Details

Total number of unique guests (a)

Average daily spend (b)
Number of days average guest stays
Total Spend per guest per stay
Average gross margin per room
Average gross profit per room
Average number of visits per year per guest
Total Gross Profit per guest
Average marketing expense per guest (systemwide) (d)
Average new guest acquisition expense (systemwide)
Total number of repeat guests (e)
Of which: Total number of multiproperty stay guests
Cross Selling %
Average Guest Retention Rate (f)
Average Gross Profit per Guest

Revenue Growth Rate

Marketing Cost Growth rate

INDIVIDUAL BRANDING
Years
Average daily spend
Number of days average guest stays
Total Spend per guest per stay
Average gross margin per room
Average gross profit per room
Average number of visits per year per guest
Gross profit per guest
Acquisition expense per new guest
Marketing expense per guest
Net Profit per Guest
Retention factor
Net Cash Flow
Discount factor
Net Present Value (NPV)(g)

CORPORATE BRANDING
Years
Average daily spend
Number of days average guest stays
Total Spend per guest per stay
Average gross margin per room
Average gross profit per room
Average number of visits per year per guest
Gross profit per guest
Acquisition expense per new guest
Marketing expense per guest
Net Profit per Guest
Retention factor

Discount factor
Net Present Value (NPV)(g)

Assuming that Acquisition Cost is one time only

Note: The company used an 8% discount rate and assumed marketing costs increased

a) For the purpose of this analysis, Rosewood treats double occupancy (i.e., John Doe a

b) The average daily spend is the total expenditure per guest per day on room, food, b

c) Twice more multi-property guests, inflating the overall number of repeat guests, 1.3

d) Cost of marketing communication with a Rosewood corporate brand: [(total number

e) Repeat guests were guests who, after staying once in a Rosewood hotel, returned to

f) Guest retention rate: the probability that a guest comes back to a Rosewood hotel th

g) Net Present Value (NPV): the future stream of benefits and costs converted into equ
Individual Branding Corporate Branding
115,000 115,000
750 750
2 2
1,500.00 1,500.00
32% 32%
480.00 480.00
1.2 1.3
576.00 624.00
130.00 138.70
150.00 150.00
19,169 24919
5,750 11500
5% 10%
16.67% 21.67%
576.00 624.00

6%
3%

0 1 2 3 4
750.00 795.00 842.70 893.26 946.86
2 2 2 2 2
1,500.00 1,590.00 1,685.40 1,786.52 1,893.72
32% 32% 32% 32% 32%
480.00 508.80 539.33 571.69 605.99
1.2 1.2 1.2 1.2 1.2
576.00 610.56 647.19 686.03 727.19
150.00 -- -- -- --
130.00 133.90 137.92 142.05 146.32
296.00 476.66 509.28 543.97 580.87
16.67%
49.34 79.46 84.90 90.68 96.83
8%
443

0 1 2 3 4
750.00 795.00 842.70 893.26 946.86
2 2 2 2 2
1,500.00 1,590.00 1,685.40 1,786.52 1,893.72
32% 32% 32% 32% 32%
480.00 508.80 539.33 571.69 605.99
1.3 1.3 1.3 1.3 1.3
 624.00 661.44 701.13 743.19 787.79
150.00 -- -- -- --
138.70 142.86 147.14 151.56 156.10
335.30 518.58 553.98 591.64 631.68
21.67%
72.66 112.38 120.05 128.21 136.89
8%
629

umed marketing costs increased at a rate of 3% per year and guest revenues at a rate of 6% per ye

ouble occupancy (i.e., John Doe and Jane Doe staying in the same room) as one guest

er guest per day on room, food, beverage, and other services.

rall number of repeat guests, 1.3 stays per guest per year, and $1,000,000 marketing expenses

corporate brand: [(total number of guests * average cost of marketing per guest in 2003) + $1,000

in a Rosewood hotel, returned to a Rosewood property the year after (the same one or a different

omes back to a Rosewood hotel the following year (number of repeat guests/total number of guests

fits and costs converted into equivalent values today, by discounting future benefits and costs usi
 5 6
1,003.67 1,063.89
2 2
2,007.34 2,127.78
32% 32%
642.35 680.89
1.2 1.2
770.82 817.07
-- --
150.71 155.23
620.11 661.84

103.37 110.33

5 6
1,003.67 1,063.89
2 2
2,007.34 2,127.78
32% 32%
642.35 680.89
1.3 1.3
 835.05 885.16
-- --
160.79 165.61
674.27 719.55

146.11 155.93

es at a rate of 6% per year.

s one guest

0 marketing expenses

r guest in 2003) + $1,000,000] / total number of guests.

same one or a different one). Repeat guests included multiproperty guests.

ts/total number of guests)

re benefits and costs using an appropriate discount rate.

