The document analyzes three options for the strategy of Rosewood Hotels & Resorts: going fully corporate, maintaining an individual approach, or adopting a hybrid strategy. It recommends a hybrid strategy that incorporates the Rosewood name in marketing while maintaining individual hotel brands. Financial projections show the hybrid strategy has the highest internal rate of return and profitability index. Adopting this approach would best increase cross-property usage and customer lifetime value while keeping existing customers satisfied.

1. Meredith Bateh
Busi 760
SCAD 2009

2. Should Rosewood go Corporate?
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3. Recommendations
1. I recommend that Rosewood adopt a
hybrid strategy:
• « Rosewood » is placed next to the individual and already
existing hotel names, except for The Carlyle.
• All marketing includes the « Rosewood » name.
• The Company’s web-site clearly indicates « Rosewood » and the
list of the hotels it owns.
2. I recommend an investment of $25,000,000
over two years.
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4. Rosewood’s Options
• Option 3: Keepingstrategies
Option 2: Hybridcorporate
1: Going an Individual approach.
1. The Rosewood name placed by all of the
• Option 2: Hybrid strategies Carlyle.
hotels names except for The
2. The Rosewood name appearsby all of the
1. placed on all of the
company’s marketing sources (towels,
hotels names except for The Carlyle.
2. bathrobes, glasses, web-site,…) all of the
The Rosewood name appears on
company’s marketing sources (towels,
bathrobes, glasses, web-site,…)
Campton Place-A Taj Hotel,
• Option 3: Keeping an Individual approach. San Francisco
Charleston Place, in Charleston
Orient-Express
The Four Seasons ,Dublin 4

5. Analysis of Options
Option 1: Corporate Option 2: Hybrid Option 3: Individual
Pros:
• May provoke an increase in cross Pros: Pros:
property usage. • The individuality of each • Doesn’t involve any changes
• May increase CLTV. hotel is respected. in the company’s strategy,
• Already existing clientele therefore it doesn’t require
Cons: will be kept. any investments.
• Goes against Rosewood’s • Will help encourage cross
brand identity (“Sense of property usage.
Place”).
• Cheaper than option 1.
Cons:
• Risk of losing existing
• The company’s profit
clientele.
remains the same.
• Involves a complete change
of the company’s strategies. Cons: • Cross property usage will
• Requires an investment of • Requires an investment of stagnate.
$50,000,000. $25,000,000. • CLTV will remain
the same.
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6. Financials
Option 1: Corporate Strategy
Years 0 1 2 3
Cash Inflows 0 10,000,000 30,000,000 45,000,000
Cash (50,000,000) - - -
Outflows
Net Cash flows (50,000,000) 10,000,000 30,000,000 45,000,000
1. The IRR is 25%.
2. The net present value is $10,900,000.
3. The profitability index is 1.7.
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7. Financials Cont’d
Option 2 (recommendation): Hybrid Strategy
Years 0 1 2 3
Cash Inflows 0 9,000,000 15,000,000 20,000,000
Cash (10,000,000) (15,000,000) - -
Outflows
Net Cash Flows (10,000,000) (6,000,000) 15,000,000 20,000,000
1. The IRR is 43%.
2. The net present value is $9,300,000.
3. The profitability index is 1.9. 7

8. Financials Cont’d
Option 3: Individual Strategy
Years 0 1 2 3
Cash Inflows 0 2,500,000 3,500,000 4,000,000
Cash (4,000,000) (2,000,000) (500,000) -
Outflows
Net Cash flows (4,000,000) 500,000 3,000,000 4,000,000
1. The IRR is 30%.
2. The net present value is $3,100,000.
3. The profitability index is 1.8. 8

9. Comparisons
Comparison of the Internal Rate of Return Comparison of the Profitability Index
(IRR) of the three options: (PI) of the three options:
IRR PI
Option 3 30% Option 3 1.8
Option 2 43% IRR Option 2 1.9 PI
Option 1 25% Option 1 1.7
0% 10% 20% 30% 40% 50% 1.6 1.65 1.7 1.75 1.8 1.85 1.9 1.95
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10. Conclusion
Rosewood should adopt a hybrid
strategy because:
1. It has a higher probability of
impacting the company’s
profitability.
2. It keeps actual loyal customers
satisfied while encouraging more
cross property usage.
3. Therefore it will have more of a
probability of increasing CLTV.
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11. Sources
• Rosewood Hotels web-site,
www.rosewoodhotels.com
• Harvard Business Publishings, « Rosewood
Hotels & Resorts: Branding to Increase
Customer Profitability and Lifetime Value »
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