Rosewood CLV Analysis

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
Incremental Costs Required per year
(Cost of Capital) Discount Rate
Average Guest Retention Rate

Without Rosewood
Branding (2003)
115,000
$750.00
2.0
32%
1.2
$130.00
$150.00
19,169
5,750
8%
16.67%

With Rosewood
Corporate
Branding
115,000
$750.00
2.0
32%
1.3
$138.70
$150.00
24,919
11500
$1,000,000
8%
18.34%

CLV Calculation With No Changes to Brand Strategy

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

2003

$
$

2004
2.0
1.2
795
1,908
611

($150.00)
($150.00)

($133.90)
$476.66

Probability of Being Retained

Expected Cash Flow from Customer

100.0%
($150.00)

100.0%
$476.66

NPV of Expected Cash Flow from Customer (CLV)

$378.49

CLV Calculation With New Brand Strategy

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

2003

2004
2.0
1.3
$795.00
$2,067.00
$661.44

($150.00)
($142.86)
($150.00)

$518.58

Probability of Being Retained

Expected Cash Flow from Customer

100%
($150.00)

100%
$518.58

NPV of Expected Cash Flow from Customer (CLV)

$436.54

Result of New Brand Strategy

Increase in CLV/customer:

$58.05

Increase in Gross Profit:

$1,446,561

Increase in Revenue:

$4,520,504

Assumption in Case -

$
$

The Number of Unique Guests will be the same

growing at:

6%

growing at:

3%

2005
2.0
1.2
843 $
2,022 $
647

Source
Exhibit 8
Exhibit 8
Exhibit 8
Exhibit 8
Exhibit 8
Exhibit 8
Exhibit 8
B19 Exhibit 8
B20 Exhibit 8, p.6
Page 5
Exhibit 8

2006
2.0
1.2
893 $
2,144 $
686

2007
2.0
1.2
947 $
2,272 $
727

2008
2.0
1.2
1,004 $
2,409 $
771

2009
2.0
1.2
1,064
2,553
817

($137.92)
$509.28

($142.05)
$543.97

($146.32)
$580.87

($150.71)
$620.11

($155.23)
$661.84

16.7%
$84.89

2.8%
$15.11

0.5%
$2.69

0.1%
$0.48

0.0%
$0.09

2005
2.0
1.3
$842.70
$2,191.02
$701.13

2006
2.0
1.3
$893.26
$2,322.48
$743.19

2007
2.0
1.3
$946.86
$2,461.83
$787.79

2008
2.0
1.3
$1,003.67
$2,609.54
$835.05

2009
2.0
1.3
$1,063.89
$2,766.11
$885.16

2010
2
1.3
$1,127.72
$2,932.08
$938.27

($147.14)

($151.56)

($156.10)

($160.79)

($165.61)

($170.58)

$553.98

$591.64

$631.68

$674.27

$719.55

$767.69

18.34%
$101.58

3.36%
$19.89

0.62%
$3.89

0.11%
$0.76

0.02%
$0.15

0.00%
$0.03