Rosewood Hotels & Resorts: Branding to increase profitability and lifetime value BACKGROUND
Rosewood Hotels and Resorts is a private hotel management company established in 1979 by the Caroline Rose Hunt Trust Estate. It is a well known company in the luxury hotels market which owns 17 iconic properties in 7 different countries (http://www.rosewoodhotels.com/en/the_company/). The first hotel was The Mansion on Turtle Creek in Dallas; afterwards the company expanded its “collection of unique properties” all over the world by converting and repositioning existing sites and by building up brand new luxury hotels. The distinctive feature of this collection is the so called “A sense of Place”. In fact in a Rosewood hotel every single service is conceived in order to adapt to the local culture and habits and capture the individuality of every location. Therefore each hotel is characterized by a strong individual image and brand while the Rosewood corporate brand usually stands on the background and mainly has a complementary function. ANALYSIS
The problem the new president and CEO are facing is whether to switch to a corporate branding strategy or stick with the current individual property branding strategy. In fact the latter has been a very successful strategy for the company for the past 15 years. Nonetheless the top managers of Rosewood believe that as the luxury hotels market is becoming more and more crowded and competitive, the individual property branding strategy is actually limiting the potential number of customer the company can target since it doesn’t seem to be effective on the mass market. Therefore a change in the company strategy is required. In order to figure out which is the best solution for the company it is necessary to consider pros and cons of each choice through a qualitative and quantitative analysis.
Pros and Cons
The individual branding strategy guarantees a strong and personal reputation for each resort and a source of differentiation from all the other competitors. The “Sense of a Place” is a unique concept which reflects the peculiarities of each location and sets Rosewood Hotels and Resort aside from all the other chain-like companies. High personalized services, attention to details, superior comfort and luxury are elements which guarantee a high perceived value for customers and therefore stimulate the development of a certain resort loyalty. In fact some of the Rosewood’s properties have a 40% return visit. Undoubtedly thanks to this strategy the organization managed to develop a strong competitive advantage based on the differentiation of its products, whose characteristics are perceived as unique and valuable from its customers. In fact the company managed to obtain a higher ADR and RevPAR than its competitors such as Four Seasons, Ritz-Carlton and Orient Express, even with a significant inferior number of rooms (Exhibit 5). On the other hand the main drawback of this strategy is the fact that it doesn’t highlight any connection between the different properties of the company, thus resulting in a very low corporate brand awareness among guests, as shown in the Strategic Marketing Solutions report. The Rosewood brand is usually unmentioned in advertising and hidden in the hotels themselves. The majority of the people who took part in the survey stated they got to know it through a professional agent only. Obviously this limits the capability of Rosewood to effectively approach the mass market, thus restricting its target market to a small niche. On the contrary the implementation of a corporate branding strategy will draw the attention on the Rosewood Company as a whole and make it benefit from a higher percentage of return guests and multiproperty cross-selling rate. The name Rosewood will become synonym of luxury, comfort and quality and all the properties of the company will take advantage of it. In fact no matter in which part of the world a customer will be, when he/she...
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