ROSEWOOD HOTELS & RESORTS: CUSTOMER LIFETIME VALUE (CLTV) ANALYSIS

Inputs

Total Number of Unique Guests

Average Daily Spend
Number of Days Average Guest Stays per Stay
Average Gross Margin per Room
Average Number of Visits per Year per Guest
Average Marketing Expense per Guest (system-wide)
Average New Guest Acquisition Expense (system-wide)
Total Number of Repeat Guests
of which: Total Number of Multi-property Stay Guests
Additional Costs Required per annum
Discount Rate
Average Guest Retention Rate

CLTV Calculation With No Changes to Brand Strategy

Year
Number of Nights per Stay
Number of Stays per guest (assuming they are retained)
Revenue Per Night
Revenue per Customer
Gross Profit per Customer
Less Cost to Acquire Customer
Less Annual Marketing Cost per Customer
Cash Flow from Customer if Retained
Probability of Being Retained
Expected Cash Flow from Customer
Discount Factor
NPV of Expected Cash Flow from Customer
Total NPV of CLTV
CLTV Calculation With New Brand Strategy
Year
Number of Nights per Stay
Number of Stays per guest (assuming they are retained)
Revenue Per Night
Revenue per Customer
Gross Profit per Customer
Less Cost to Acquire Customer
Less Annual Marketing Cost per Customer
Less Additional Marketing Cost per Customerb
Cash Flow from Customer if Retained
Probability of Being Retained
Expected Cash Flow from Customer

Discount Factor
NPV of Expected Cash Flow from Customer
Total NPV of CLTV
Increase in CLTV per customer of new Marketing Plan
Multiplied by # of Customers to obtain increase in profit of Rosewood from new brand strategy
Divided by 32% gross margin to obtain increase in Revenue of Rosewood from new brand strategy
b

$1 million growing at 3% per year allocated to 115,000 guests

Without Rosewood Branding

(2003)
115,000
$750.00
2.0
32%
1.2
$130.00
$150.00
19,169
5,750

With Rosewood Corporate

Branding
115,000
$750.00
2.0
32%
1.3
$138.70
$150.00
24,919
11500

8%
16.67%

8%
21.67%

2003

growing at

growing at

($150.00)

2004
2.0
1.2
$795.00
$1,908.00
$610.56
$0.00
$133.90
$476.66

1.00
($150.00)

1.00
$476.66

0.17
$84.90

0.926

0.857

$441.35

$72.78

2004
2.0
1.3
$795.00
$2,067.00
$661.44

2005
2.0
1.3
$842.70
$2,191.02
$701.13

$133.90

$137.92

($150.00)

$8.96
$518.58

$9.23
$553.98

1.00
($150.00)

1.00
$518.58

0.22
$120.04

$150.00

1.000
($150.00)
$378.49

2003

2005
2.0
1.2
$842.70
$2,022.48
$647.19
$0.00
$137.92
$509.28

$150.00

1.000
($150.00)
$461.09
$82.60
$9,498,542
$29,682,943

0.926

0.857

$480.17

$102.92

Growth Rate
6%

3%

2006
2.0
1.2
$893.26
$2,143.83
$686.03
$0.00
$142.05
$543.97

2007
2.0
1.2
$946.86
$2,272.46
$727.19
$0.00
$146.32
$580.87

2008
2.0
1.2
$1,003.67
$2,408.81
$770.82
$0.00
$150.71
$620.11

2009
2.0
1.2
$1,063.89
$2,553.33
$817.07
$0.00
$155.23
$661.84

0.03
$15.12

0.00
$2.69

0.00
$0.48

0.00
$0.09

0.794

0.735

0.681

0.630

$12.00

$1.98

$0.33

$0.05

2006
2.0
1.3
$893.26
$2,322.48
$743.19

2007
2.0
1.3
$946.86
$2,461.83
$787.79

2008
2.0
1.3
$1,003.67
$2,609.54
$835.05

2009
2.0
1.3
$1,063.89
$2,766.11
$885.16

$142.05

$146.32

$150.71

$155.23

$9.50
$591.64

$9.79
$631.68

$10.08
$674.27

$10.38
$719.55

0.05
$27.78

0.01
$6.43

0.00
$1.49

0.00
$0.34

0.794

0.735

0.681

0.630

$22.05

$4.72

$1.01

$0.22