GLOBAL REPORT—Just like Generation X and the baby boomers before them, millennials are the target of intense pursuit by global hotel companies as members of this group of 20- and 30-somethings approach their peak earnings years. The question, however, is whether hotel companies and hotel brands can make loyal customers out of these consumers.
Millennials—also called Generation Y and commonly defined as people born between 1982 and 1999, and with 80 million-plus members—is one of the fastest-growing segments of consumers, including consumers of travel.
A lot of traits are used to describe the psychographics of millennials, but as with most age categories, it’s a group with both specific characteristics as well as many variables that can’t be generalized.
“We always believed millennials would be minimalists and would prefer form and style over substance, but everything I’ve seen and read says that’s not true,” said Robert J. Habeeb, president and COO of First Hospitality Group and a Hotel News Now columnist. “Millennials have the same sense of luxury that other generations do. They like luxury. They like being pampered. The biggest difference is they’ve grown up in an environment where they can buy (luxury) on a flash sale.”
Their reliance on technology is often cited as a key descriptor. In fact, millennials are the first generation that has had technology and the Internet as a persistent part of their lives.
“They’ve grown up with the Internet, are heavy users of social media and are used to receiving instant information,” said Don Berg, VP of loyalty programs and partnerships for InterContinental Hotels Group. “The Internet created transparency with respect to pricing, availability and reputation, and social media became a magnifying glass on transparency.”
Millennials are heavy users of mobile technology. According to MMGY Global’s “2013 Portrait of American Travelers,” 74% of millennial leisure travelers regularly access the Internet from a smartphone, compared to 68% of Generation X travelers and 53% of baby boomers. On the other hand, Gen Xers are more likely to access the Internet from a tablet (49%) than are millennials (43%).
Teresa Y. Lee, an analyst with HVS, said mobile technology might be the most important tool in marketing to millennials. Lee, who is in the millennial generation, authored a report on the most important trends in millennial travel.
“Mobile is the biggest of these trends because of what technology will control in the future and where it is going,” she said. “Some companies say they’ve been hesitant to move toward mobile because they don’t know if it is the next big thing. All signs point to the fact that mobile is here to stay, and companies should be investing in it. It’s not just a millennial trend, but we grew up with this technology so we expect it.”
Millennials and loyalty
Several sources disputed the notion that millennials aren’t loyal to brands. However, it takes effort to build that loyalty, they said.
Christine Cutten, principal at Monitor Deloitte Consulting, said while she tends to agree that millennials are not generally brand loyal, “they can be influenced by the wisdom of the crowd. Wisdom of the crowd takes more precedent over brand as young consumers turn to social media to leverage the input of their friends.”
Other hotel executives said millennials will be loyal to a brand if it aligns with their values and interests. Authenticity is a key driver.
“Think Apple,” said Berg of IHG. “Some people are rabid about Apple, but the old way of throwing some ads on TV and putting up some billboards isn’t going to work.
“(Millennials) are more discerning about what makes them loyal, so you better have what they need for them to be loyal to your brand. They’re more skeptical by nature, but if you have the right product and right service and you give them what they want when they want it, they will be very loyal,” he said.
Hoteliers court millennials
It’s important for hotel and brand companies to engage millennials and turn them into loyal customers, sources said. For the big brand companies, loyalty program members account for a large portion of their most-profitable business.
According to a recent study from TravelClick, during the first five months of the year, 60% of all transient roomnights were booked by members of hotel loyalty programs, up from 56% during the same time last year. And loyalty club members accounted for 77% of roomnights booked directly through hotel websites, the most cost-efficient distribution channel for hotels.
HVS’s Lee said while brands have been slow to adopt design elements that appeal to millennials, many independents and boutique hotels are creating environments favored by the demographic.
“Ace Hotels, for example, championed the social lobby idea and was followed eventually by Starwood (Hotels & Resorts Worldwide) and then even Marriott’s Courtyard and Residence Inns’ Gen 10 (prototype),” she said. “The design aspect is always a little slower on the big brand side, but it is being led by boutique and specialized hotel (companies) that only have one or two properties and have the flexibility of moving quicker with these trends.”
Among big brand companies, Marriott has been aggressive in its product development and marketing strategies aimed at millennials. Its new economy brand, Moxy, was designed with the millennial traveler in mind. Marriott and the parent company of furniture retailer Ikea are partnering to develop the brand and plan to have 150 franchised properties in Europe in during the next 10 years.
In addition, Marriott last month launched a new marketing campaign, Travel Brilliantly, aimed at millennials. The company earlier this month also debuted Xplor, a mobile travel game that offers Marriott Rewards points as prizes.
Hotel News Now’s Patrick Mayock contributed to this report.