Industry Update
Opinion Article 9 October 2019

‘Hospitality for Millennials’

By Korosh Farazad, Founder and Chairman of Farazad Group of Companies

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What are millennials (Gen Y)

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According to demographers at Pew Research Center, The Millennial generation are born between roughly 1981 and 1997. They account for approximately 2 billion people which make them the largest living generation by population size (27% of the global population). According to Bernstein, they are composed to have more spending power than baby boomers. They are the most powerful and influential consumer group the world has experienced. The Millennial market is big on travel, experiences, and technology. They are more engage in experiential travel rather than traditional way. Satisfactory of the customer service and personalized are the important key for customer loyalty.

Experiential luxury

Today, the significant trend is the rise of experiential luxury, including categories such as high-end food and wine, luxury hotels, and exclusive vacations. Research from Bain & company 2017 claimed that nearly half of all consumers—and a majority of Millennials—say they're buying fewer products and purchasing more experiences.

By 2022, the experiential segment is forecast to account for nearly two-thirds of the total luxury market—representing a fundamental shift in consumer behavior, from owning to being. "Consuming products and brands are not just a way to say who you are but a way to define who you are," D'Arpizio notes. "This is why Millennials are more engaged than previous generations with self-expression."

According to Forbes 2019. The global luxury market is anticipated to top €1.3 trillion by 2025. Millennials account about 32% of spending in the personal luxury market. By 2025 they are expected to make up to 50% of the total market. "Millennials view ownership differently than previous generations did. They are willing to pay for truly valuable and one-of-a-kind experiences. They desire the new and novel and crave the unexpected. They want meaningful travel experiences and demand the distinct and different". Eventbrite study commissioned claimed that 78% of millennials prefer to spend more money on experiences rather than on material things.

The new demand described above shown the rise of experiential travel. It is a drive for hoteliers to reconstruct and develop their product offering to be more engaged and personalized, immersive and adventurous and more adjusted to local culture, thus, to inspire and vibrate on a deeper emotional level.

What do Millennials look for in hospitality?

They are the generation that prefer to engage with technology in order to make their lives easier and their travel experience more continuously. Millennials guests have high expectations in payments, mobile experience together with discovery before and during their stay. They want a better technology to make their stay to be an experiential and excellent one.

Some interesting key stat below from Hotel Management 2018:

  • 73% of Millennials check a company's social media (website, Instagram) before they make a booking
  • 33% will change their mind and they will not book it if a hotel had no social media presence
  • 97% of Millennials will post their travel experiences on social media - which can be a big impact and influences for other people choices.
  • Nearly 90% of Millennials use Facebook to inspire their travels. Twitter is also a popular platform. 'Instagrammable' vacation is a key for may millennials. Offering a signature or scenic background for pictures in or around the hotel. In addition, offer a free drink at bar for posting a selfie with a specific #hashtag for the hotel.

Some hotels already use the technology to attract tech-savvy guests as example which are shown below:

  • Ritz Carlton: Guests can order extra toiletries, towels, pillow, blanket, housekeeping services or even luggage pick up via their smartphone
  • W Hotel: Guests can open and unlock their rooms with their apple watch or smartphone in some of the hotel under the group
  • HTL Hotels: Check-in and room access are via smartphone
  • Conrad Hotel: Guests can choose their own rooms before checking in and order room service via smartphone.

Not all millennials are seeking for only experiential luxury. Beware that some millennials prefer budgeted hotel, it's important to position hotels as budget-sensible so that millennials are reassured to use hotels as their basecamp while they go out exploring the destinations. Value add services should always concentrate on improving their traveling experience such as helpful local information, either through materials or trained staff who can introduce the city with a knowing smile.

How can Hospitality operators meet Millennial expectations?

Prioritizing experience over material, millennials are looking for something entirely different than the previous generations in traveling, and hoteliers need to familiarize themselves with Digital to attract these young and vibrant customers:

Digitalize

Millennials do everything online, and more importantly via their phone, including searching to actual reservation and even room service. It is high time for hoteliers to consider a digitalized sales system that are extremely convenient and user-friendly on websites and apps. Also, don't forget to upgrade your Wi-Fi to the highest standard, which is a must to satisfy millennials.

Business, companies, hoteliers, brands etc. that eavesdrop to find opportunities and understand what millennials need will be best positioned to earn higher revenue and repetitive clients/guests.

Korosh Farazad

As the acting CEO of Farazad Investments (FI), Mr. Farazad, asserts market integrity and an unconventional approach to Structured Financing. He was awarded by the IAIR Awards as the ‘CEO of the Year for Structured Finance Europe Middle East & Africa (EMEA)’ 2015, and awarded with the ‘Best Structured Finance Company 2015’, by the European CEO.

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