Luxury hotel segment is getting more competitive. Rosewood Hotels & Resorts have been competing in this segment more than 25 years with its distinctive individual hotel brands. On the contrary, guests want to see one unique brand, same quality and service at every hotel that they stay under one corporate brand name. One corporate brand strategy help companies increase their retention rate, make multi-cross selling and have loyal repeat buyers. Guests also tend to tie the brand of hotels that they stay before with a corporate brand that they are familiar with. Above mentioned issue signals that current trend in g and competition side is a threat for Rosewood`s future growth and profitability. Market Segment Share may be lost. Also this can be turned to an opportunity if Rosewood can shape its future strategy towards operating under Corporate Branding. Huge growth opportunities lay in Retention rate, Total revenue, Customer Lifetime Value, Repeat guest numbers. Individual branding is limiting Rosewood`s growth opportunity.
S:Very well-known individual hotel brands.
W:Low awareness of Rosewood and low cross property usage compared to industry. O:Guests in luxury market segment value corporate brands.
T:The increasing competition between individually branded hotels. Their expansion is %120 on average.
b-) Statement of the Problem
Which marketing strategy will enable us to grow and turn competition threat to an opportunity with increased revenue, retention rate and customer equity without undercutting the distinctiveness of each individually branded hotel?
a-) Company & Competition Information:
# of Hotel Year End131312
# of Rooms Year End1.8591.7141.513
% of decrease in Room #s10092 (-8%)81 (-11%)
CLTV in 2003 w/Ind. Brd.--$378
(RevPAR * # of Rooms)$366.223$349.656$328.321 (-6%)
Corporate Branded Properties132 (80%)235 (79%)
Individual Branded Properties33 (20%)64 (21%)
Rosewood total room # decreased 8% and 11% in years 2002 and 2003 respectively. Although RevPAR increased from 2001-2003, total revenue decreased sharply 6% in 2003. In 2003, the total # of corporate branded hotels is 235 where as individual branded ones are 64. However, growth is %85 and %120 respectively. This is a sign of a greater competition within the sub-market of individually branded hotels where Rosewood operates in. Compared to competition capacity and new investments, growth with retaining current customers more and getting revenue from their multi-cross buying’s and repeat visits under Rosewood corporate brand seems the best strategy. A similar model like Aman can be developed. (See Appendix 1 for further details) Competition is investing into new capacity and increase their room based. Also their per guest revenue coming out of RevPAR is increasing and this shows that competition is promoting multi-cross property usage and develop individual services rather then standard luxury ones. The individual brand and collection hotel brands typically had 5% to 10% multi property cross-selling rates while corporate branded hotels enjoyed 10% to 15% cross property usage. b-) Market and Customer Information:
Market Research was done with an audience includes both guest and Travel Agencies. General comments are around one thing: Rosewood is not a very well known brand. Guests of Rosewood Hotels & Resorts are very satisfied with the service that they get from hotels but they remember and select hotels with their individual names. They do not link hotels with Rosewood. Only in Dallas where our HQ is located, our awareness as Rosewood brand is quite high.
III-EVALUATIONS OF ALTERNATIVES:
a-) Qualitative Analysis through PROs & CONs of each strategy
Individual BrandingDistinctiveness and local culture No link...