Are you Ready for the «Millennials»?

Seneca said “Ignoranti, quem portum petat, nullus suus ventus est”. Clearly, Travel Companies, when defining their future, must try to understand how they can create more value for their customers. And that involves to determine who should be those customers, as the greatest mistake for a company is trying to be everything for everyone. This reflection is tightly linked with understanding the different profiles of the generations which can be served by the travel companies. Specially with understanding the “Millennials”, as they represent the real challenge for them.

The travel trends of the Baby Boomer generation have been the focus of a great deal of analysis as the industry competes to capture their business.  However, a new generation is surpassing this segment and will be garnering as much attention: The Millennials.  For instance, in USA, this age group is beginning to outpace the Baby Boomer’s 76 million population with their own 79 million, and is projected to attain an even larger population gap at 78 million compared to the Boomers’ 58 million by 2030.   Though most people are aware that the Millennial generation is tech-savvy and will not travel in the same style as their parents, there has not been significant research concerning the trends and changes this generation will bring to the hospitality industry.

“Generation Y.  The Millennials.  Generation Next.”  These are just a few of the names attributed to the generation born between 1980 and 1999.  Many businesses argue that the younger end of the Millennials may still depend financially on their parents, but the older end of this spectrum is already experiencing their peak spending years.  With an increase of 20% in 2010 based on American Express Business Insights, this age bracket is the fastest growing segment for travel spending.  As a whole, the Millennials  have not  reached  their spending peak, and already they dictate where hundreds of billions of dollars are directed,and they still have more potential to spending power and are expected to start reach their peak in 2017.

Millennials now make up 35% of the workforce, a figure that is expected to double by 2020. No shocker there, but what is perhaps surprising is how quickly the baby boomer generation has started to behave like Millennials in how they interact with social and mobile technologies. According to a GlobalWebIndex study, the 55-64 age bracket on Twitter is the fastest growing demographic, with 79% growth since 2012. On Facebook and Google+, the fastest growing demographic is the 45-54 age bracket, growing at 46% and 56% respectively. The average age of today’s social gamer is 39 years old, a nod to how popular games like Candy Crush and Angry Birds are with all age groups.

With these demographics, the travel industry is experiencing what you might call a “youth movement.” Certainly, it is being driven by the Millennials and Gen X-ers, but older generations are sitting shotgun, having become more comfortable with technology in their personal lives. Regardless of age, the next-generation travelers have different expectations when it comes to the travel tools they use today.

Thus, Travel Campanies must analyze carefully if they should begin to focus on Millennial or baby Boomers or Gen X should be their focus. In this article my aim is to provide a closer overview of Gen Y and share how some companies are embracing the challenge so each reader can decide if «Millennials» are for them, and when.

The next video gives a great explanation of the main characteristics of Gen Y:

There are already some companies that have accepted the challenge to meet the expectations of Millennials and have either designed special products for them, as Chase Manhattan Bank; or try to be themselves identified as Millennials as Internet Explorer or Virgin Atlantic; or mimick the Millinnials behaviour, as Doritos; or, like STA, show how a Millinnial travels.

We can summarize the  main trends of Millennials related to Travel:

1) The Now Generation – Now, Instantaneity, and Flexibility of Service

Since individuals falling into this category are also labeled the Now Generation, Millennials seek immediate gratification.  This holds true when traveling and in particular, during hotel stays.    It cannot be ascribed as a “want” so much as a “need” since this generation has grown up with the technology that allows them to access information instantly.  This capability to obtain data will not necessarily propel you ahead, but lacking it will definitely leave you behind.

The expectation is that hotels will provide comprehensive material on their websites.  If not, Millennials will turn to Google, and search for answers on review sites such as TripAdvisor.  This is not beneficial for hotel operators and owners as they cannot control the content on those sites.  Therefore, if accurate substance is readily available and easily accessible, Millennials will easily obtain the answers they are seeking.

