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Rosewood Hotels & Resorts: Branding to Increase Customer Profitability and Lifetime Value Case Study

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Updated: May 25th, 2020

Introduction

Rosewood hotels & resorts was started by the Caroline Rose Hunt’s trust Estate in 1979. The company has its headquarters in Dallas, Texas and the first hotel acquired by the company was The Mansion on Turtle Creek, which was opened in 1980. By 2003, the group managed 12 hotels located in different countries.

The hotels are known worldwide for their excellent services and knowledge they pass to their customers about the history and culture of the places the hotels are located in. The Rosewoods & resorts brand is built around a concept the management refers to as “A sense of Place.” This means that each of the hotels and property under their management capture unique features of their locations (Devlaure and Mougeot).

For almost 25 years, the group has not been advertising the hotels and this made them to rely mainly on their names because there was no “corporate” identification for the collective hotels. The brand (Rosewoods) was facing competition from corporate branded and individually branded hotels, and this made the group in 2004 to undertake a project that was aimed at growing the company and fighting competition.

John Scott, the new president and CEO of the group and Robert Boulogne, the vice president of marketing and sales of the company, headed the project. This paper will look at tactical problems that are facing the company, the strategic problems, solutions to the problems and finally make recommendations and a conclusion.

Tactical Problems and Strategic Problems

The tactical problems that are facing the company include clients not seeing the 12 hotels managed by the group as being under the same brand. This poses a problem because these clients, even after having enjoyed their stay in one of the hotels and having return visits, do not seek the brand in other destination.

This has made the company lose many clients who visit other known “corporate” brands when they are travelling (Devlaure and Mougeot).

The strategic problem that is facing the group includes branding strategy that was adopted 25 years ago, and which is ineffective and compounded with the competition is making the Rosewood’s hotels hard to identify when customers travel. Another strategic problem facing the company is the new strategy proposed because it requires the company to invest a lot of money and is at risk of facing opposition from employees and clients.

Analysis of the case and problems that faced the brand

The problem of lack of recognition of the Rosewood brand by customers stems from the fact that the company does little to advertise it. The name of the brand fails to appear on accessories found in the rooms and the clothing or items used by the hotel staff. Each hotel under the flagship has a different nametag on each of their items, and this makes it hard for clients to associate the hotels to a worldwide brand.

The statistics obtained shows that even though individual hotels have a return rate of around 40%, only 5% of customers seek for other Rosewoods hotels when they are visiting other locations. This, in itself, is a problem because it means that the company is losing its customers to other hotels.

The surveys that have been carried out on customers and travel agents show that unless travel agents guide the customers, most customers are uninformed of the other Rosewoods hotels that are within their place of visit.

The new strategy that is to be adopted needs to address the problem of losing customers to competitors during their travels, as well as address the opposition it might receive from employees and the customers. One of the strategies proposed require the introduction of a frequent-stay-program that is to be based on the expenses incurred by clients during their stay in the hotels.

Clients are to be awarded points which can be redeemed at any hotel under the company’s management. This strategy is aimed at increasing the repeat visits by customers and enlightening them about various locations of the hotels around the world.

The bonus system proposed also helps motivate customers to visit the hotels and redeem their points. It is also aimed at attracting more customers to aid in growth and development of the hotels.

The other strategy proposed is to use corporate branding where the company is to identify itself to the customers and make all the hotels known to them. This will include advertising and installing the company’s logo in all hotels. This strategy has received a lot of criticism from managers and customers.

According to the survey carried out, customers do not want the hotels to change and say that they are used to the products offered by the hotels and therefore do not want changes to occur. This poses a challenge to the managers who may not want to lose their customers, but at the same time need to retain and attract more customers (Devlaure and Mougeot).

Finding solutions to problems

To find solutions to the problems the company is facing, the management needs to understand the needs and wants of the customers. There is need to find out whether customers would prefer the diversity of the Rosewoods hotels or standardized hotels. There is also need to know if the frequent-stay-program will affect the decision making of customers when choosing their stay in hotels.

Calculation of the returns expected from adoption of a corporate branding program needs to be done, as well as explanation the benefits of adopting this strategy to managers. The management needs to know if dissatisfied customers can be helped and what actions are going to be taken.

Recommendations

To make a decision on the strategy to be adopted the company is required to know exactly what the client is looking for in the hotel. By using CRS the company needs to collect data on why customers frequent certain hotels and find out their reason. They need to know why in individual hotels the return rate is as high as 45%, while it is 5% when the customer is traveling to other destinations.

The company needs to involve travel agencies in their research so that they can gather information on why there is a negative view on some of the hotels. The management of the group needs to finish working on the brand-wide customer lifetime value spreadsheet so that they can adequately prepare a five-year projection of net profits expected after adoption of either strategy.

To harmonize operation in all hotels, the management needs to convene a general meeting for all managers so that they can explain them the benefits of adopting the corporate strategy. This will be effective in helping forge a strong team that will help in implementation of the strategy and see that the strategy is successful. Finally, the hardest part of adopting the strategy will be losing dissatisfied customers.

The management needs to formulate ways of making them understand and appreciate the change. This is important for customers of the Carlyle hotel who can be seen from the survey as being very pessimistic about the planned changes.

Conclusion

It is clear from the case study that the company needs to change their strategy if they are going to increase the return rate of different hotels. The corporate brand strategy seems to be the best option available to the group as it promises to increase the return rate to about 10-15%. This means that the revenue will go up although this might be reflected in a few years.

From the customer lifetime value spreadsheet, we can see that it is expected that the gross profit earned from a multi property stay in customer is expected to double. From the forecast, we see that it is expected that the gross profit will move from $2,702,500 in 2003 to $5,305,000 the following year. This is proof enough that this strategy, if adopted, will be the best option.

My opinion is that corporate branding strategy will help the company retain its market share, as well as attract more customers. It will help forge loyalty among the customers.

The strategy will help fend off competitions because clients will be able to know and access the different Rosewoods hotels around the world unlike before.

Works Cited

Devlaure, Cheki tan and Mougeot Stroock. “.” Harvard Review. 2007. Web.

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"Rosewood Hotels & Resorts: Branding to Increase Customer Profitability and Lifetime Value." IvyPanda, 25 May 2020, ivypanda.com/essays/rosewood-hotels-resorts-branding-to-increase-customer-profitability-and-lifetime-value-case-study/.

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IvyPanda. "Rosewood Hotels & Resorts: Branding to Increase Customer Profitability and Lifetime Value." May 25, 2020. https://ivypanda.com/essays/rosewood-hotels-resorts-branding-to-increase-customer-profitability-and-lifetime-value-case-study/.

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IvyPanda. 2020. "Rosewood Hotels & Resorts: Branding to Increase Customer Profitability and Lifetime Value." May 25, 2020. https://ivypanda.com/essays/rosewood-hotels-resorts-branding-to-increase-customer-profitability-and-lifetime-value-case-study/.

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IvyPanda. (2020) 'Rosewood Hotels & Resorts: Branding to Increase Customer Profitability and Lifetime Value'. 25 May.

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