Rosewood Hotels & Resorts: Branding for Customer Profitability

This case study examines Rosewood Hotels & Resorts' strategic shift towards a more prominent branding approach to enhance customer profitability and lifetime value. The company, initially operating with a muted brand presence and focusing on individual hotel identities, faced challenges in increasing brand awareness and cross-property usage. The case explores the limitations of the individual brand/collection strategy and the potential benefits of a corporate branding model, drawing parallels with successful luxury hotel brands like AmanResorts. The analysis covers Rosewood's historical background, competitive landscape, customer data analysis, and the consideration of loyalty programs. It highlights the decision-making process of the company's leadership in response to low brand recognition and the need to foster greater customer loyalty and repeat business, ultimately aiming to optimize the brand's position within the luxury hotel market.

2087
J U N E 1 5 , 2 0 0 7
CHEKITAN S. DEV
LAURE MOUGEOT S TROOCK
Rosewood Hotels & Resorts: Branding to
Increase Customer Profitability and Lifetime Value
Introduction
For nearly 25 years, Rosewood Hotels & Resorts (Rosewood), a private hotel management company, sought
to build a global reputation with iconic luxury hotels such as The Mansion on Turtle Creek in Dallas and The
Carlyle in New York—trophy properties so distinctive, each could thrive on its own name, without any
“corporate” identification (see Exhibit 1 for brand history). The Rosewood brand was muted, unmentioned in
advertising, and known mainly to hotel professionals.
However, in early 2004, to boost the company’s growth, John Scott, Rosewood’s new president and CEO,
and Robert Boulogne, vice president of sales and marketing, were considering a new brand strategy. As
Boulogne recalled:
We thought the time was right to establish Rosewood as a true brand incorporated into the name of
each hotel and prominently displayed in all communications for and at our properties. This would help
provide us with a platform for encouraging guests who stay at one of our properties to stay at some of
the others.
But, they wondered how far they could push this branding strategy without undercutting the distinctiveness
of each individually branded hotel.
Company Profile and Background
Headquartered in Dallas, Texas, Rosewood Hotels & Resorts, L.L.C, was a privately held company,
established in 1979 by the Caroline Rose Hunt Trust Estate (see Exhibit 2 for biographies of key figures). The
first hotel Rosewood managed was The Mansion on Turtle Creek, opened in 1980. This hotel was an old
mansion in Dallas rescued from demolition by Mrs. Hunt, the daughter of Texas oil tycoon H.L. Hunt.
Rosewood worked with Hunt to transform the property into a worldclass hotel and restaurant. After successful
conversions of existing hotels (The Mansion on Turtle Creek and Little Dix Bay in the British Virgin Islands),
and new builds (The Lanesborough in London
________________________________________________________________________________________________________________
Chekitan S. Dev and Laure Mougeot Stroock prepared this case solely as a basis for class discussion and not as an endorsement, a source of primary data, or an
illustration of effective or ineffective management. Chekitan S. Dev is Associate Professor of Marketing and Brand Management at Cornell University’s School
of Hotel Administration. Laure Mougeot Stroock is an independent business research analyst and casewriter working for the School of Hotel Administration
and Cornell’s Johnson Graduate School of Management.
This case, though based on real events, is fictionalized, and any resemblance to actual persons or entities is coincidental. There are occasional references to
actual companies in the narration.

2087 | Rosewood Hotels & Resorts: Branding to Increase Customer Profitability and Lifetime Value
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and Las Ventanas Al Paraiso in Mexico), the company became known for its ability to enhance a property’s
value by creating unique, one-of-a-kind properties with a small ultra-luxury residential style that differentiated it
from other chain-like luxury competitors.1 As of 2003, Rosewood had 12 hotels worldwide, with a total capacity
of 1,513 rooms, for which the nightly rate ranged from a low of $120 for one of the Saudi Arabian properties to
$9,000 for a Canadian lodge. In the previous year, 115,000 unique guests2 had stayed at Rosewood hotels (see
Exhibit 3 for operating profile).
Rosewood competed with two groups of luxury hotels: the corporate branded Ritz-Carlton, Four Seasons, St.