Additionally, Millennials expect speed and efficiency in their travels.  As an example, they prefer fast-casual restaurants such as Panera Bread.  These eateries provide quality food, albeit no table service.  They allow Millennials the flexibility to move in and out of the restaurant quickly with the desired product, fast, good food.  To some degree, this trend has been adopted by the hotel industry with Aloft and Yotel, two brands that provide a quality experience incorporating kiosk check-ins.  Although hospitality prides itself on service, kiosk and technology provide the type of ritual Millennials prefer.  While the traditional offering dictates a friendly front desk agent greeting guests, a kiosk does not translate into poor service, just service of a different kind.  36% of Millennials prefer automated kiosk check-ins minus staff interaction compared to 19% of the older generations.   When ATMs were initially introduced, members of the banking industry believed that customers would not trust machines with their money as opposed to actual bank tellers. Obviously today, ATMS are ubiquitous and the norm.  Another example of transition in the hospitality industry is the disappearance of the traditional concierge.  Smartphones now deliver the best local advice.  Why use a concierge necessitating time-consuming conversation with an individual when an APP can do the same thing?  With Twitter or other apps, travelers can ask hotel employees or “local experts” through their phones about the best restaurants instead of asking a traditional concierge agent.  This provides the technological convenience to which Millennials are accustomed.

2) Real Time Information

Another reason this group is called the Now Generation is because they demand information as it occurs.  With the dominance of social media, the Millennials expect real-time reporting so they feel they are in the thick of things even when they are sitting comfortably at home.   Twitter and Facebook status are an integral component in the lives of Millennials who regularly upload photographs on Instagram so they may share their news in real-time with friends and colleagues.  They expect this from hoteliers, as well.  One humorous perspective of this generation is the question, “If I didn’t check-in and there aren’t photos of the night on Facebook, did it really happen?”  Millennials are accustomed to sharing their life’s activities and opinions instantly with friends through social media.  This is demonstrated predominantly in the television industry where it is standard procedure to post a hashtag in the corner of the TV screen to enable viewers to share opinions and reactions on Twitter simultaneously as the show is airing. 

This is a good example of information intended for Millennials:

Many hoteliers have enjoyed success sharing hotel event photographs using apps such as Instagram.  This allocation of information in real-time increases the buzz, and often convinces Millennials to join in spontaneously.  In fact, the Hotel blog, Hotel Chatter, actually listed Gansevoort Hotels, Morgans Hotel Group, The Standard, Thompson Hotels, and Four Seasons Los Angeles as the top five hotels or brands to follow on Instagram.  These luxury boutique hotels have routinely embraced social media on various levels.

Another benefit of real-time information is that it enables Millennials to identify a “happening” worthy of a visit.  Many hotels post “teaser” pictures of events, parties, or activities being promoted to entice people to attend ……, “A picture is worth a thousand words.”  Why describe how cool a DJ and rooftop pool party is going to be when you can sum it up in a single photo reaching thousands of followers with one click?  When there are so many alternatives for Millennials, they ultimately aspire to select the best option for the very same day.  FOMO or “Fear of Missing Out” is a phenomenon born from the Millennial Generation and social media, and stems from a deep-seated concern that your friends or the person sitting next to you is having more fun.  Possessing real-time photos will guarantee the most current data and options for a generation that considers it the norm to makes last minute plans based on an informed decision.

3) Peer Review

Millennials grew up bombarded with advertising, and they are too sophisticated to be “tricked” by marketers.  Thus, Millennials turn to their peers for “expert” opinion.  On average, a Millennial will check 10.2 sources before booking. With review sites such as TripAdvisor or Yelp being so commonly used, it is now a powerful tool to get real opinions about hotels or restaurants.  Millennials will often look up reviews in real-time on their mobile devices while they are deciding where to eat or stay.  This is especially prevalent with apps such as Yelp where upon check-in, reviews and tips automatically pop-up and this neatly ties in with Now Generation trends of garnering current information instantly.

