Rosewood Hotels & Resorts is a private hotel management company with a collection of twelve boutique hotels across North

America, Caribbean, Latin America, Middle East, and Asia Pacific with plans for a thirty-three percent growth within the next three years. Each luxury hotel is known for its own one-of a-kind brand, and the reflection of the local character and culture in its architectural details, interiors and culinary concepts. Rosewoods current brand marketing strategy has been to place the Rosewood name secondary to the individual property brand which has resulted in a lack of market awareness of the Rosewood brand. Guests who have stayed at Rosewood properties were aware only of the property brand and not of the corporate brand. Given this lack of brand awareness, Rosewood has not been able to capitalize on repeat and multi-property guest stays in the way that a corporate-branded hotel with clear brand recognition such as that of Ritz Carlton or Four Seasons. Rosewoods leadership saw an opportunity to increase their market share in the number of repeat guests and multi-property guests. Two possible approaches were considered: a frequent stay program an idea which they quickly rejected; and a corporate branding approach which they believed would encourage both repeat guest stays and multi-property guest stays. The corporate branding approach would require a marketing and operations investment of one million dollars per year. To assess the long term financial implications of the required investment to implement the corporate branding strategy, Rosewood needs to compare the forecasted Customer Life Time Value for six years with and without the branding campaign (Appendix A). The cumulative six-year-forecasted CLTV with the corporate branding campaign is $109.5 million compared to that without the branding campaign of $86.3 million; yielding a net gain of $23.2 million dollars. Working with the constraint that the only cost information we have is aggregate and is averaged across the number of unique guests, we are taking a conservative approach and including the new guest acquisition cost in the cost per unique guest. We are also assuming the average number of visits per year per guest remains at 1.3 from year one through year six and the number of multi-property guests and repeat guests also remain constant. With these assumptions, Rosewood can expect to realize a 27% greater cumulative CLTV with the corporate branding campaign than without. The actual gain however, is likely to be greater in magnitude as a successful branding campaign will result in retention rate growth and thus higher multi-property and repeat guests over time. Given the CLTV analysis, Rosewood Hotels should move forward with the corporate brand marketing strategy. However, building brand awareness and recognition will first require that Rosewood define a clear brand identity. The Strategic Marketing Solutions Report revealed Rosewood had a lack of brand identity with guests, travel agents and employees. Therefore, it will be crucial to the overall success of the corporate branding campaign for Rosewood to invest in learning how their guests and employees define the Rosewood brand culture and brand value, and then draw from that to develop the corporate brand identity. Without this assessment of guest and employee views, any brand identity Rosewood leadership develops will be meaningless. They will also need to ensure that the corporate brand identity continues to allow for individual property flavor as

this is what sets them apart from the Ritz and Four Seasons of the world and is their differential advantage. Secondly, Rosewood will need to contend with the potential lack of buy-in from hotel managers, employees, and even guests. Managers and employees concerns about loss of autonomy with a corporate brand structure will need to be addressed; they will need to be empowered to continue to anticipate and meet guest needs; and they will need to be educated on other Rosewood properties so they can promote those properties as well as their own. Rosewood should also consider some type of incentive for managers to encourage their guests to stay at other Rosewood properties. Guest concerns about moving to a corporate brand will also need to be addressed, particularly in the case of specific Rosewood properties that have permanent residences. Rosewood would benefit from meeting with this group of unique guests and hearing their concerns. This action alone would help mitigate some of the backlash they might experience while transitioning to a corporate brand. Additionally, travel agents will need to be educated on the Rosewood brand and portfolio. Rosewood should consider some type of incentive for travel agents who consistently have repeat bookings at Rosewood properties. Once a clear brand identity has been defined and potential lack of buy-in issues have been addressed, Rosewood will have to plan an implementation approach. They could PhaseIn the corporate branding over time, or they could establish a Day One date and have all corporate branding be in place on a specific date. A Phase-In approach would allow for subtle changes over time and may help allay concerns of guests and employees. However, this approach may also lessen the buy-in from the same group of people as they will have more time to be disgruntled about the change. The Phase-In approach will also lead to inconsistent branding across the portfolio at any given time and thus would negate any attempts at clear brand identity. Alternatively, the Day One approach would ensure that branding at all properties within the portfolio is consistent from that day forward and support the evolution of clear brand awareness. Rosewood may see an immediate negative reaction from guests and employees who were against the change, but they can mitigate this with timely and appropriate public relations measures (much like Macys did when they bought Marshall Fields). I would recommend the latter approach as it will have a much greater impact there is a clear change in brand identity and there is a clear demarcation in time of when the change occurred, allowing for more accurate measures of the effects of the change. Rosewood Hotels & Resorts will not only increase their number of repeat guests and number of multi-property guest stays by investing in and implementing a corporate branding strategy, they also stand to make significant financial gains in doing so. The success of this strategy however, depends on their ability to define a clear and strong brand identity, get buy-in from employees and guests alike, and have an implementation strategy that has the greatest impact and does not denigrate their differential advantage
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Rosewood Case Analysis For Rosewood Hotels to successfully move from the "canned and cookie cutter" approach of individual branding to a collective strategy of corporate branding, first the pros and cons have to be weighed and measured. From the research conducted by Rosewood, the most obvious and immediate pro to a corporate branding strategy is the projected increase in multiproperty stay guests from 5% to 10%. This has the potential to not only increase revenues but also brand awareness, recognition and word of mouth referrals. A full complement of pros and cons to converting to a corporate brand strategy for Rosewood is outlined in the table below: Pros Cons Increased brandwide usage "Canned and cookie cutter" approach Increased brand recognition No "sense of place" philosophy Connection amongst properties Loss of uniqueness Good positioning for competition Less differentiation Increased market/share Potential loss of current brand equity Increased brand awareness Loss of discretion Promotion of cross-property usage Resistance to change (guests and management) Increased return visits Increased marketing costs Brand loyalty less property specific Competition tougher among corporate branded hotels Increased revenues Change in the corporate culture is challenging Building customer lifetime values Overall customer lifetime value is higher with corporate branding than without, as demonstrated in Exhibit A. Without corporate branding, overall net present value totals $378.49 per guest while with branding that number jumps to $461.09. The average gross profit, based on repeat guests, is $2,702,500.00 without branding and $5,305,000.00 with corporate branding. Based on the calculations, as well as the overall pros and cons, I believe that Rosewood should definitely move from individual brands to a corporate brand. That being said, the company currently has some powerhouse locations under its overall corporate climate, such as the flagship location, The Mansion on Turtle Creek in Dallas and also The Carlyle in New York. So as not to lose any current brand equity in those properties, and also to appease the management of those