 CLTV (Indiv) Varying C
(Avg Visits
Avg No of Remains
Visits per Constant at
Guest Retention CLTV (Corp) 1.2) 700.00
1.20 16.67% 443 443
1.21 17.17% 453 443 600.00
1.22 17.67% 472 443
1.23 18.17% 490 443 500.00
1.24 18.67% 509 443
1.25 19.17% 529 443

CLTV (in $)
400.00
1.26 19.67% 548 443
1.27 20.17% 568 443
1.28 20.67% 588 443 300.00
1.29 21.17% 609 443
1.30 21.67% 629 443 200.00

100.00

0.00
1.2 1.21 1.22 1.23 1.

Varying R

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%
1.2 1.21 1.22 1.23
 Varying CLTV with Shift From Individual to Corporate Bra

Avg No of Visits per

Guest
CLTV (Corp)
CLTV (Indiv) (Avg Visits
Remains Constant at
1.2)

1.21 1.22 1.23 1.24 1.25 1.26 1.27 1.28 1.29 1.3

Varying Retention Rate

Retention

1.21 1.22 1.23 1.24 1.25 1.26 1.27 1.28 1.29 1.3
orporate Branding

s per

vg Visits
ant at

tention
 Individual
Details Branding
Total number of unique guests (a) 115,000
Average daily spend (b) 750
Number of days average guest stays 2
Total Spend per guest per stay 1,500
Average gross margin per room 32%
Average gross profit per room 480
Average number of visits per year per guest 1.2
Total Gross Profit per guest 576
Average marketing expense per guest (systemwide) (d) 130
Average new guest acquisition expense (systemwide) 150
Total number of repeat guests (e) 19,169
Of which: Total number of multiproperty stay guests 5,750
Cross Selling % 5.0%
Average Guest Retention Rate (f) 16.67%
Average Gross Profit per Guest 576

Revenue Growth Rate 6%

Marketing Cost Growth rate 3%

INDIVIDUAL BRANDING (Avg no of Visits per Guest per year = 1.2)

Years 0
Gross profit per guest 576
Acquisition expense per new guest 150
Marketing expense per guest 130
Net Profit per Guest 296
Retention factor 16.67%
Net Cash Flow 49
Discount factor 8%
Net Present Value (NPV)(g) 443

(Avg no of Visits per Guest per year = 1.21)

Years 0
Gross profit per guest 581
Acquisition expense per new guest 150
Marketing expense per guest 139
Net Profit per Guest 292
Retention factor 17.17%
Net Cash Flow 50
Discount factor 8%
Net Present Value (NPV)(g) 453
(Avg no of Visits per Guest per year = 1.22)
Years 0
Gross profit per guest 586
Acquisition expense per new guest 150
Marketing expense per guest 139
Net Profit per Guest 297
Retention factor 17.67%
Net Cash Flow 52
Discount factor 8%
Net Present Value (NPV)(g) 472

(Avg no of Visits per Guest per year = 1.23)

Years 0
Gross profit per guest 590
Acquisition expense per new guest 150
Marketing expense per guest 139
Net Profit per Guest 302
Retention factor 18.17%
Net Cash Flow 55
Discount factor 8%
Net Present Value (NPV)(g) 490

(Avg no of Visits per Guest per year = 1.24)

Years 0
Gross profit per guest 595
Acquisition expense per new guest 150
Marketing expense per guest 139
Net Profit per Guest 307
Retention factor 18.67%
Net Cash Flow 57
Discount factor 8%
Net Present Value (NPV)(g) 509

(Avg no of Visits per Guest per year = 1.25)

Years 0
Gross profit per guest 600
Acquisition expense per new guest 150
Marketing expense per guest 139
Net Profit per Guest 311
Retention factor 19.17%
Net Cash Flow 60
Discount factor 8%
Net Present Value (NPV)(g) 529

Note: The company used an 8% discount rate and assumed marketing costs increased a
a) For the purpose of this analysis, Rosewood treats double occupancy (i.e., John Doe an

b) The average daily spend is the total expenditure per guest per day on room, food, be

c) Twice more multi-property guests, inflating the overall number of repeat guests, 1.3

d) Cost of marketing communication with a Rosewood corporate brand: [(total number o

e) Repeat guests were guests who, after staying once in a Rosewood hotel, returned to

f) Guest retention rate: the probability that a guest comes back to a Rosewood hotel th

g) Net Present Value (NPV): the future stream of benefits and costs converted into equi
 115,000 115,000 115,000 115,000 115,000 115,000 115,000
750 750 750 750 750 750 750
2 2 2 2 2 2 2
1,500 1,500 1,500 1,500 1,500 1,500 1,500
32% 32% 32% 32% 32% 32% 32%
480 480 480 480 480 480 480
1.21 1.22 1.23 1.24 1.25 1.26 1.27
581 586 590 595 600 605 610
139 139 139 139 139 139 139
150 150 150 150 150 150 150
19,744 20,319 20,894 21,469 22,044 22,619 23,194
6,325 6,900 7,475 8,050 8,625 9,200 9,775
5.5% 6.0% 6.5% 7.0% 7.5% 8.0% 8.5%
17.17% 17.67% 18.17% 18.67% 19.17% 19.67% 20.17%
581 586 590 595 600 605 610