Although these review sites may not be as professional as the New York Times Dining section, there is a certain level of authenticity and trust in a friend’s or peer’s review.  Historically, marketers have always been aware of this phenomenon as well as the power of word of mouth.  Reviewers on Yelp and other sites are experts of another genre, not possessing the traditional set of credentials.  And social media only amplifies reviews with the speed of which information is shared and the process by which material is organized by voting up or down with flattering or critical reviews so that the most prevalent reviews are the top search results.  Sites such as TripAdvisor and Yelp are beneficial to hoteliers as they provide the option to respond to negative comments.  The response and reaction to reviews creates the chance to flip a harmful experience, as reviewers can change their original perspective or offer a follow-up assessment based on the response of hoteliers.  However, this is only possible if hoteliers monitor their social media presence, in essence, having dedicated social media personnel is always advantageous.

4)  Social Creatures – Online and Offline

Millennials are social creatures online and offline. It seems something new but 2.000 years ago Seneca already said «Homo sit naturaliter animal socialis». Although previous generations express trepidation that this generation will be unable to dialogue and interact with others due to their reliance on texting and other forms of communication, Millennials do, in fact, connect with their peers, in ways the older generation is unfamiliar with such as texting, Facebook message, GChatting, WhatsApp, etc.  The use of social media to bond with others also feeds into the “Fear of Missing Out” where Millennials feel the need to share their current location, activities, and opinions with others, and this becomes their method of interaction.  This allows them to validate the “fun” they are having with their peers’ approval in the form of a “like” on their Facebook status or check-in, giving them a much broader reach than previous generations.  While members of previous age brackets may inform a few friends via phone calls about a great hotel stay, Millennials will post a picture or review that can easily reach thousands of people at once.  This again addresses the power and reach of social media’s popularity and the importance of a positive review, or a travel company´s reaction to uncomplimentary comments. Even traditional companies have been capable to evolve to face the challenge:

Additionally, Millennials are sociable offline as they are a generation that enjoys traveling with others, whether or not they have met previously.  58% of Millennials (20% higher than older generations) prefer to travel with friends.   Companies offering tour groups such as Contiki are exceedingly popular as they target Millennials, with an age cap at 26.  They provide opportunities for Millennials to meet other Millennials and experiences foreign countries with new people.  This provides hotels with the opportunity to target Millennials by connecting and reaching out to them.  Again, Aloft has embraced this idea very well by creating the social lobby and XYZ Bar with a much younger and “hipper” vibe that appeals to Millennials and draws them to socialize in the lobby rather than remaining sequestered in their rooms.  The Trypt Hotel Times Square has also embraced this idea and taken it one step further with the use of LobbyFriend, an app that encourages hotel guests to meet and greet fellow guests.  Even if Millennials don’t meet others in the lobby area, they do practice “isolated togetherness,” being alone on individual laptops or phones, but doing it in a public area.  Advances in technology and sociability will attract Millennials who are seeking interaction and socialization to which they have become accustomed.

5) Different Booking Structure

Compared to previous generations, another trend with Millennials that is heavily influenced by technology is the change in booking structure.  Millennials use a shorter booking window consisting of 75 days compared to 93 days, the rule for older generations.   Millennials make snap decisions in real time due to all the previously mentioned reasons.  Thus, it is of critical importance that hoteliers offer the most up-to-date, real-time, accurate information on their websites to best control internet content regarding their property.  Social media and review sites must be constantly monitored as Millennials consistently peruse reviews before booking.

Millennials grew up surrounded by technology.  They cannot relate to a time where internet and cell phones didn’t exist and, therefore, have different expectations for travel such as instant email confirmation and digital boarding passes on their smartphones.  It also means they are fluent and comfortable with booking travel plans online, as well as on mobile and tablet devices.  Brand websites content combined with mobile-optimized webpages and apps are mandatory as many Millennials will be viewing that material on various devices.  Mobile websites and apps should be designed to provide the same quality of content, along with ease of navigation and booking based on its change in interaction.