Regis, One&Only, and Mandarin Oriental hotels, and the “collections” of individually branded unique hotels,
such as Auberge, RockResorts, and Orient-Express (Exhibits 4 and 5).
The Individual Brand/Collection Strategy
Unlike the corporate brand model, in which luxury tended to follow (as Scott dubbed it) a “canned and
cookie cutter” approach across properties, Rosewood operated a “collection” of unique properties, each with its
own name or brand (see Exhibit 6, Rosewood Properties and Signed Agreements). Each hotel and resort
featured architectural details, interiors, and culinary concepts that reflected local character and culture and
defined Rosewood’s “Sense of Place” philosophy. Scott explained:
What makes Rosewood different is its commitment to unique, one-of-a-kind, luxury properties. Our
brand compass has always been built on our concept of “A Sense of Place®” which, at its core, means
that each of our properties seeks to capture what is unique about the given location. From design to
service to programming, we try and tailor each property experience to what is special about a given
location, architecture, history, and culture. To this end, our Rosewood design and service standards are
meant to be flexible enough to adapt to local conditions. Our local teams are expected to have some
degree of flexibility and creativity to reflect “A Sense of Place®” from menu design to how a guest is
greeted. This is a very different approach from our chain-like competitors.
In the 1990s, Rosewood’s management believed that the individual property brand or collection strategy was
a powerful tool to differentiate Rosewood properties from competitors with a corporate brand. Scott explained:
Our original collection growth strategy was two-fold. We sought to convert existing iconic, luxury
hotels with strong brand equity which needed to be re-positioned and re-launched with professional
management (i.e., The Carlyle and Little Dix Bay). We also sought to help developers conceive and
create the next generation of luxury hotels and resorts around the world, and in doing so create brand
equity in the property itself (i.e., The Mansion on Turtle Creek and Las Ventanas al Paraiso).
Under the individual brand or collection strategy, the Rosewood hotel marketed itself under its own brand
name in addition to participating in Rosewood-related advertising. “The Rosewood branding was soft and
meant to be complementary, not intrusive,” remarked Boulogne. The Rosewood logo appeared discreetly on
low-profile amenities such as clothes hangers or stationery. Higher-profile amenities, such as bathrobes and
towels (which also provided a profitable souvenir business), bore the logo of the hotel. Hotel phone greetings
did not mention the Rosewood name.
2
1 In December 2002, Las Ventanas Al Paraiso’s RevPAR index was 3.62 (the index measures the Revenue per Available Room of
a hotel compared to the ones of its competitors in the same market). The Lanesborough’s was 1.5, the Mansion on Turtle Creek’s was
1.96 and Little Dix Bay’s was 1.25.
2 For example, a couple or family staying in the same hotel room counted as one unique guest.
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Rosewood Hotels & Resorts: Branding to Increase Customer Profitability and Lifetime Value | 2087
Through the 1990s, Rosewood’s advertising was property-specific: the property name appeared first, then
the location. In the early 2000s, Rosewood’s advertising began to feature a list of all Rosewood properties, but
the Rosewood logo remained secondary to the hotel logo.
The Limitations of Individual Branding
In April 2003, John Scott, who was the director of acquisitions and asset management at a private real estate
investment group and a Rosewood board member, was asked by the Board to become CEO and help chart a
new direction for Rosewood. He recognized that the Rosewood brand had low recognition and brand-wide
usage among guests and was an untapped asset.
Scott and Boulogne concluded:
Our emphasis on individual property brands was not working from a number of fronts. While guests
were seeking a unique Rosewood property experience and product, they were not making the connection
between Rosewood properties and were increasingly identifying with other strong hotel brands.
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.
Philip Maritz, chairman of the board, went further in questioning Rosewood’s individual branding
positioning: “I think we are underestimating the power of corporate brands, such as Four Seasons, as status
symbols. At this time, we are after only a subset of the luxury market—the sophisticated customers who value
the distinctive, exclusive ‘collection’ hotel—when in fact the vast majority of the luxury market seem to value
the corporate-branded version of luxury. Our current brand positioning substantially limits our market.”