1 2 3 4 5 6
611 647 686 727 771 817
-- -- -- -- -- --
134 138 142 146 151 155
477 509 544 581 620 662

79 85 91 97 103 110

1 2 3 4 5 6
616 653 692 733 777 824
-- -- -- -- -- --
143 147 152 156 161 166
473 505 540 577 616 658

81 87 93 99 106 113
 1 2 3 4 5 6
621 658 697 739 784 831
-- -- -- -- -- --
143 147 152 156 161 166
478 511 546 583 623 665

84 90 96 103 110 118

1 2 3 4 5 6
626 663 703 745 790 837
-- -- -- -- -- --
143 147 152 156 161 166
483 516 552 589 629 672

88 94 100 107 114 122

1 2 3 4 5 6
631 669 709 751 797 844
-- -- -- -- -- --
143 147 152 156 161 166
488 522 557 595 636 679

91 97 104 111 119 127

1 2 3 4 5 6
636 674 715 757 803 851
-- -- -- -- -- --
143 147 152 156 161 166
493 527 563 601 642 686

95 101 108 115 123 131

ng costs increased at a rate of 3% per year and guest revenues at a rate of 6% per year.
ncy (i.e., John Doe and Jane Doe staying in the same room) as one guest

ay on room, food, beverage, and other services.

f repeat guests, 1.3 stays per guest per year, and $1,000,000 marketing expenses

and: [(total number of guests * average cost of marketing per guest in 2003) + $1,000,000] / total n

d hotel, returned to a Rosewood property the year after (the same one or a different one). Repeat

a Rosewood hotel the following year (number of repeat guests/total number of guests)

converted into equivalent values today, by discounting future benefits and costs using an appropr
 Corporate
Branding
115,000 115,000 115,000
750 750 750
2 2 2
1,500 1,500 1,500
32% 32% 32%
480 480 480
1.28 1.29 1.3
614 619 624
139 139 139
150 150 150
23,769 24,344 24,919
10,350 10,925 11,500
9.0% 9.5% 10.0%
20.67% 21.17% 21.67%
614 619 624
g expenses

003) + $1,000,000] / total number of guests.

or a different one). Repeat guests included multiproperty guests.

mber of guests)

and costs using an appropriate discount rate.

(Avg no of Visits per Guest per year = 1.26)
Years 0 1
Gross profit per guest 605 641
Acquisition expense per new guest 150 --
Marketing expense per guest 139 143
Net Profit per Guest 316 498
Retention factor 19.67%
Net Cash Flow 62 98
Discount factor 8%
Net Present Value (NPV)(g) 548

(Avg no of Visits per Guest per year = 1.27)

Years 0 1
Gross profit per guest 610 646
Acquisition expense per new guest 150 --
Marketing expense per guest 139 143
Net Profit per Guest 321 503
Retention factor 20.17%
Net Cash Flow 65 102
Discount factor 8%
Net Present Value (NPV)(g) 568
(Avg no of Visits per Guest per year = 1.28)
Years 0 1
Gross profit per guest 614 651
Acquisition expense per new guest 150 --
Marketing expense per guest 139 143
Net Profit per Guest 326 508
Retention factor 20.67%
Net Cash Flow 67 105
Discount factor 8%
Net Present Value (NPV)(g) 588

(Avg no of Visits per Guest per year = 1.29)

Years 0 1
Gross profit per guest 619 656
Acquisition expense per new guest 150 --
Marketing expense per guest 139 143
Net Profit per Guest 331 513
Retention factor 21.17%
Net Cash Flow 70 109
Discount factor 8%
Net Present Value (NPV)(g) 609

CORPORATE BRANDING (Avg no of Visits per Guest per year = 1.30)

Years 0 1
Gross profit per guest 624 661
Acquisition expense per new guest 150 --
Marketing expense per guest 139 143
Net Profit per Guest 335 519
Retention factor 21.67%
Net Cash Flow 73 112
Discount factor 8%
Net Present Value (NPV)(g) 629
ber of guests.

sts included multiproperty guests.

discount rate.
 2 3 4 5 6
680 720 764 809 858
-- -- -- -- --
147 152 156 161 166
532 569 607 649 692

105 112 119 128 136

2 3 4 5 6
685 726 770 816 865
-- -- -- -- --
147 152 156 161 166
538 574 614 655 699

108 116 124 132 141

 2 3 4 5 6
690 732 776 822 872
-- -- -- -- --
147 152 156 161 166
543 580 620 661 706

112 120 128 137 146

2 3 4 5 6
696 737 782 829 878
-- -- -- -- --
147 152 156 161 166
549 586 626 668 713

116 124 132 141 151

2 3 4 5 6
701 743 788 835 885
-- -- -- -- --
147 152 156 161 166
554 592 632 674 720

120 128 137 146 156