How millennials will change travel by 2020
05 JANUARY 2015 10:52 AM
Hoteliers need to adapt their product and service offerings as millennials become the largest group of hotel customers.
REPORT FROM THE U.S.—By 2020 or sooner, millennials might dominate the travel demographic. Hoteliers need to understand the nuances of this group of guests and be prepared with product and services that meet their needs and expectations, sources said.
“The number of millennial travelers is significant and growing fast,” said Jason Dorsey, chief strategy officer of The Center for Generational Kinetics, a consulting firm focusing on issues of millennial consumers. “It appears by 2017 millennials will outspend baby boomers on hotels. This will be a defining moment given that many hotel brands grew rapidly because of the boomers and all of a sudden the people with wallets are the millennials.”
According to Anna Blount, research manager at travel marketing agency MMGY Global, millennials are already more likely to take vacations than those in older generations. According to research conducted by the agency, 24% of millennials are planning to take more overnight leisure trips in the coming year than in the previous 12 months, she said.
“They are the most passionate about travel; and they have the most motivation about why they want to travel; and they are the ones who want to take more trips, go see more places and spend more money on experiences than on things,” she said.
The travel patterns of millennials will shape strategies of hotel companies in the coming years.
“Millennials are very used to getting things quickly and easily without the encumbrances that perhaps Gen X and the boomers grew up with,” said Tina Edmundson, global officer for luxury and lifestyle brands at Marriott International. “When you think about what companies Uber or Apple have done for millennials’ expectations—not just for product but also for service—it will be incumbent upon the hotel industry to understand how that changes what we do.”
According to Dorsey, property-level changes are inevitable as millennials rise to dominance.
“The typical hotel experience today was designed for baby boomers. You walk in; someone greets you; and you stand in a line,” he said. “Millennials never stand in line, so this (procedure) will be disrupted. There will be no more lines, and the process of checking in, looking someone in the eye and answering the same questions you answer all the time will all change.”
Dorsey said the mobile device will be millennials’ sole point of communication with the hotels they use.
“It’s not just the check-in, but also it will be how I communicate if I want a drink or a towel or directions to the gym,” he said. “There won’t be a need for people-to-people conversation for millennials once they and hotels get accustomed to using that screen as a connection point.”
Loyalty and millennials
Blount said her agency’s research shows millennials tend to be as loyal to hotel brands as are members of other demographic groups. She said 49% agreed with the statement, “I have a few hotel brands I like and rarely stay with others.”
Edmundson believes that in many cases millennials have yet to develop brand loyalties.
“It’s not that they aren’t loyal; they’re now in their formative years and are experiencing the brands that they may or may not become loyal to in the future,” Edmundson said. “This is the time for them to experience a wide variety of brands before they make a loyalty decision.”
Dorsey sees major changes ahead in hotel loyalty programs to match the psyche of millennials.
“Right now, loyalty programs are based on the number of stays or nights, which is not the best way to incentivize millennials or build their loyalty,” he said. “They are much more into shorter-term rewards.”