The Case for Corporate Branding
Rosewood Hotels & Resorts had very low brand awareness with its guests. A 2003 report from Strategic
Marketing Solutions commissioned by Rosewood showed that a majority of consumers did not know the brand
—and the few who did had learned the name Rosewood from their travel agents (see Exhibit 7, Selected
Quotes).
In spite of this, Scott had high hopes for Rosewood: “I want to emulate the AmanResorts model and develop
‘Rosewood junkies’ who will seek out Rosewood properties exclusively.” AmanResorts was a luxury resort
hotel management company with corporate-branded properties located in remote natural settings. Its core
followers, nicknamed “Aman Junkies,” prided themselves on collecting Aman experiences and generally
rejected the other luxury corporate brands. Aman resorts sold the promise of pure, unadulterated quiet. It
offered a consistent service formula with healthful, uncomplicated food; Asian-themed spa treatments; and an
uncannily attentive staff. Although Aman had only around 500 rooms across 15 resorts in 2003, it counted
more than 100,000 repeat guests.3 Inspired by Aman, Scott and Boulogne thought Rosewood could do better.
Toward this end, Scott and Boulogne were taking steps to learn more about Rosewood guests’ habits and
profile in order to improve Rosewood’s guest recognition capabilities and promote crossproperty usage. The
company, which had been manually collecting guest data from its 12 separate hotel management systems, had
just switched to automated data-gathering through its central reservation system (CRS), and was creating one
global, flexible data warehouse for all its hotels. Boulogne explained:
Our traditional guest-recognition service was to provide a guest with, for example, a specific type of
pillow upon arrival. Now we are also able to track the repeat factor for that guest and how much they
spent on room, food and beverages, and activities for stays across all Rosewood properties. In the not-
so-distant future, we will combine this data with specific guest preferences provided by the guest into a
comprehensive guest profile to be housed in our global data warehouse. With this, we will have the
ability to expand our customer preference program across the entire brand. 4
3 Jonathan Gregson, “Loyal Beyond Reason,” Financial Times, June 11, 2004.
4 “Ultra-Luxury Segment Stays Strong in $525 Billion Travel Industry. Rosewood Hotels & Resorts Consolidates Global Guest History to Target
10% Increase in Repeat Business from World’s Traveling Elite,” www.hotel-online.com. September 30, 2003.
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2087 | Rosewood Hotels & Resorts: Branding to Increase Customer Profitability and Lifetime Value
Preliminary results from an analysis of consolidated guest data revealed that, although some properties
enjoyed return visits of up to 40% of guests, only 5% of Rosewood guests had stayed in more than one of
Rosewood’s properties. Such low percentages were typical of the luxury hotel segment, where the expense per
visit was high, loyalty was typically property-specific, and therefore the number of visits per year was usually
only one or two. While the proportion of repeat guests at a single property could reach 40%, 5 the individual
brand or collection hotel brands typically had 5% to 10% multiproperty cross-selling rates6 while corporate-
branded hotels enjoyed 10% to 15% crossproperty usage rates.7 Rosewood was at the low end of the scale and
management felt there was an opportunity for increasing cross-property usage.
To encourage guests to use more than one Rosewood hotel, two possible approaches were considered. One
possibility to boost Rosewood’s customer multiproperty visits was to set up a frequent-stay program.8
According to Market Metrix—a provider of market research services for the hospitality industry—the number
of guests enrolled in frequent-stay programs (mostly point-based) grew by nearly 12% in 2003, and such
programs were believed to double repeat business.9 But while such programs had proved successful for large
multiple-segment operators with broad geographic distribution, where guests could easily redeem their reward
(such as Marriott, Starwood, and Hilton), few luxury hotels had adopted them. Neither Four Seasons nor Ritz-
Carlton had point-based loyalty programs, although members of Marriott Rewards could redeem their points for
stays at RitzCarlton. In March 2003, Leading Hotels10 was the first luxury hotelier to offer its frequent
customers
5 A 40% return visit rate meant that if 10,000 guests stayed at a “Hotel X” in a given year, 4,000 of those guests had stayed in Hotel X within the
previous year.
6 A 5% multiproperty return visit rate for a hotel brand which has 100,000 guests in a given year meant that 5,000 of those guests were guests
returning to the same hotel brand, but to a property different from the one they visited the previous year.
