ROSEWOOD HOTELS CLTV

ROSEWOOD HOTELS: CUSTOMER LIFETIME
VALUE (CLTV) ANALYSIS
The calculation below confirms that when following the corporate branding/strategy could be beneficial for Rosewood hotels.
ROSEWOOD HOTELS & RESORTS:
CUSTOMER LIFETIME VALUE (CLTV) ANALYSIS

Without
Rosewood
Branding

Total number of unique Guests

With Rosewood
Corporate
Branding

115,000.00

115,000.00

$750

$750

2

2

32%

32%

1.2

1.3

Average Marketing expense per guest (system-wide)

$130

$138.70

Average new guest acquisition (system wide)

$150

$150

19,169

24,920

5750

11500

8%

8%

16.67%

21.70%

Average gross Profit Guest

$576

$624

CLV Calculation Without Corporate Brand strategy

2003

2004

Average daily Spend
Number of days average guest per stay
Average gross margin per room
Average number of visits per year per guest

Total number of repeat guests (s) of which: Total number of multi-property stay guests
Discount Rate
Average Guest Retention Rate (f)

# of Nights per stay

2

# of Stays per guest

1.2

Revenue per Night

$795

Revenue per Customer

$1,908

Gross Profit per customer

$610.60

Cost to acquire customer

$150

Marketing cost per customer
Cash flow retained customer

133.9
($150)

476.66

1

1

Percentage probability of retention
Expected Cash flow from customer
Discount factor
NPV of cash flow
NPV of CLTV

CLV Calculation With Corporate Brand strategy

0

($150)

476.66
1

0.926

($150)

441.35

$378.49

2003

2004

# of Nights per stay

2

# of Stays per guest

1.3

Revenue per Night

$795

revenue per Customer

$2,067

Gross Profit per customer

$661.40

Cost to acquire customer

$150

Marketing cost per customer

$133.90

Additional Marketing Cost per customer

$8.96

Cash flow retained customer

$518.58

Percentage probability of retention

1

1

Expected Cash flow from customer

($150)

518.58

1

0.926

($150)

480.17

Discount factor
NPV of cash flow
NPV of CLTV

$461.09

Based on the Customer Lifetime Value (CLV) calculations, there is incremental value when