locations who are probably more resistant to the change to corporate branding than any other locations, I would recommend a modified corporate umbrella plan using a combination of new and existing brand elements. Rather than renaming The Carlyle to The Rosewood Carlyle, I would recommend the name become "The Carlyle, a Rosewood Property" or something similar. This will associate the properties with the Rosewood name without detracting from the brand equity already built within the current naming framework. The changes to the corporate culture will be difficult enough to traverse without adding undue stresses, and Rosewood definitely does not want to alienate current customers with dramatic and immediate changes. All new properties could be named under the Rosewood umbrella. The company also needs to strive to establish the same service levels across all properties that the patrons of locations like The Carlyle and The Mansion at Turtle Creek have come to expect. Rosewood needs to maintain the core company philosophies and impeccable standards established by Mrs. Hunt when she rescued The Mansion from demolition and made it the worldclass hotel and restaurant that it is today. Exhibit A Rosewood: 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 $750.00 $750.00 increasing at 6% Number of Days Average Guest Stays 2.0 2.0 Average Gross Margin per Room 32% 32% Average Number of Visits per Year per Guest 1.2 1.3 Average Marketing Expense per Guest (systemwide) $130.00 $138.70 increasing at 3% Average New Guest Acquisition Expense (systemwide) $150.00 $150.00 Total Number of Repeat Guests 19,169 24,919 Of which: Total Number of Multi-property Stay Guests 5,750 11,500 Average Guest Retention Rate 16.67% 21.67% Average Gross Profit per Guest $470 $461 Without Rosewood Branding

Year 0 1 2 3 4 5 6 Gross Profit per Guest $610.56 $647.19 $686.03 $727.19 $770.82 $817.07 Acquisition Expense per new Guest ($150.00) Marketing Expense per Guest ($133.90) ($137.92) ($142.05) ($146.32) ($150.71) ($155.23) Net Profit per Guest ($150.00) $476.66 $509.28 $543.97 $580.87 $620.11 $661.84 Retention Factor 1.00 1.00 0.17 0.03 0.00 0.00 0.00 Discount Factor 1.000 1.080 1.166 1.260 1.360 1.469 1.587 Net Present Value ($150.00) $441.35 $72.78 $12.00 $1.98 $0.33 $0.05 With Rosewood Branding Year 0 1 2 3 4 5 6 Gross Profit per Guest $661.44 $701.13 $743.19 $787.79 $835.05 $885.16 Acquisition Expense per new Guest ($150.00) Marketing Expense per Guest* ($142.86) ($147.14) ($151.56) ($156.10) ($160.79) ($165.61) Net Profit per Guest ($150.00) $518.58 $553.98 $591.64 $631.68 $674.27 $719.55 Retention Factor 1.00 1.00 0.22 0.05 0.01 0.00 0.00 Discount Factor 1.000 1.080 1.166 1.260 1.360 1.469 1.587 Net Present Value ($150.00) $480.17 $102.92 $22.05 $4.72 $1.01 $0.22

Rosewood Case Analysis For Rosewood Hotels to successfully move from the "canned and cookie cutter" approach of individual branding to a collective strategy of corporate branding, first the pros and cons have to be weighed and measured. From the research conducted by Rosewood, the most obvious and immediate pro to a corporate branding strategy is the projected increase in multiproperty stay guests from 5% to 10%. This has

the potential to not only increase revenues but also brand awareness, recognition and word of mouth referrals. A full complement of pros and cons to converting to a corporate brand strategy for Rosewood is outlined in the table below: Pros Cons Increased brandwide usage "Canned and cookie cutter" approach Increased brand recognition No "sense of place" philosophy Connection amongst properties Loss of uniqueness Good positioning for competition Less differentiation Increased market/share Potential loss of current brand equity Increased brand awareness Loss of discretion Promotion of cross-property usage Resistance to change (guests and management) Increased return visits Increased marketing costs Brand loyalty less property specific Competition tougher among corporate branded hotels Increased revenues Change in the corporate culture is challenging Building customer lifetime values Overall customer lifetime value is higher with corporate branding than without, as demonstrated in Exhibit A. Without corporate branding, overall net present value totals $378.49 per guest while with branding that number jumps to $461.09. The average gross profit, based on repeat guests, is $2,702,500.00 without branding and $5,305,000.00 with corporate branding. Based on the calculations, as well as the overall pros and cons, I believe that Rosewood should definitely move from individual brands to a corporate brand. That being said, the company currently has some powerhouse locations under its overall corpor...