7 Cross selling rates for Orient-Express Hotels, for example, was 5% to 10% in 2002. See Francis X. Frei, “Orient-Express
Hotels,” HBS Case 603-024 (Boston: Harvard Business School Publishing, 2002), p.5. Cross selling rates for Four Seasons Hotels
was 9% in 2000. See Roger Hallowell, “Four Seasons Hotels and Resorts,” HBS Case 800-385 (Boston: Harvard Business School
Publishing, 2000).
8 Loyalty programs in the hotel industry were either based on points (guests earned points, based on spending or stays, which
could be exchanged for rooms or other benefits) or on guest recognition (guests’ preferences were captured, retained, and
communicated throughout the brand and utilized to enhance future visits).
9 “Market Metrix Announces Fourth Quarter 2003 Hospitality Index Results: Membership in Frequent-Stay Programs Double
Repeat Business,” Hospitality.net, Industry News, February 3, 2004. http://www.hospitalitynet.org/news/4018442.html, accessed on
04/22/2007.
10 Leading Hotels of the World was a hospitality organization that provided sales, marketing, and other services to luxury hotels
and resorts. Besides Rosewood, Leading handled reservations for over 400 hotels worldwide, including the Mandarin Oriental and the
Peninsula hotel brands.
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Rosewood Hotels & Resorts: Branding to Increase Customer Profitability and Lifetime Value | 2087
4
the possibility to earn rewards for stays at its properties worldwide.11 Research on luxury hotel guests revealed
that loyalty was fostered by offering the following benefits: room upgrades, flexible check-in and check-out,
personalized services, expedited registration, the freedom to request a specific room, and the capacity of
employees to take guests' problems—even the most unusual— seriously.12 Scott therefore deemed it wiser for
Rosewood not to invest in a frequent-stay program.
The other way to create guest connection with Rosewood properties was to adopt a corporate branding
approach, which Scott and Boulogne believed would encourage multiproperty guest stays, as delighted guests
at, say, Mexico’s Las Ventanas would be encouraged to stay at another Rosewood property when they visited a
different part of the world. However, a fair amount of marketing expense (not to mention cultural change)
would go into building and promoting the Rosewood corporate brand, and before they could justify the costs,
Scott and Boulogne needed to test their hypothesis.
A New Brand Strategy to Build Customer Lifetime Value
By late 2003, Scott and Boulogne began to wrestle with the nuances of corporate branding. Boulogne
favored the immediate implementation of a corporate branding strategy, with the Rosewood brand directly
preceding the name of properties (e.g., Rosewood Al Faisaliah Hotel, or Rosewood Little Dix Bay). “We are
sitting on a great brand. The people who know it, love it. Unlike One&Only Resorts, we do not need to start
from scratch, we just need to expose it,” he argued. But he conceded that outright full branding carried some
risks. “Prominently imposing the Rosewood brand might alienate some of our guests at well-established
properties such as The Carlyle or The Mansion on Turtle Creek,” he admitted.
In practice, adopting a new branding strategy meant that the Rosewood name would become ubiquitous
across all operational dimensions, from the telephone greetings to in-room amenities and beyond. Scott
observed:
To keep our brand promise, we would need to ensure perfect product/service performance
consistency across our portfolio, internal soft branding initiatives to link property-level people to the
Rosewood organization, and significant marketing investment to boost guest retention and cross-selling.
Scott wondered how far he could develop consistent brand-wide performance standards while preserving the
uniqueness and individuality of Rosewood properties. Boulogne explained:
Many of the hotel managers have mixed feelings about spreading the Rosewood corporate brand in
their properties. They are more inclined to promote just their own individual hotel brands, particularly if
they have a strong brand. I think some hotel managers may also feel threatened in their autonomy to
manage the properties because with more brand standards come all kinds of other things like spa
branding or other branded programs.
