Industry Update
Opinion Article14 July 2016

A Refreshing Perspective on the Millennials

By John T. Bowen

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Just by the size of their numbers, millennials will have a significant effect on the hospitality industry. In the United States, there are over 90 million in this demographic, making them the largest generational segment with a spending power of over $200 billion. In terms of travel consumption, millennials will account for over half of all travel spending by 2020.

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Although definitions of the millennial generation vary, the general consensus is they were born between 1980 and 2000. Generational segments are just one way we can divide the market, though. From a marketing standpoint, we are interested in the consumer behavior of this demographic. And just like other forms of market segmentation, not all constituent members behave the same. Some millennials have a consumer behavior similar to baby boomers while, conversely, some baby boomers act millennials. As a fun aside, google 'How Millennial Are You' and fill out the questionnaire developed by the Pew Research Center.

Millennials are often misunderstood by their boomer bosses and have become maligned. If one does a search beginning with 'millennials are', the auto-suggestions will likely yield the next four top keywords as 'lazy', 'entitled', 'stupid' and 'screwed'. Hopefully, after reading this you will come away feeling that they are not lazy, entitled, stupid or screwed.

Events Shaping Their Lives

To understand millennials, one needs to understand the events that shaped their lives. Some of the older millennials remember the Challenger explosion in 1986, the deaths of 80 people in the Branch Davidian compound fire in Texas in 1993, the 9/11 terrorist attacks in 2001, the 2004 Indian Ocean tsunami and Hurricane Katrina in 2005. They also remember the Columbine High School shooting in 1999, the first of a string of mass murders of both innocent and random people at schools, universities, theaters and other public venues. They have witnessed random acts of violence almost instantaneously as the internet has connected this generation with these events in real time.

Millennials have witnessed economic uncertainty and the collapse of the internet bubble, followed by the worst global recession since the Great Depression. Finally, they have witnessed their parents working long hours, sometimes resulting in dysfunctional families or divorce. Some watched as companies that employed their parents did not always appreciate the sacrifices they made for their careers. Many parents lost their jobs due to downsizing or when the company they worked for was part of an acquisition. These formative events help explain why, as a cohort, millennials want to work to live and not live to work.

Millennials will work long hours to finish a project, but they do not want to work long hours. They are not lazy; they want time to live life to its fullest. Millennials have an almost insatiable desire to learn. When they feel they are no longer learning, they will look for another job. This makes them ideal candidates for special projects that keep them engaged while they complete the tasks the organization needs them to perform on a daily basis. When they travel, they want to go local and enjoy the culture of the community they are visiting. Airbnb locations are often located in said community, and this, along with the affordable price, is key reason why millennials often prefer Airbnb.

Another profound influence on millennials is technology. They were the first generational cohort to grow up with the internet and are sometimes referred to as digital natives. They grew up with cell phones and social media sites including MySpace and Facebook. They are now moving from expensive subscription cable TV to using WiFi to gain access to last week's cable shows through Netflix, Hulu or other online providers of stored content. If they are interested in a news item, they look it up online. Comparatively, most spend little time reading print media.

In their cars, they are often listening to their own music – that is, when they happen to be in a car. Those living in urban areas prefer not to own a car, using public transportation, Uber and Zipcar when they need to get somewhere. This is why print and broadcast media are not as effective as social media for reaching millennials. Their desire to use public transportation was crystallized in a study by Chase Card Services, which found that almost one-fifth of millennials said they will not stay at a hotel that does not have easy access to public transportation.

Brand Loyalty

One of the areas I specialize in is creating loyalty through branding. I became interested in how to create loyalty amongst millennials.

First, although they are brand loyal, they expect immediate recognition from brands. They do not want to stay in a basic room 35 times before they start to get upgrades as a gold member of a loyalty program. They want to be recognized as being important the first time they walk through the door. A challenge for brands is how to maintain their legacy loyalty programs that have been effective with baby boomers while also providing instant benefits for millennials.

New brands catering to this youthful generation can indeed design appropriate loyalty programs. For example, citizenM's loyalty program has a one-level 'citizen' designation. When you join, you instantly get 15% off room rates, a free drink, plus a more liberal cancellation policy. Hilton and Marriott now have programs where loyalty members get discounts on hotels as well as free WiFi. These immediate benefits will attract Millennials.

Millennials are also influencing hotel designs, resulting in spaces that enhance social interaction. The new concepts – such as Moxy, citizenM and Radisson RED – all have public areas that invite social interaction. Because millennials use these public areas, their rooms can be smaller. The new social aspect of the public areas not only attracts millennials but is also a feature that seems to create value with boomers and Gen Xers.

Some brands have gone even further, eliminating the front desk and moving to a computerized check-in. Millennials prefer these self-service technologies (SSTs) because they eliminate human error and not because they do not like human interaction. In fact, they are very social. The use of SSTs creates an opportunity for companies to reduce their labor by having millennials perform the tasks of ordering, checking in, making reservations and anything else that can be digitalized.

Radisson RED has several recruitment videos showing opportunities for employees with tattoos and unique hairstyles, while other hospitality brands have policies against visible tattoos, facial hair, body piercings or unique hairstyles. With the growing trend of millennials exhibiting individual expression through physical body alterations, considerations about hiring policies have thus come to the forefront. Radisson RED realizes that these features are common traits among millennials and seeks employees who represent this generation. Some current hotel policies will not survive if hospitality firms want to focus on millennials.

These are exciting times for the hospitality industry. Although millennials are changing the design of hospitality spaces, the format of loyalty programs and employment models, many of these shifts are refreshing and necessary. They can and will enhance the travel experience for not only millennials but also for all the other generations.

References:

  • Walsh, E. (2014). Looking Ahead: Millennial Travel Trends-Part1, retrieved April 2016 from https://www.turnerpr.com/blog/millennial-travel-trends-part-1/.
  • Bolton, R., Parasuraman, A., Hoefnagels, A., Migchels, N., Kabadayi, S., Gruber, T., Loureiro, Y., and Solnet, D. (2013). Understanding Generation Y And Their Use Of Social Media: A Review And Research Agenda, Journal of Service Management, Vol. 24 (3), pp. 245-267
  • Ng, E., Schweitzer, L. & Lyons, S. (2010). New Generation, Great Expectations: A Field Study Of The Millennial Generation, Journal of Business Psychology, Vol. 25, pp. 281-292.
  • Strutner, S. (2014). Generation Y Travels Fancier Than The Rest Of Us, Survey Finds. Retrieved, April 2016 from http://www.huffingtonpost.com/2014/06/17/millennial-travel_n_5492127.html.
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John T. Bowen

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