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Rosewood hotels & resorts HBS case study

Rosewood Hotels & Resorts_HBS Case Study
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Rosewood hotels & resorts HBS case study

  1. 1. Raman  Dhiman   INDIAN  INSTITUTE  OF  MANAGEMENT(IIM),  SHILLONG  
  2. 2. Some of the Rosewood properties across the world
  3. 3. Introduction •  A   private   5   star   hotel   management   company   with   luxury   iconic   hotels   headquartered  in  Dallas,  Texas   •  It  has  12  hotel  world  wide  with  capacity  of  1513  rooms   •  Room  Tariffs  Rate  ranging  from  $120  to  $9000.   •  John  ScoU  is  a  new  President  &  CEO  and     •  Robert  Boulogne  is  VP  of  sales  &marke]ng   John •  Robert Competed  with  hotels  with  Corporate  branding  and  individually  branded  unique   hotels.  
  4. 4. Introduction Contd… •  Rosewood’s  “Sense  of  Place”  Philosophy  –  Architectural  details,  interiors   reflected  the  local  character  and  culture.   •  Two  strategies  u]lized  by  Rosewood  in  opera]ng  its  proper]es:   I.  Reposi]oning  Exis]ng  hotels  with  strong  brand  equity  with  the  professional   management.   Hotel Bel Air, Los Angeles Hotel Caroline     II.  Create  new  genera]on  hotels  having  strong  brand  equity  in  the  property  itself.  
  5. 5. Introduction Contd… •  1990  adver]sing  was  property  specific  and  by  early   2000  Rosewood  adver]sing  began  to  feature  in  all   Rosewood  proper]es,  but  secondary  to  hotel  logo.   •  Issue  came  in  2003  when  it  realized  that  Rosewood   had  low  recogni]on    and  brand  wide  usage  among   guest  was  an  untapped  asset.  
  6. 6. Important Factors to taken into account… Corporate     Branding   Employees   Guests   Agents   Compe]]on  
  7. 7. External Competition… •  Compe]ng   with   known   chains   and   individually   branded   proper]es,  to  name  few:   •  Four  Seasons  with  58  proper]es   •  Ritz-­‐Carlton  –  52  proper]es   •  Fairmont  –  46  proper]es   •  Orient  express   •  Rocco  Forte  etc.      
  8. 8. Agents Perception o  I  book  the  hotel  and  not  the  Rosewood   o  Brand  is  not  as  important  as  the  hotels  &  resorts   o  The  brand  is  not  as  strong  as  it  was  in  its  past   o  Known  only  by  individual  hotels  &  resorts     o  Clients  don’t  come  asking  for  Rosewood  as  a  Brand   o  Clients  know  Rosewood  only  because  I  educate  them  on  it   o  We   have   to   drive   understanding   of   Rosewood.   Once   they   understand  what  Rosewood  is,  it  does  mean  something   —     
  9. 9. Employees’ Perception •  It’s   a   brand   of   dilemma   –   don’t   see   great   opportunity,   few   business  opportunity   •  Secret  club  –  known  by  some  guests  who  go  and  the  industry   •  Very  low  awareness.  Those  who  know  are  past  guests  
  10. 10. Guest’s Perception •  Brand  Rosewood  means  nothing.   •  Guests   have   used   various   proper]es   but   couldn’t   realize   that   all  were  a  part  of  same  group   •  Even  aier  staying  at  the  property,  guests  don’t  tend  to  know   the  name  Rosewood   •  Rosewood   as   a   brand   doesn’t   encourages   me   to   try   different   proper]es   •  I  dint  know  un]l  my  travel  agent  men]oned  it  
  11. 11. Current Issues Aier  switching  to  automated  data  gathering  through  CRS,   consolidated  guest  data    revealed  that  -­‐     •  5%  mul]  property  return  visit  while  corporate  branded  hotels   enjoyed  10%  -­‐15%    cross  property  usage  rate.   •  Rosewood  was  at  the  low  end  of  the  scale  and  there  were  an   opportunity  for  increasing  cross-­‐property  usage.  
  12. 12. Probable Solutions •  Through  frequent-­‐stay  program   •  Corporate  branding  approach  
  13. 13. Issues observed with Frequent Stay Programme •  This  type  of  program  had  been  successful  only  for  large  mul]   segment  operators  with  broad  geographic  distribu]on.   •  Loyalty  through  these  type  of  program  was  fostered  by   offerings  such  as—flexible  check  in,  check  out  ]me,   personalized  services,  freedom  to  request  a  specific  room,   capacity  of  employees  to  solve  most  unusual  problem  etc…  
  14. 14. Advantages of Corporate Branding: Better Customer Life Time Value CLV   3000   2500   2000   1500   1000   500   0   2003   2004   2005   2006   2007   2008   2009   CLV  without  branding   317   640   966   1296   1628   1963   2299   CLV  with  branding   364   731   1102   1475   1850   2226   2603  
  15. 15. Advantages of Corporate Branding (Contd…) •  Collec]ve  experience     •  Consistent  service  –  in  all  aspects   •  Encourage  guests  to  use  more  than  one  property   •  BeUer  brand  recogni]on     •  High  customer  loyalty   •  As  per  the  survey,  Individual  brand  or  collec]on  hotels  had  5%  to   10%   cross   selling   rates   while   corporate   branded   hotels   enjoyed   10%  to  15%  cross  property  usage  rates  
  16. 16. Issues in Corporate Branding •  Internal  resistance  :  Few  Hotel  Managers  were  inclined  to   promote  their  own  Hotel  Rather  than  promo]ng  the  Rosewood   •  Some  corporate  guests  didn’t  want  to  be  a  part  of  bigger   Organiza]on  due  to  their  emo]onal  aUachment  to  a  par]cular   hotel.  
  17. 17. Scenario with an Introduction of Corporate Branding Without Rosewood brand Name(2003) With Rosewood corporate brand name 115000 115000 750 750 No. of days av guest stays 2 2 Av gross margin per room 32% 32% Av no. of visits per year per guest 1.2 1.3 Av. Mktg. expense per guest (system wide) 130 139 Av new guest acquisition expense (system wide) 150 150 19169 46000 5750 11500 16.67% 40 386 407 138689580 146314155 Total Guest 115000 115000 New Guest 95831 69000 183070246 193134685 Parameters Total no of unique guests Av daily spend Total no of repeat guests (Of which: total no. of multi property stay guest) Average Guest retention rate Average gross profit per guest Total Expenses Total Revenue Generated Corporate Branding proves out to be profitable vis-à-vis Frequest Stay programme
  18. 18. Suggestion based of Corporate Branding as a go ahead •  Don’t  dilute  individual  brand  persona   •  Subtly  add  Rosewood  to  it   •  Get  internal  teams  confidence     •  Show  them  a  bigger  picture   •  Incen]vize  trade  and  ask  them  to  push  a  brand   •  PR  can  do  wonders   •  Build  a  Rosewood  membership  plan   •  Tie  up  with  travel  agencies/tour  operators  etc  
  19. 19. Thanks

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