Some resistance to Rosewood branding came from guests as well as managers. The Carlyle in New York, a
signature, 1930s-era, 35-story hotel overlooking Central Park, was a notable example. About one-third of The
Carlyle’s 179 rooms and suites had been purchased by private owners who organized into a cooperative (“co-
op”). James McBride, managing director of The Carlyle, explained:
11 Ron Lieber, “Better Coddling? Chic Hotel Group To Offer Rewards,” Wall Street Journal, January 23, 2003.
12 John T. Bowen and Stowe Shoemaker, “Loyalty: A Strategic Commitment,” Cornell Quarterly, 1998, 39(1), pp. 12-25.
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2087 | Rosewood Hotels & Resorts: Branding to Increase Customer Profitability and Lifetime Value
Most of the co-op owners are reluctant to go toward a more visible Rosewood brand, because they
do not view being a part of a bigger organization as positive. They feel that The Carlyle brand is
powerful and they view the association of a brand like Rosewood as unnecessary. They have an
emotional bond with The Carlyle’s branded products that they feel would be lost with Rosewood’s
branded items.
Ultimately, Scott and Boulogne needed to use guest revenue and expense data to convince themselves that
the potential benefits—greater customer lifetime value—would outweigh the marketing and operations costs
associated with promoting the new branding to guests. A spreadsheet model that projected Rosewood’s brand-
wide customer lifetime value (CLTV) was developed, using nine financial and operational input variables
related to rooms, guests, and marketing and acquisition costs.
To estimate the impact of Rosewood’s corporate branding strategy on profit per guest, the initial analysis
resulted in the following working assumptions:
1. The number of multiproperty guest stays was anticipated to double to 10% from the 5% rate the
company experienced during the previous year, raising the average number of visits per year per guest
from 1.2 to 1.3 and inflating the total number of repeat guests. While it was expected that this initiative
would also bring new guests to Rosewood, to simplify the analysis the overall total number of unique
guests was kept constant at 115,000.
2. A marketing and operations investment of $1 million per year would be necessary to implement the
corporate branding strategy.
Boulogne needed to calculate and forecast the CLTV for six years with and without a Rosewood corporate
brand in order to compare both results to determine how the branding strategy would affect profit per guest (see
Exhibit 8).
Despite various sources of resistance and conflicting evidence, Scott was now fully convinced that a
branding decision had to be made to clarify the company’s future. Rosewood’s board of directors was
scheduled to meet in late January 2004 to discuss Rosewood’s future plans. Scott knew he would need to put
forth a compelling strategic and financial argument for the board’s consideration. “We need to complete our
calculation of the costs and benefits of this new branding strategy and evaluate if its potential positive impact on
guest retention and revenues can offset the increased marketing and operational cost and effort it requires. This
will be the perfect venue to discuss the branding issue, but it is likely to be a contentious meeting, given the
long-term strategic change of direction.”
Exhibit 1 Rosewood’s History
1979 The Caroline Rose Hunt Trust Estate establishes Rosewood Hotels & Resorts.
1980 Rosewood launches its first hotel—The Mansion on Turtle Creek, Dallas, Texas.
1982 Rosewood refurbishes and opens Hotel Bel-Air, Los Angeles, California.
1984 Rosewood develops the Hotel Hana Maui in Hawaii.
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Rosewood Hotels & Resorts: Branding to Increase Customer Profitability and Lifetime Value | 2087
1985 Rosewood opens Hotel Crescent Court in Dallas, Texas, including The Crescent Club and The Spa at The
Crescent.
1987 Rosewood positions the opening of Hotel Seiyo Ginza in Tokyo, Japan.
1989 Rosewood sells the Hotel Bel-Air and Hotel Hana Maui for record prices, reflecting the company's ability to
create value through positioning strategies and marketing.
1991 Rosewood opens The Lanesborough in London, England.
1992 Rosewood assumes management of Caneel Bay, St. John, U.S.V.I. and Little Dix Bay, Virgin Gorda, B.V.I.
1995 Rosewood is awarded management contracts in Riyadh, Saudi Arabia: Hotel Al Khozama and Al Faisaliah
Hotel.
1997 Rosewood opens The Bristol in Panama City, Las Ventanas al Paraiso in Los Cabos, Mexico, and The
Dharmawangsa in Jakarta. The Rosewood Corporation announces joint-venture partnership with Maritz, Wolff
& Co. in Rosewood Hotels & Resorts, L.L.C.
