the name of the hotel

22. Calculation of profits taking
both the cases of branding
with Rosewood and not-
branding with Rosewood

23. Without Rosewood branding
Of the total number of Unique guests (115,000), total number of repeat guests are 19,169.
Using the average daily spending as $750 and the average time a guest spend is 2 days.
Considering 32% margin and considering 130$ as marketing expense and 150$ as guest
acquisition expense, the total profit generated comes out to be
Profits = $32.201120 Million

24. With rosewood branding
After branding, the guest retention rate increased to 30% but at the expense of 1 Million $ as extra
marketing expense.
So the total profits after calculations and using all the data boils down to,
Profits = $38.560650 Million
So the net extra profits gained after branding, thus comes to,
Net profit =$6.35953 Million

25. Conclusion
The decision to add the name ‘Rosewood’ indeed ensured increased profits
for the firm because of the reason that now customers can connect one hotel
with another and this prompted them to visit another hotel of the same
branding as the percentage of repeated guests increased from 5% to 10%,
thus earning the company extra $6.35 Million dollars after the marketing costs

26. DISCLAIMER
Created by ,
Aditya Patni,
Under-graduate student, IIT(ISM) Dhanbad
Intern under Prof. Sameer Mathur
Prof. SAMEER MATHUR
IIM Lucknow
Marketing professor (2013-Present)
McGill University
Marketing professor (2009-2013)