Rosewood Hotel and Resorts: Branding To Increase Customer Profitability and Lifetime Value Harvard Case Solution & Analysis

Maximizing CLV

Rosewood was using the individual brand strategy, but Rosewood was not satisfied, as their customers were not getting their brand awareness due to many other world-class hotels working under their umbrella. Therefore, they thought that using the corporate strategy could increase their brand image and also the customer lifetime value.

Considering the progress of the company in terms of revenue and guests when Rosewood was not using the corporate branding strategy. The total number of guests that Rosewood was having were 115,000, whereas, the guests who were repeating was 19,169 and the number of multi property stay guests was 5,750. Similarly the guest retention rate was 16.67% and Gross profit was $480.Similarly, in the case of Rosewood with corporate branding, the number of guests was 115,000, the average number of visits per year per guest were increased to 1.3. Moreover, the total number of repeat guests were 46000, average guest retention was 40%.

If Rosewood uses the corporate brand strategy, then it would be beneficial for the company. This is because the Customer Lifetime Value would be increased and this would be better for the company. The gross profit would increase in all the six years. The first year gross profit per guest would be 509, then it would increase to 539, in the third year the gross profit would increase to 572, then it would be increased to 606, whereas in the fifth year the profit would rise to 642 and in the sixth year it would be around 681. Gross profit would be increased in a way that the average daily spend would be multiplied by the number of day's average guest stays and also multiplying the average gross margin per room and dividing it by the total number of unique guests. The net profit would increase from $769 to $801 in the first year, $836 in the second year, $873 in the third year, $912.43 in the fourth year, $953 in the 5th year and $996 in the sixth year, shown in Exhibit 1. Hence, this could be observed via the trends that the gross profit was increasing each year and the company would be having good trends of gross profit if the corporate brand strategy would be applied and the gross profit would increase for the company as well.

The present value also increased if Rosewood applied the corporate brand strategy, then its present value would gradually increase for the company as compared to the individual corporate brand strategy. Whereas, the NPV of the company shows that going for the brand strategy would be a positive thing for Rosewood Hotels and Resorts, as shown in the exhibit 1. This is will surely help the company to raise its profit and also help to maximize the customer lifetime value using the corporate brand strategy approach. The customer lifetime value is very important for the company as it increases the brand image of the company and also the credibility of the company (Bosch, 2012).

Recommendation

Most of the companies only work on controlling their expenses and taking initiatives for increasing growth and sales. But the main thing is that it is not always the sales that companies should consider in fact they should also consider the perfect marketing strategy for their businesses. After calculating the customer lifetime value, it is recommended that Rosewood should change their strategy and should implement the corporate strategy all over the board. This is due to the reason because this strategy seems to be perfect for Rosewood, to increase the recognition of their brand among its guests, increase in revenues, profits and an increase in the customer base.

The corporate strategy seemed to be the best strategy for increasing the brand awareness. Through this strategy guests may have knowledge that Rosewood Hotels and Resorts owns other world class hotels as well and they all come under one umbrella. Similarly, the guests can enjoy the best service and quality in other hotels as well. Through this the guests could identify the brand and they could enjoy the quality services and treatment in any hotel coming under the umbrella of Rosewood Hotels and Resorts. The main aim was to increase the standardization and quality in a way that the hotel providing high quality in one part of U.S, should also provide the same quality and service in the other part of U.S also. So, this was also the aim and challenge of corporate strategy.

Since people relied more on the brand, the quality it offers and the best treatment to its customers. Therefore, they are willing to pay high prices for the brands rather than the generic ones. Since, the brand is the reliability and also shows the credibility, so customers are willing to pay for it............................

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