ROSEWOOD HOTELS & RESORTS: CUSTOMER LIFETIM

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
MER LIFETIME VALUE (CLTV) ANALYSIS
Without Rosewood Branding With Rosewood Corporate
(2003) Branding
115,000 115,000
$750.00 $750.00
2.0 2.0
32% 32%
1.2 1.3
$130.00 TO BE CALCULATED
$150.00 $150.00
19,169 TO BE CALCULATED
5,750 TO BE CALCULATED
$1,000,000
8% 8%
16.67% TO BE CALCULATED
 CLTV Calculati
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
TV Calculation With Individual Branding Strategy
2003 2004 2005 2006

($150.00)

($150.00)

1.00
($150.00)

1.000

($150.00)
2007 2008 2009
 CLTV Calcu
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
b
$1 million growing at 3% per year allocated to 115,000 guests

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
Calculation With Corporate Branding Strategy
2003 2004 2005 2006
2 2.0 2.0 2.0
1.3 1.3 1.3 1.3
$795.00 $842.70 $893.26
$2,067.00 $2,191.02 $2,322.48
$661.44 $701.12 $743.19
$150.00

$138.70 $147.39 $156.09 $164.78

($138.70) $514.05 $545.03 $578.41

1.00 1.00 0.22 0.05

($138.70) $514.05 $119.91 $27.58

1.000 1.080 1.166 1.260

($138.70) $475.97 $102.80 $21.89

$467.82

$84.94
$9,768,100

$30,525,313
 2007 2008 2009
2.0 2.0 2.0
1.3 1.3 1.3
$946.86 $1,003.67 $1,063.89
$2,461.83 $2,609.54 $2,766.11
$787.79 $835.05 $885.16

$173.48 $182.17 $190.87

$614.31 $652.88 $694.29

0.01 0.00 0.00

$6.66 $1.41 $0.00

1.360 1.469 1.587

$4.89 $0.96 $0.00