1999 Rosewood assumes management of Badrutt’s Palace, St. Moritz, Switzerland; opens Al Faisaliah Hotel; and
announces a long-term contract for Hotel Seiyo Ginza.
2000 Rosewood announces purchase and management of The Carlyle in New York and engages in a marketing
arrangement with King Pacific Lodge in British Columbia, Canada.
2001 Acqualina Resort & Residences selects Rosewood to manage its resort under development in Sunny Isles Beach,
Florida.
2002 Rosewood takes on management, renovation, and relaunch of Jumby Bay in Antigua.
Source: Rosewood Hotels & Resorts’ Website
Exhibit 2 Biographies of Rosewood’s Executive Officers as of 2003
Caroline Rose Hunt, Honorary Chairman: Over 25 years ago, Caroline Rose Hunt opened The Mansion on Turtle
Creek, the first Rosewood hotel, by transforming an old Dallas mansion in peril of being demolished into a world-class
restaurant and hotel. Mrs. Hunt's goal with The Mansion, and each ensuing Rosewood hotel and resort, has been to create
an ambience of elegance without ostentation, an unrivaled level of personal service, and attention to detail. Each property
acts as a quintessential expression of its location. This long-existing mantra of the company has become its guiding
principle, inspiring the phrase “A Sense of Place®”.
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2087 | Rosewood Hotels & Resorts: Branding to Increase Customer Profitability and Lifetime Value
Philip Maritz, Chairman of the Board: Maritz is President and founding partner of Maritz, Wolff & Company. Since
1994 Maritz has helped establish Maritz, Wolff as a leading private real estate investment company focused on the luxury
hospitality industry. Since its inception Maritz, Wolff has acquired 19 luxury hotel properties and significant interests in
Rosewood Hotels & Resorts and Fairmont Hotels, two leading luxury hotel management companies. Prior to founding
Maritz, Wolff & Company Maritz was active in real estate acquisition and development with Morgan Stanley & Company
and Spieker Properties. He received a BA from Princeton and a MBA from Stanford University Graduate School of
Business.
John Scott, President and Chief Executive Officer: John M. Scott III is president and CEO of Rosewood Hotels &
Resorts. Scott joined Rosewood as president and CEO in 2003. In his role as senior executive, he leads Rosewood in
pursuing growth opportunities and further refining its renowned standard of luxury. Scott has served as a member of the
company's board of directors since 1997. His experience as both owner and operator of world-class hotels has proven to be a
great asset to the company. Scott came to Rosewood from Maritz, Wolff & Co., where he was managing director of
acquisitions and asset management, responsible for building and overseeing the company's $1.5 billion portfolio of luxury
hotels and resorts. Before joining Maritz, Wolff, Scott held leadership positions with Interpacific Group, where he was
responsible for hotel projects in Micronesia, Indonesia, and Thailand; and the Walt Disney Company, where he led strategic
planning and development efforts for Walt Disney World's theme parks, hotels, and entertainment-related businesses. He
holds a Master's Degree in Business Administration from Harvard Business School and a Bachelor of Arts Degree from
Dartmouth College.
Robert Boulogne, Chief Operating Officer: Robert Boulogne joined Rosewood Hotels & Resorts in 2001 with over
20 years of experience in the hospitality and travel industry. He assumed the position of vice president of sales and
marketing where he oversaw all aspects of marketing, public relations, advertising, and central reservations for all of the
company's properties. Previously, Boulogne served as vice president of sales for Youpowered Inc., a company specializing
in personalization and privacy software for the Internet, and as vice president, Americas for Rezsolutions, Inc., where he
was responsible for managing sales and marketing initiatives for Summit Hotels and Resorts and Sterling Hotels and
Resorts. Additionally, Boulogne has held various sales and marketing positions with Four Seasons Hotels and Resorts.
James McBride, Managing Director of The Carlyle, New York: James McBride joined Rosewood as managing
director of The Carlyle in December 2003. McBride joined The Carlyle from The Grosvenor House in London where, as
general manager, he was recruited to reposition this landmark hotel after an extensive renovation. A native of South Africa,
McBride received his diploma in hotel management before moving to the United States to further his education at Cornell
University’s School of Hotel Administration. He then joined The Ritz-Carlton Hotel Group, working for the company
throughout the world starting in Boston followed by San Francisco, Hawaii, Singapore, Hong Kong, Kuala Lumpur, and
Washington D.C.