As previously indicated, technology also provided Millennials with the ability to conduct more research and comparison shopping.  OTAs began this process with Expedia, Orbitz, Travelocity and the like, becoming an aggregate search and booking engine for the various hotels and airlines.  Now, even more sophisticated search engines have developed including Kayak that aggregate and explore the other search engines including going directly to the brands. Accordingly, brands have been adopting “lowest price guarantees” such as Starwood’s “Best Rate Guarantee” where the published rate on their own website will be the lowest price available or the guest receives a 10% discount of 2,000 SPG Starpoints.

A good example of how to deal with this habits is Expedia´s app:

Another unique change in booking is the emergence of deal websites that started in the luxury market with Gilt Group and location-based deals with Groupon.  Targeted at travelers, sites such as Jetsetter offer deals on vacations as well as other travel experiences at reduced pricing presenting both  opportunities and threats to hoteliers.  They can embrace the chance to reach a wider audience of travelers who otherwise may not be able to afford or may not have heard of their brand or property. However, it also presents revenue management issues along with the dilemma of how to keep these Millennials as repeat customers.

6) Millennials as Business Travelers

The older end of the Millennials spectrum is already traveling for business.  In the past, hotel rooms offered in-room desks as it was expected that people worked in their rooms, travelers now want to work in a “third space.”  This was popularized with the coffee shop culture where people went for “third space” other than their home and work space and is segueing into the hotel industry where the lobby has been transformed into a place of socialization and work.  Again, Millennials are social creatures who value group work and feedback.  36% of Millennials responded that they prefer to work in the lobby area compared to 17% of older generations.   The standard for the industry is Marriott Courtyard’s Bistro Lobby with their bar seats, pod seating to encourage group work, and open socializing nature.  More and more hotel lobbies are being designed as an attractive place for work with a social component to adapt to the changing needs of younger travelers.

Even the airlines are revamping their offerings for the growing group of next-generation business travelers. For example, JetBlue, which has historically been class–agnostic, has introduced a business traveler “experience” fully equipped with touchscreen seat controls, charging stations, and free WiFi.

TripCase leaned even further into the corporate travel world with new technology offerings that allow travelers to manage personal and business travel in one place while keeping corporate programs informed of their employees’ business itineraries.

Just as applications such as Foursquare and Get Glue have made it fun for consumers to regularly check in to businesses and events, we are seeing new tools that are doing the same for business travel. Rather than relying solely on staid and, frankly, often ignored travel policies, travel managers can now encourage and reward smart employee travel behavior through applications and platforms that bring those policies to life. Compliance generally equals savings for corporations, but the real benefit lies in the data. With better insight into employees’ behavioral data, corporations can adjust travel programs to realize those savings and keep employees happy at the same time. The concept of gamification remained top of mind as companies discussed how incentivizing travelers throughout the different stages of travel -from purchasing to on-trip- can bring benefits across the board. Expect these platforms, like Marriott’s app, Xplor, which combines its reward program with social-gaming mechanics to continue to build loyalty and engagement.

7) Required Essentials and Wanted Amenities

Millennials are not the travelers their parents were.  Their first experience with travel may not have been in hotels but rather in hostels that have become popular with backpackers and young budget conscious travelers.  The basics of all hostels are a clean bed, a hot shower, and free wifi.  If free wifi can be provided at $10 or under per night at hostels, it is obvious why Millennials cannot comprehend the policy of luxury hotels with a rate of over $500 a night charging an additional $20 per day for wifi.  As shown by IHG with their newest announcement that all members in their new IHG Rewards Club will receive free wifi starting in 2014.  Other than a clean bed, wifi is probably the Number One item Millennials seek in a hotel it is not an amenity, but a requirement. That is why innovative value propositions as those from ConnectedtoGo are the perfect fit for Millennials.

