a)Economic Environment & Industry Trends2
b)Organizational & Political Environment3
c)SWOT analysis for Rosewood5
III.PROBLEMS FOUND IN SITUATION ANALYSIS6
c)Selective Corporate Branding12
PROPOSED BRANDING STRATEGY - SELECTIVE CORPORATE BRANDING STRATEGY13 SUMMARY15
I. EXECUTIVE SUMMARY
Rosewood Hotels & Resorts (Rosewood), known for managing distinctive luxury hotels is considering a new brand strategy. Rosewood’s concept for each property has always been “Sense of Place”, emphasizing the individual character of each property. In an effort to increase multi-property guest across its 12 hotels worldwide, a new corporate branding strategy is being considered. The new strategy should also not undercut the distinctiveness of each individually branded hotel.
In the analysis, Rosewood’s ADR and RevPAR were superior to the corporate-branded groups namely Four Seasons Hotels and Ritz-Carlton (Marriott International). Rosewood also fared better than Orient-Express Hotels, another individual-branded hotel group. The results make the argument for corporate branding difficult to justify as the current individual-branded strategy places Rosewood ahead of their current competition. The Customer Lifetime Value (CLV) was calculated to assess if the targeted incremental spending by multi-property guests was sufficient to justify corporate branding strategy - with its increased marketing, operational cost and efforts. Analysis showed that the corporate branding strategy yielded higher customer lifetime value of $1,047.32 compared to $862.50 for individually-branded strategy.
Considering the probable loss of customer profitability from the iconic hotels after corporate branding and its brand reputation, it is recommended that Rosewood adopt corporate branding strategy to their hotels selectively. Highly profitable hotels should retain their individuality while the less profitable ones can be clustered together and branded corporately. It is also recommended that Rosewood should conduct qualitative surveys to better understand their customers and spending behaviours/patterns.
II. SITUATION ANALYSIS
Rosewood Hotels & Resorts (Rosewood) was a privately held hotel management company established in 1979 by the Caroline Rose Hunt Trust Estate. Since its inception, Rosewood prided itself as an ultra-luxury collection of classical hotels each with its own individual personality and positioning.
a) Economic Environment & Industry Trends
The ultra-luxury hotel segment’s penetrated market demand was valued at $525 billion in 2003. This segment was fronted by corporate branded status symbols like the Four Seasons, Ritz-Carlton and the Fairmont hotel groups. The potential of this market segment can be deduced from the number of properties owned by corporate branded groups plying in this segment and their corresponding growth in the number of properties from 1996 to 2003. The average growth was 11 properties during the eight year period. On the contrary, the individually branded category that was fronted by the Orient Express and Rosewood hotels only grew by an average of six properties in the same period. The former’s domination in the luxury segment pointed to a higher Customer Lifetime Value (CLV) for corporate branded hotels. However, it also meant a clear limited penetration rate for new entrants due to established consumer behaviours and the existing monopoly.
In addition, the multi-property cross-selling rates for corporate branded hotels were 10% to 15%. That was against the rate of 5% to 10% for individual branded hotels such as the Orient-Express Hotels in 2002. An established brand like Four Seasons saw a 9% cross-selling rate in 2000 already. The multi-property cross-selling rates of the...