Exhibit 3 Rosewood’s Operating Profile, 2001-2003
2001 2002 2003
Number of hotels (year beginning) 11 13 13
Number of hotels added 2 2 0
Number of hotels lost
Total number of hotels (year end)
0 (2) (1)
13 13 12
Total number of rooms (year end) 1,859 1,714 1,513
Source: Rosewood Hotels & Resorts.
Exhibit 4 Rosewood’s Competition
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Rosewood Hotels & Resorts: Branding to Increase Customer Profitability and Lifetime Value | 2087
Selected Luxury Hotel Brands
Number of
Properties in
1996
Number of
Properties in 2003
Number of
Properties Added
% Property
Growth
1996-2003
Corporate Branded Properties
Four Seasons 38 58 20 53%
Ritz-Carlton 30 52 22 73%
Fairmont 25 46 21 84%
Park Hyatt 13 21 8 62%
Mandarin Oriental 9 19 10 111%
St. Regis/Luxury Collection 5 9 4 80%
One&Only 0 9 9 n/a
Regent 6 9 3 50%
Peninsula 5 7 2 40%
Raffles 1 5 4 400%
Average 13 24 11 85%
Individually Branded Properties
Orient Express 13 25 12 92%
Rosewood 6 12 6 100%
RockResorts 6 10 4 67%
Rocco Forte 0 8 8 n/a
Auberge 1 5 4 400%
Dorchester 2 4 2 100%
Average 5 11 6 120%
Source: Rosewood Hotels & Resorts
Exhibit 5 Select Operational Statistics of Rosewood’s Competitors in the Luxury Hotel Segment
2001 2002 2003
Rosewood Hotels & Resorts
ADRa $344 $334 $351
Occupancy 57% 61% 62%
RevPARb $197 $204 $217
Number of rooms 1,859 1,714 1,513
Four Seasons Hotels
ADRa $287 $289 $299
Occupancy 65% 65% 62%
RevPARb $187 $187 $185
Number of rooms 14,598 15,433 15,726
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2087 | Rosewood Hotels & Resorts: Branding to Increase Customer Profitability and Lifetime Value
Ritz-Carlton (Marriott International) ADRa $250 $233 $231
Occupancy 67% 66% 66%
RevPARb $167 $154 $152
Number of rooms 14,826 16,566 18,347
Orient-Express Hotels
ADRa $276 $286 $340
Occupancy 63% 59% 54%
RevPARb $173 $168 $184
Number of rooms 1,914 2,104 2,177
Source: Operating statistics for Ritz-Carlton come from the Annual Reports of Marriott International, Inc. Operating statistics for Four
Seasons and Orient-Express Hotels come from the companies’ Annual Reports. Operating statistics for Rosewood come from Rosewood
Hotels & Resorts.
aADR (average daily room rate) is obtained by dividing room revenue by the total number of rooms occupied by hotel and resort guests
during the applicable period.
bRevPAR is a commonly used measure within the lodging industry to evaluate hotel and resort operations. RevPAR is obtained by
multiplying the average daily room rate charged (ADR) with the average daily occupancy achieved. RevPAR does not include revenues
from food and beverage, telephone services, or other guest services generated by the property, which can account for over 50% of total
hotel revenues in the luxury segment.
