Cltv Rosewood

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CLTV - CUSTOMER LIFETIME VALUE
CLTV is the sum of present value of company’s future cash flows generated from its customer

From the Exhibit 8 ROSEWOOD'S BRAND - WIDE CUSTOMER LIFETIME VALUE SPREADSHIT Without With Rosewood Rosewood Corporate Branding (2003) Branding Total Number of Unique Guests Average Daily Spend Number of Days Average Guest Stays Average Gross Margin per Room Average Number of Visits per Year per Guest Average Marketing Expense per Guest (systemwide) Average New Guest Acquisition Expense (systemwide) Total Number of Repeat Guests Of which: Total Number of Multiproperty Stay Guests Additional Marketing Costs Required per Year with branding $ 115,000 750.00 $ 2.0 32% 1.2 130.00 $ 150.00 $ 19,169 5,750 $ 115,000 750.00 2.0 32% 1.3 138.70 150.00 24,919 11,500 1,000,000.00

$ $

$

Average Guest Retention Rate
Discount Rate Guest Revenew growing Marketing Cost growing

16.67%
8% 6% 3%

21.67%
8% 6% 3%

CLTV CALCULATION WITHOUT ROSEWOOD BRANDING Years
Number of Days Average Guest Stays Average Number of Visits per Year per Guest

0 (2003)

1
2.0 1.2

2
2.0 1.2

3
2.0 1.2

4
2.0 1.2

5
2.0 1.2

6
2.0 1.2

Revenue per Night Revenue per Guest

$ $

795.00 1,908.00

$ $

842.70 2,022.48

$ $

893.26 2,143.83

$ $

946.86 2,272.46

$ $

1,003.67 2,408.81

$ $

1,063.89 2,553.33

Gross Profit per Guest
Less Acquisition Expense per New Guest Less Annual Marketing Expense per Guest $ (150.00)

$
$

610.56

$

647.19

$

686.03

$

727.19

$

770.82

$

817.07
(133.90)

(133.90) $

(133.90) $

(133.90) $

(133.90) $

(133.90) $

Cash Flow per Retained Guest
Retention Factor Expected Cash Flow per Guest Discount Factor

$

(150.00) $
1.00 (150.00) $ 1.00

476.66
1.00 476.66 1.08

$

513.29
0.17 85.56 1.17

$

552.13
0.03 15.34 1.26

$

593.29
0.00 2.75 1.36

$

636.92
0.00 0.49 1.47

$

683.17
0.00 0.09 1.59

$

$

$

$

$

$

NPV of Expected Cash Flow per Guest Total NPV of CLTV

$ $

(150.00) $ 379.29

441.35

$

73.35

$

12.18

$

2.02

$

0.33

$

0.06

CLTV CALCULATION WITH ROSEWOOD BRANDING Year
Number of Days Average Guest Stays Average Number of Visits per Year per Guest Revenue Per Night Revenue per Guest $ $

0 (2003)

1
2.0 1.3 795.00 2,067.00

2
2.0 1.3 842.70 2,191.02

3
2.0 1.3 893.26 2,322.48

4
2.0 1.3 946.86 2,461.83

5
2.0 1.3 1,003.67 2,609.54

6
2.0 1.3 1,063.89 2,766.11

$ $

$ $

$ $

$ $

$ $

Gross Profit per Guest
Less Acquisition Expense per New Guest Less Annual Marketing Expense per Guest $ (150.00)

$
$

661.44

$

701.13

$

743.19

$

787.79

$

835.05

$

885.16
(165.61)

(142.86) $

(147.14) $

(151.56) $

(156.10) $

(160.79) $

Cash Flow per Retained Guest
Retention Factor Expected Cash Flow per Guest Discount factor

$

(150.00) $
1.00 (150.00) $ 1.00

518.58

$

553.98

$

591.64

$

631.68

$

674.27

$

719.55
0.00 0.34 1.59

$

1.00 518.58 $ 1.08

0.22 120.04 $ 1.17

0.05 27.78 $ 1.26

0.01 6.43 $ 1.36

0.00 1.49 $ 1.47

NPV of Expected Cash Flow per Guest Total NPV of CLTV

$ $

(150.00) $ 461.09

480.17

$

102.92

$

22.05

$

4.72

$

1.01

$

0.22

Increase in CLTV per Guest of New Marketing Plan Multiplied by # of Guests to Obtain Increase in Profit of Rosewood From New Brand Strategy Divided by 32% Gross Margin toOobtain Increase in Revenue of Rosewood From New Brand Strategy

$ 81.80 $ 9,406,704.82 $ 29,395,952.55

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