Running head: Rosewood Hotels & Resorts Case Study

Rosewood Hotels & Resorts Case Study

Rosewood Hotels & Resorts Case Study2

Abstract Companies are well aware that branding oneself offers an inherent advantage to their existing organization. In todays technological age, branding can be an extremely effective and powerful tool to reinforce ones marketing message and consistently build customer loyalty and brand awareness. It can also be used to define your competitive position and differentiate your organization within your industry. For nearly 25 years, Rosewood Hotels & Resorts (Rosewood), a private hotel management company, sought to build a global reputation with iconic luxury hotels and trophy properties so distinctive, each could thrive on its own name, without any corporate identification. The Rosewood brand was muted, unmentioned in advertising, and known mainly to hotel and travel professionals. This brief case study discusses the pros and cons of Rosewood Hotels initiative to make a deliberate strategic move from an individual brand to a corporate brand.

Rosewood Hotels & Resorts Case Study3 Rosewood Hotels & Resorts (Rosewood), L.L.C, was a privately held company, established in 1979 by the Caroline Rose Hunt Trust Estate, headquartered in Dallas, TX. This private hotel management company, sought to build a global reputation with iconic luxury hotels. The first hotel Rosewood managed was The Mansion on Turtle Creek, opened in 1980. Rosewood worked with the owner to transform the property into a world- class hotel and restaurant. Rosewood eventually became known for its ability to enhance a propertys 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 (Dev, 2007). 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 guests had stayed at Rosewood hotels. 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 (Dev, 2007). Since the majority of Rosewoods competition are corporate branded hotels and they are in the process of acquiring more international properties, their organization may derive a huge benefit from evolving their corporate brand. Brands play a critical role in a firm's international expansion. A coherent international brand architecture is a key component of the firm's overall international marketing strategy as it provides a structure to leverage strong brands into other markets, assimilate acquired brands, and rationalize the firm's international branding strategy

Rosewood Hotels & Resorts Case Study4 (Douglas, 1999). There is significant power associated with a strong global brand. Youll not only define your marketplace, but youll attract partnerships with other organizations that have a comparable target market. We are automatically conditioned to think bigger is better - a well known brand is better than an unknown (individual) brand. If you have a collection of hotels that are all branding themselves independently - it would appear that you are overlooking your biggest asset - the brand. Most brand-related advertising is focused on creating subconscious images (JWMI, 2011), which is difficult if your brand doesnt define itself. Rosewood operated a collection of unique properties, each with its own name or brand. Each hotel and resort is known for its local character and culture and features architectural details, interiors, and cuisine that define Rosewoods Sense of Place philosophy. This philosophy allowed each hotel to capture and tailor each property experience to what is unique about each individual location. To this end, the Rosewood design and service standards are meant to be flexible enough to adapt to local conditions and offers their local teams a certain degree of flexibility and creativity (Dev, 2007). This is great if you do not desire to attract an global market. As most markets become more interlinked, companies like Rosewood, operating in international markets need to identify opportunities for strengthening brand architecture by improved coordination and harmonization of brands across countries (Douglas, 1999). Where is the value? Research suggests that most customers within the luxury hotel market valued the corporate-branded hotel (Dev, 2007). Unfortunately, Rosewood is not able to capitalize on having a recognizable brand like the Ritz-Carlton or Four Seasons. Before moving forward, Rosewood could conduct surveys (quantitative research) of

Rosewood Hotels & Resorts Case Study5 their current customers and/or undergo some qualitative research by using focus groups to help them understand their brand perception and that of their competitors (JWMI, 2011). Rosewood would need to invest an additional $1MM to roll-out a corporate brand strategy for all of their properties. This is well worth it, when you look at the end result. Currently their average daily room rate (ADR) is higher than all of their direct competitors, maybe this new strategy could make them more price competitive. It may also encourage cross property usage because right now, most of their guests are not even aware of Rosewood properties. The number of multi-property guest stays is 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 (Dev, 2007). If thats the case, then Rosewood would see significant Customer LIfetime Value (CLTV). Advantages of corporate branding Increased awareness / Create brand equity Ability to unify the organization, culture and processes Consistent quality control across all locations Overall reduction in marketing and supplies costs Drive cross property usage Ability to offer local creativity for hotel character and culture More competitive pricing Ability to multi-brand the properties through transition Ability to build trust and brand loyalty in existing clients and attract new clients Improved competitive positioning Disadvantages May destroy current individual brand loyalty May need to multi-brand well known properties through transition May lose Sense of Place philosophy May adversely affect the culture of the individual brands May alienate investors and employees May need significant time investment to build brand loyalty

Rosewood Hotels & Resorts Case Study6 Rosewood has already signed agreements on 4 new properties, 2 international properties that are already under construction (Dev, 2007). This may cause internal challenges with the investors, as well as the increased cost in materials to rebrand those properties. However, global branding is frequently an effective means of reaching target markets with relatively homogeneous interests and similar sociodemographic profiles and media habits worldwide (Hassan and Katsanis 1996). They will still be able to manipulate the four areas of marketing to gain a competitive advantage. Theyll still have the hotel (product) locations (place), theyll just make some changes in having more consistent global promotion, which will eventually make them more price competitive. This would seem to be more effective marketing and will eventually attract more loyal customers. Rosewood was known for its ability to enhance a propertys value by creating unique, one-of-a-kind properties with a small ultra-luxury residential style. This differentiated them from their clearly recognizable luxury competitors. However, based on the fact that most people prefer a corporate branded luxury hotel, they were missing out on the ability to build a strong brand loyalty. When reviewing the advantages and disadvantages of moving from an individual brand to a corporate brand, its obvious that the effect of the corporate brand on guest retention and CLTV will offset the increased operational investment.

Rosewood Hotels & Resorts Case Study7