If there is a silver lining to the sustained economic downturn that now appears to be receding, it is the degree to which hotel owners and operators have learned the importance of paying close attention to the evolving preferences of travelers. The economic pressures of the recession reinforced that no demographic can be ignored, and that old, flawed assumptions must be cast aside in the harsh light of new professional realities.
One of the most interesting ways in which this dynamic has played out in recent years is in the newfound respect and attention being paid to the millennial generation. As tech-savvy, social-media-using spenders in their 20s and 30s, millennials have been exerting their demographic influence on an industry that not too long ago was spending far more time and energy catering to baby boomers. The story of how the hotel industry has come to appreciate and better understand the millennial generation provides an interesting look at the ways in which hotel owners and operators have changed, and will continue to change, the service and structure of their hotels to meet the needs of this new demographic force.
The degree to which the hotel industry misunderstood millennials can be seen in the first iteration of hotels designed to appeal to their supposed sensibilities. Misconceptions of a generation led to a number of concept hotels designed to be lean on luxury and high on style. These hotels had scaled back somewhat on service in favor of introducing high-tech elements, including private spaces designed for guests to “commune” with technology at their leisure. The result was, in retrospect, predictably poor. However, this first generation of purpose-built millennial hotels helped initiate an industry evolution into the next chapter of customized hotel experiences.
The reality is millennials are far more social and far less socially inept than some might think. Millennials value social engagement more than some generations. Like most, they appreciate great service and quality. The millennial generation does have a personality, however—and some distinctive traits that are all its own.
Millennial spending habits
When it comes to luxury fashion, the younger demographic is spending at a rate of 33% in 2012 over 2011, according to American Express Business Insights data. This shows their appreciation for luxury items is ingrained in the generational consciousness. At the same time, however, this is also the “Groupon Generation,” where luxury at a discount is not just appreciated but sought out. Hotels have learned flash sales and daily deals play well with the millennial crowd. Millennials also love social causes and want to do business with responsible businesses. Green hotels are in, and socially conscious brands are likely to gain millennial traction.
Millennials love the latest and greatest gadgets, and facilitating the integration of technology into the hotel experience is important for hotels looking to boost their appeal. Free high-speed Internet access and Wi-Fi service are no longer perks, but necessities. A number of small-but-important conveniences for gadget owners—such as in-room power consoles and accessible power strips in public areas to make for easy device charging—are a testament to which this technology generation expects to access and utilize that technology on their own terms.
When it comes to service, millennials still place a great emphasis on human interaction and connections. The immediacy of technology to augment that service is still appreciated and expected, but this is a consumer group with little patience for delays or poor service.
Millennial intolerance of unacceptable service has begun to erode traditional notions of brand loyalty, and even one bad service experience can have lasting and wide-ranging repercussions. A number of popular consumer websites provide a readily accessible forum for aggrieved guests. Critical consumers will not complain to the manager, they will post their feelings online—an event that can be far more damaging. The flip side is quality service can be recognized and rewarded almost instantaneously. A great service experience that a guest posts to Facebook is an extraordinary piece of positive publicity for a hotel. Unsurprisingly, marketing and communicating to guests through social networks has also become more important. Some of the biggest hotel brands in the world have established sophisticated social media operations, with employees tracking and listening to online sentiment and responding immediately to virtual commentary.
Millennials also respond positively to individualized service. Some forward-thinking brands have begun to track detailed data on individual customer preferences with the goal of making each service experience customized to the consumer. And “experience” is definitely the right word when it comes to this generation, because hotels are increasingly viewed by these young consumers as opportunities to engage in something new and different—as a form of culture and entertainment. Innovative and interesting are qualities that are beginning to overtake comfort and familiarity as top millennial priorities, and hotels are increasingly being marketed with that in mind.
Entertainment value and the appeal of social engagement has led to a number of renovations and newly built hotels, with stylish and comfortable lobbies and welcoming and convivial public gathering spaces. Millennials are less likely to stay in their rooms and more likely to head down to the hotel bar with their smartphones. To capture this audience, some hotel owners and operators are introducing special social events and programming into their day-to-day operation.
One thing is clear: These distinctive generational characteristics and priorities are already manifesting themselves in today’s (and tomorrow’s) hotels, and hoteliers who do not tailor their approach to meet the needs of this increasingly influential generation will find themselves at a competitive disadvantage.
First Hospitality Group, Inc. has been involved in the development, ownership and management of hotels since 1985. Currently, the First Hospitality Group, Inc. portfolio consists primarily of Hilton and Marriott affiliated assets. In addition, First Hospitality Group, Inc. has ownership interests and manages hotels affiliated with InterContinental, Hyatt and Carlson. For further information, visit www.fhginc.com or call Robert Habeeb at 847-299-9040.
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