According to the Rosewood case study, moving to a corporate brand from an individual brand is expected to improve customer lifetime value (CLV). Use the above excel file to calculate the impact of the new brand strategy on customer lifetime value. Please note that there are items in the spreadsheet to be included in the analysis that are not mentioned in the case study that will impact the lifetime value. Please see the "Notes: Additional Information for your analysis" at the lower left of the spreadsheet. The anticipated 115,000 new guests has been increased to 125,000 guests due to the planned inflight advertising campaign targeting business class customers of Delta Airlines. After determining the increase in CLV resulting from the changes, use it to calculate the additional sales Rosewood needs to achieve to realize the new total CLV (see Cells B59 to B61). Note: You only need to make changes to row 37 downwards of the spreadsheet. No changes are needed above row 37.

| TI B D E F H 1 ROSEYOOD HOTELS & RESORTS: CUSTOMER LIFETIHE YALUE (CLTY) ANALYSIS 2 lapets Without With Source Rosewood Rosewood Branding (2003) Corporate Branding Total Number of Unique Guests 115,000 115,000 Exhibit 8 5 Average Daily Spend $750.00 $750.00 growing at 6% Exhibito 6 Number of Days Average Guest Stays per Stay 2.0 2.0 Exhibit 8 7 Average Gross Margin per Room 32% 32% Exhibit 8 8 Average Number of Visits per year per Guest 1.2 1.3 Exhibit 9 Average Marketing Expense per Guest (system-wide) $130.00 to be calc growing at 3% Exhibit 8 10 Average New Guest Acquisition Expense (system-wide) $150.00 $125.00 Exhibit 8' 11 Total Number of Repeat Guests 19,169 24,919 12 of which: Total Number of Multi-property Stay Guests 5,750 to be calc 13 Additional Costs Required per annum to be calc Page 5 14 Discount Rate 8% Exhibit 8 15 Average Guest Retention Rate 16.672 to be calc 16 17 18 CLTY Calculation With Ho Changes to Brand Strategy 19 Year 2003 2004 2005 2006 2007 2008 2009 20 Number of Nights per Stay 2.0 2.0 2.0 2.0 2.0 2.0 21 Number of Stays per quest fassuming they are retained) 1.2 1.2 1.2 1.2 1.2 1.2 22 Revenue Per Night $795.00 842.70 $893.26 $946.86 $1,003.67 $1,063.89 23 Revenue per Customer 11.908.00 $2,022.48 +2 143.83 2,272.46 12.408.81 12.553.33 24 Gross Profit per Customer $610.56 $647.13 $686.03 $727.13 $770.82 $817.07 25 Less Cost to acquire Customer ($150.00 26 Less Annual Marketing Cost per Customer ($133.90 (137.92 (142.05) ($146.32 (150.71 (155.23 27 Cash Flot from Customer if Retained ($150.00) $476.66 $503.28 $543.97 $580.87 $620.11 $661.84 28 29 Probability of Being Retained 1.00 1.00 0.17 0.03 0.00 0.00 0.00 30 Expected Cash Flow from Customer ($150.00 $476.66 $84.90 $15.12 $2.69 $0.48 $0.09 31 32 Discount Factor 1.000 1.080 1.166 1.260 1.360 1.469 1.587 33 34 HPY of Expected Cash Flor from Customer ($150.001 $441.35 $72.78 $12.00 $1.98 10.33 10.05 35 Total HPY of CLTY $378.49 36 37 CLTY Calculation With Her Brand Strategy 38 Year 2003 2004 2005 2006 2007 2009 39 Number of Nights per Stay 2.0 2.0 2.0 2.0 2.0 2.0 40 Number of Stayo per questo auming they are retained) to be calc: 41 Revenue Per Night $795.00 $842.70 $893.26 $946.86 $1,003,67 $1,063.89 42 Revenue per Customer #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! 43 Gross Profit per Customer $661.44 $701.13 $743.19 $787.79 $835.05 1885.16 44 Less Cost to acquire Customer ($125.00 45 Loss Annual Marketing Cost per Customer calc 46 Less Additional Marketing Cost per Customer calc 47 Less data management and analytics foc per customer" calc 48 Co-Branding payment to airline for advertsing fee of $8.00 (flat) per per customer' calc 49 Cash Flor from Customer if Retained ($125.000 50 51 Probability of Being Retained 1.00 1.00 0.22 0.05 0.01 0.00 0.00 52 Expected Cash Flow from Customer ($125.00) #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! 53 54 Discount Factor 1.000 1.080 1.166 1.260 1.360 1.469 1.587 55 56 HPY of Expected Cash Flor from Customer ($125.00'DYALUE! TYALUE! TYALUE!'+++++ 'TYALUE! DYALUE! 57 Total NPY of CLTY #YALUE! 58 59 Increase in CLTY per customer of me Harketing Plan 60 Multiplied by # of Customers to obtain increase in profit of Rosetood 61 Divided by 322 gross margin to obtain increase in Revenue of Rosewoo 62 63 Hotes: Additional Information for your Analysis 64 | $1 million growing at 3% per year allocated to 115,000+10,000 65 'Each customer costs a $12 data management fec increasing at 4% per year 66 'Management later realized that customer acquisition would actually be $125 instead of $150 67 Rosewood launched a a cobranded inflight advertsing campaign with Delta Air costing $8 per customer 68 'For simplicity of analysis we assume that the custmer was acquired the last day of 2003, therefore no costs are attributed to 2003 69 2008