Other than the essentials, Millennials are also looking for that “something extra” in a hotel.  A Marriott is a Marriott.  The big box hotel can quickly become monotonous to a Millennial, as they do not wish to Instagram a photo of a boring room to share that with their friends.  They search for the “cool factor” and individualistic aspect in their travels and want a story to share when they go home.  This can be done with a special amenity such as local potato chips and beer in the mini-bar or a unique design aspect such as distinctive local artwork in each room, or a special event such as a Swedish deejay spinning on the hotel’s rooftop bar.  There must be something unique that draws the Millennial traveler in that they can’t find at another property.  To put it simply, the hotel must have a certain je ne sais quoi or else why stay at this property?

8) Authentic Local Experiences

Millennials reject a cookie cutter journey. They are not the type of traveler to visit Paris to just view the Louvre’s Mona Lisa.  Millennials demand to be integrated in the culture with an authentic local experience.  They not only want to see the Mona Lisa, but then go to a local café and people watch while sipping a latte and then visit a local, underground wine bar that has secret entrance.  78% of Millennials indicated that they prefer to learn something new when traveling, while 70% indicated they expect special places to offer immersive experiences that are interactive and hands-on.   This idea has sprouted into new accommodation concepts including hostels, Air BNB, couch surfing, and home exchanges.

Hostels allow Millennials to meet other Millennials while interacting with the locals.  This is reflected in the new social lobbies and local concierges that brands are introducing as previously mentioned.  Air BNB, couch surfing, and home exchanges allow Millennials to move out of the traditional hotel experience and feel “at home” in a new city.  In order not to lose Millennials to these other forms of accommodations, travel companies and destinations much provide an equally authentic experience.

STA and Travel Alberta are two good examples.

9) Volunteer Travel/Social Responsibility

Another aspect of a journey that is essential to Millennials is the idea that they are promoting social responsibility.  They not only want to view new sites and enjoy local experiences, but hope to contribute to the community and the world.  77% of Millennials believe it is imperative to address causes that are important to them.   Millennials grew up in an increased social society and strive to support their beliefs and views in all aspects of their lives.

On the more extreme end of the spectrum, one popular form of volunteer travel is through WWOOF, World-Wide Opportunities on Organic Farms, where in exchange for help on organic farms, hosts provide food and accommodations to visitors.  Many local properties will now offer excursions to the neighboring school for an afternoon to interact with the students in a game of soccer or story time.  Some hotels offer a list of  desirable items that local school would like donated if guests are inclined to contribute to the community.  Even if Millennials cannot physically volunteer, they still want to feel that they are supporting sustainable travel by staying in eco-friendly or LEED-certified properties.  In this manner, they dictate where their money is directed and support sustainable projects, the local community and products, and other causes in which they believe.  This green theme can be seen in the recent development of eco-friendly brands such as Starwood’s Element or Hilton’s Home2 Suites.

10) Pod Hotels

A new hotel type that is geared towards Millennials is the pod hotel concept. The  Pod hotel is characterized by limited room size, unique luxury design, and high-tech gadget features which are the main requirements Millennials are  seeking.  These luxury qualities are accomplished by sacrificing space for price.  Pod hotels can be an excellent alternative in locations where traditional hotels cannot be built, such as in airports and in the heart of major urban cities, where land available for development is limited and expensive, and high density projects are permitted.  The trend was started with Yotel and has been increasing in popularity with the spread of brands such as CitizenM and Qbic demonstrate the changing landscape of hotels and travel for Millennials and their willingness to discover something that is uniquely appropriate for them. If a brand is able to introduce the right product, young Millennials will flock to it.

In brief, each travel company has to decide if it is possible -and profitable- to focus on Gen Y regarding to its products and organization and plan the future  accordingly.