Tulip Hotels & Resorts

About Tulip Group

• Privately owned 5 star hotel management company operating a collection of individually branded luxury iconic hotels• 12 hotels with 1513 rooms capacity• Faces competition from hotels with corporate branding and individually branded

unique hotels as well• Follows “Sense of Palace” philosophy by tailoring experience around local culture,

architecture, history and location

Why is Tulip considering a new brand strategy?• Recognition of Tulip as a brand was very low• This meant brand wise usage and cross selling of different hotels under same

brand was not possible• Return visits and cross selling in individual brands was 5-10% while in chain of

hotels under one corporate brand was 10-15%• Tulip wad not recognized as a status symbol/luxury brand like corporate brands of

Four Season etc. Getting only a sub-set market in luxury brands/market• Customer segment targeted usually value distinctive, exclusive ‘collection’ hotel –

Philip Maritz, Chairman – BOD• Tulip logo on low-profile amenities and hotel logo on high-profile amenities –

makes Tulip seem like some low end brand of hotel suppliers• Untapped opportunity for increasing cross property usage

Pros and Cons of moving from an Individual Brand to a Corporate BrandPros

• Projected increase in multi-property stay guests from 5% to 10%

• Increase in revenue, brand awareness, recognition and word of mouth referrals, especially since Tulip brand-wide usage among guests and was an untapped asset

• Good positioning for competition

• Increased market share due to higher brand recognition

• Promotion of cross-property usage of 10-15%

• Increase in customer lifetime value

• Provide consistent experience

Cons

• Loss of uniqueness and differentiation

• Potential loss of current brand equity

• Alienating guests at well-established properties such as the Carlyle or the Mansion

• Increased marketing costs

• Change in the corporate culture is challenging; individual hotel managers feel their autonomy would be threatened

• ‘Sense of place’ philosophy will need increased attention

Branding Strategy

Corporate branding

Individual branding

Will corporate branding maximise revenues?

• Encourage guests to use more services• Better Brand Recognition and brand recall• Collective experience - sense of association with the brand across categories &

hotels• Consistent services• Higher customer loyalty• Individual Brands/collective hotels: 5-10% cross selling rates• Corporate Brand – 10-15% cross property usage rates

Revenue and Cost AnalysisWithout Rosewood Branding (2003) With Rosewood Corporate

Branding

Total number of unique guests (a) 115,000.00 115,000.00Average daily spend (b) $750.00 $750.00Number of days average guest stays 2 2Average gross margin per room 32% 32%Average number of visits per year per guest 1.2 1.2

Average marketing expense per guest (system-wide) d $130.00 $138.70

Average new guest acquisition expense (system-wide) $150.00 $150.00

Total number of repeat guests (e) 19,169 24,919

Of which: Total number of multi-property stay guests 5,750 11,500

Number of Multiproperty Guest 5% 10%Average Guest Retention Rate (f) 16.67% 21.67%Average Gross Profit per Guest $576.00 $624.00

CLV as metric to forecast business potential from a customerCustomer lifetime value in marketing is the net present value of the cash flows that you will realize on the average customer during a given number of years.

• The use of customer lifetime value :• Marketing metric that tends to place greater emphasis on

1. Customer service and long-term customer satisfaction2. Not emphasize on maximizing short-term sales3. To identify profitable customers 4. To develop strategies to target customers

Calculating CLV

STEPS:1. Forecasting of remaining customer lifetime (most often in years)2. Forecasting of future revenues (most often year-by-year), based on estimation

about future products purchased and price paid3. Estimation of costs for delivering those products4. Calculation of the net present value of these future amounts

Formula (Not used in this case)(Avg Monthly Revenue per Customer * Gross Margin per Customer) ÷ Monthly Churn Rate

Calculating CLV

2003 2004 2005 2006 2007 2008 2009317 640 966 1296 1628 1963 2299

364 731 1102 1475 1850 2226 2603CLV without corporate branding

CLV with corporate branding

0

500

1000

1500

2000

2500

3000