Rosewood launched its first hotel the mansion on turtle Creek, Dallas Texas in 1980. Over the next 25 years rosewood purchased several high-end hotels, operating them under various names, each with their own prestigious reputation. The Rosewood corporate name historically has always been kept in the background, remaining unknown except to travel agents and other hotels and related travel organizations, (Dev & Strook, 2007). “Competition in the luxury hotel segment is intense and it was becoming difficult to position Rosewood’s collection of properties in an increasingly crowded field of luxury operators,” (Dev & Strook, 2007).
In recent years rosewood and its management team headed by Robert Boulogne has been strongly considering establishing Rosewood as the corporate brand, similar to the Four Seasons and Ritz-Carlton brands. Rosewood has also looked at the idea of the frequent stay program among all the hotels in the Rosewood chain. However, the idea of frequent stay program would likely not benefit Rosewood. It would actually cheapen the brand. Being a luxury hotel, Rosewood’s customers are likely to be less interested in a discount program then and just knowing where other luxury hotels are.
It may be just as easy to be the brochure in the room showing the locations of other Rosewood hotels to help improve brand awareness. Disadvantages Almost all of the Rosewood hotels carry with them a high level of prestige tied to their individual names. Each hotel offers a unique experience that the individual operators pride themselves on. Each hotel has its own client base based on that experience in the brand name of that individual hotel. Many of the individual hotel owners, especially the Carlyle in New York feel that attaching a corporate brand may cheapen the identity of the individual hotel.
There’s also the fact that according to surveys done by the Rosewood Company itself, the Rosewood name is almost completely unknown among its current customers. It may be conceived by their existing customers that the Rosewood Company bought out these hotels and may change their management style and customer experience, rather than Rosewood being there all along. Advantages If done correctly, the Rosewood name can tie all of these prestigious hotels together. The name Rosewood can carry the same prestigious qualities that the Ritz-Carlton and the Four Seasons Hotels carry.
The Dev & Strook article mentioned that although some properties in your return visits of up to 40% of guests, only 5% of Rosewood guess it stayed more than one of Rosewood properties. This suggests that many of their customers, when returning to the same vacation destination choose to stay at that particular Rosewood Hotel. However it’s possible that when going to another vacation destination their guests may not realize that one of the hotels in that area are also owned by Rosewood. This is a situation where corporate brand recognition would be extremely beneficial.
That would mean that that same brand loyalty at each individual Rosewood Hotel enjoys can be shared across all of the Rosewood hotels which are already located in many vacation hotspots. This could increase each individual hotels customer base without the need for expensive advertising. Unlike the corporate brand model, in which luxury tended to follow a “candid cookie-cutter” approach across properties, Rosewood operated a “collection” of unique properties, each with its own name or brand. (Dev & Strook, 2007).
The comparison can be made between Rosewood Hotels and the high-end automaker Duesenberg. Duesenberg made high-end unique one-of-a-kind automobiles. Just like the rich and famous all wanted to be seen in a Duesenberg, they can all want to stay at a Rosewood Hotel. Since the Duesenberg name is no longer protected by copyright, their advertisements could even feature Duesenberg’s in the background and make either a direct or subtle comparison to the Rosewood hotels unique, luxurious, one-of-a-kind experience.
A Look at Customer Lifetime Value Each of Rosewood’s hotels has a loyal customer base of approximately 40% that return at least once a year to the individual location, (Dev & Strook, 2007), most likely due to the superior service and perceived customer value they have for that individual hotel. Rosewood’s customers likely either vacation or do business in the locations of any of the other Rosewood hotels but are not aware of the relationship between Rosewood and the existing hotels in those locations.
If this perceived customer value can be applied to the other hotels in the chain this can increase the average number of purchases per year for each individual hotel. When entering the data in Exhibit 8 from the Dev & Strook article, the average profit per customer can triple, just by increasing the number of stays per year by one. This is due to the fact that there are no additional direct marketing costs to retain that customer. Background Rosewood hotels should proceed with attaching the Rosewood name to all of its hotels.
However, they should proceed with careful consideration to the individuality of each one of its hotels. Their ad campaign should make it clear that they’ve been here all along. The benefits of time the Rosewood name to all of its prestigious hotels would far outweigh any perceived disadvantages. Once the Rosewood name is established and tied with other hotels, any new hotels started with the Rosewood name would receive these same advantages and likely enjoy high profit margins much faster than without the Rosewood name.
Because “80% or more of the company’s profits come from the top 20% of its customers,” (Kotler & Keller, 2009), it becomes increasingly important to hang on to these profitable repeat customers. References: Dev, C, Strok, L, 2007 “Rosewood Hotels and Resorts: Branding to Increase Customer Profitability and Lifetime Value” Harvard Business School Publishing. Taken From JWMI 2012 Kotler, P. , & Keller, K. L, (2009), 5th Ed. A Frame Work For Marketing Management. Prentice Hall, Upper Saddle River NJ