Rosewood hotels & resorts HBS case study

Rosewood hotels & resorts HBS case study

• 1.
  Raman  Dhiman   INDIAN  INSTITUTE  OF  MANAGEMENT(IIM),  SHILLONG  
• 2.
  Some of theRosewood properties across the world
• 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.
  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.
  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.
  Important Factors totaken into account… Corporate     Branding   Employees   Guests   Agents   Compe]]on  
• 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.
  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.
  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.
  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.
  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.
  Probable Solutions •  Through  frequent-­‐stay  program   •  Corporate  branding  approach  
• 13.
  Issues observed withFrequent 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.
  Advantages of CorporateBranding: 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.
  Advantages of CorporateBranding (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.
  Issues in CorporateBranding •  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.
  Scenario with anIntroduction 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.
  Suggestion based ofCorporate 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.
  Thanks