Exhibit 6 Rosewood Properties and Signed Agreements in 2003
Rosewood Properties
Name Location Opening Rooms Property
North America The
Carlyle New York, NY 2002 179 Conversion
The Mansion on Turtle Creek Dallas, TX 1998 143 Conversion
Hotel Crescent Court Dallas, TX 1998 220 New Build
King Pacific Lodge BC, Canada Marketing agreement 17 New Build
Caribbean Jumby
Bay Antigua, WI 2002 39 Conversion
Little Dix Bay Virgin Gorda, BVI 1998 100 Conversion
Caneel Bay St. John, USVI 2003 166 Conversion
Latin America
Las Ventanas al Paraiso Los Cabos, Mexico
1997
61
New Build
Middle East
Hotel Al Khozama Riyadh, Saudi Arabia 1995 187 New Build
Al Faisaliah Hotel Riyadh, Saudi Arabia 1999 224 New Build
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Asia Pacific
Hotel Seiyo Ginza Tokyo, Japan 2001 77 Conversion
Dharmawangsa Jakarta, Indonesia 1997 100 New Build
Rosewood Signed Agreements
Name Location Opening Status
Acqualina Sunny Isles Beach, FL 2005 Under construction
Tuanovo Bay Viti Levu, Fiji To be defined Development/Planning
La Solana Punta Mita, Mexico 2005 Under construction
Laguna Kai Riviera Maya, Mexico 2006 Under construction
Source: Rosewood Hotels & Resorts
Exhibit 7 Selected Quotes from the Strategic Marketing Solutions Report on Rosewood’s Branding
What does Rosewood Hotels & Resorts mean to you (or your clients)?
Guest: It means nothing to me; I went to Little Dix. Later I went to Mansion on Turtle Creek. I had no idea until much later
that they were connected through Rosewood.
Guest: I don’t know Rosewood.
Travel Agent: Not much. I book the hotel, not Rosewood.
Travel Agent: It means quality, luxury, service, and value to consumers. But the brand is not nearly as important as the
properties.
Travel Agent: Rosewood is a collection of brands; it is not a brand!
Travel Agent: Initially, it meant a quality brand of hotel. The brand is not nearly as strong as it was in the past.
Travel Agent: A little amorphous now; it is less of a brand than it used to be—known just by the individual properties.
Travel Agent: Clients are not aware of it. They do not come to me asking for Rosewood properties.
Rosewood Employee: A collection of individualistic properties; Rosewood as a brand is a dilemma—don’t see great
opportunity, few business opportunities.
Rosewood Employee: It’s a secret club—known by some guests who go and the industry.
HARVARD BUSINESS SCHOOL | BRIEFCASES 11

2087 | Rosewood Hotels & Resorts: Branding to Increase Customer Profitability and Lifetime Value
What percent of your clients/guests do you believe know the Rosewood name?
Travel Agent: At least 50% know the name Rosewood, but only because I educate them on the brand.
Travel Agent: Perhaps 25% know the name Rosewood. They know the hotel name better.
Travel Agent: They may know the name, but there are no positive connotations like there are for Four Seasons— maybe
60% know the actual name.
Rosewood Employee: Very low awareness, less than 5%. Those who know are “past” Rosewood guests.
Is the name Rosewood meaningful in encouraging you (or your clients) to try different properties?
Guest: No, I do not really know the name Rosewood, even after staying at the property. Guest: No, it has not
been for me.
Guest: Yes, I once tried one or two hotels, then my travel agent started telling me if a hotel was Rosewood or not.
Travel Agent: Once they understand what Rosewood is, it does mean something. It means something only after they have
stayed there. The travel agent has to drive understanding of Rosewood. Travel Agent: In Dallas, yes it definitely helps.
Source: Adapted from “Rosewood Hotels & Resorts, Branding Recommendation,” Strategic Marketing Solutions, Inc., November 24, 2003.
Exhibit 8 Rosewood’s Brand-wide Customer Lifetime Value Spreadsheet Model
Without Rosewood
Branding (2003)
With Rosewood
Corporate Branding c
Total number of unique guests a 115,000 115,000
Average daily spendb $750 $750
Number of days average guest stays 2 2
Average gross margin per room 32% 32%
Average number of visits per year per guest 1.2 1.3
Average marketing expense per guest (systemwide) d $130 To be calculated
Average new guest acquisition expense (systemwide) $150 $150
Total number of repeat guests e 19,169 To be calculated
Of which: Total number of multiproperty stay guests 5,750 To be calculated
Average Guest Retention Ratef 16.67% To be calculated
Average Gross Profit per Guest To be calculated To be calculated
Years 0 1 2 3 4 5 6
Gross profit per guest
Acquisition expense per new guest Marketing expense per
guest
Net Profit per Guest
Retention factor
Discount factor
12 BRIEFCASES | HARVARD BUSINESS SCHOOL