Generation next: Making sense of millennial guests
The millennial traveller has certainly disrupted the way in which hotels think about attracting potential guests. They are more digitally active, open to peer influence and seek out short-term gratification compared to previous generations of guests.
While millennials may not currently have the combined buying power of older generations of travellers, their spending power is rapidly increasing. The Nielsen Australian Millennials Report revealed that over the next five years, for the food retail sector alone, millennials were set to grow their annual purchasing market share by over 10 percent.
Given the growing importance of millennial travellers to the hospitality industry, it is vital that hoteliers around the world better understand some of the key motivations of this age demographic and how they relate to the hotel sector.
The rise of the independent traveller
Millennials are the most independent travel generation the hospitality industry has encountered to date. Trends show young people are doing more research, on more online booking platforms, before booking hotel rooms, without the help of a travel agent.
When booking a hotel, millennial travellers are likely to be influenced by peer-reviewed online posts and trip advisory reviews, all of which offer the ability to hear from other guests about their firsthand experiences with a property. This feedback can relate to the service, brand, product or even the perceived value of a hotel and is all important when targeting younger, digitally savvy guests.
To improve a hotel’s online reputation and harness peer reviews that actively promote the property as a desirable location to stay, hoteliers may consider enacting customer advocacy programmes that motivate guests to share their experiences online by offering them rewards or discounts on future bookings, or the chance to win a free stay. These incentives help to encourage guests with positive experiences to share their opinions of the hotel online and that in turn can influence online millennial travellers to become future guests.
Streamline hotel services with millennials in mind
Having grown up with technology and instant information which has helped streamline everyday tasks, it is a commonly held belief that millennials seek immediate gratification, and that this underlying impatience extends to hotel visits. This can mean that these guests can feel put-off by a stay in a new hotel if they encounter long check-in lines at reception. A Delliotte study has noted in the past that:
“When it comes to interacting with hotel staff for check-in, almost two-fifths (36 percent) of the 18-44 year-old respondents favour automated kiosks rather than checking in with a hotel employee at the front desk. Whereas only 19 percent of the 45 and older survey participants say they prefer automated kiosks.”
Importantly, today there are innovative solutions available for a variety of guest scenarios and preferences. For younger guests that prefer not wait in line or speak with anyone to check in, there are mobile apps, keyless entry and secure payment options to achieve that. However, just because one traveller prefers to get straight to their room doesn’t mean all millennial guests want a check-in experience with a robot. A chat bot can recite breakfast hours but when a guest is looking for a unique and memorable brunch, they want to speak with a human so hotels need to ensure they cater for all guest types.
Meeting the needs of the millennials
Hotels looking to attract large numbers of millennial guests need to ensure that they understand the value perception of their hotel amongst this key demographic and ensure that their property is priced correctly through collecting data to analyse price elasticity.
Hoteliers can also entice younger travellers through improving their online presence and offering up accommodation packages that appeals to this market. This can be done through matching the look and feel of the hotels website and social media feeds to the visuals (design, photography and video) styles that appeal to younger travellers and better targeting SEO key words. Hotel packages like those that combine rooms with an F&B package, or entertainment tickets and a hotel room can help also attract experiential millennial guests who base their travels more around experiences than just destinations.
Listen to what your millennial guests are saying online
While some hoteliers are still reluctant to fully engage with the wider community on social media, this does not mean that the conversation about their hotel is not going on without them, especially amongst millennial travellers. Hoteliers that monitor what is being said about their hotel online (and acting upon it where appropriate) are positioned to best understand the concerns or compliments younger travellers have regarding their property. For example, if the common feedback on social media was that the Wi-Fi provided by the hotel was dysfunctional, the IT department at the hotel could investigate and rectify any issues with service to prevent potential travellers being negatively influenced by excessive online commentary on the issue. In the same way, if a hotel is rated highly, and the majority of social media commentary relates to the tastefully decorated rooms and comfortable beds, the marketing department will have the opportunity to build on these positive reviews and revenue managers may also be able to consider strengthening the pricing position of their rooms.
Making a millennial guest a loyal guest
Interestingly, although it is commonly assumed that millennials are not as loyal when compared with older generations, research suggests they will commit to brands they believe in. “When considering loyalty, nearly half (46 percent) of the 18-29 year-olds say they prefer to stay at their favourite hotel brand even if it is not conveniently located, whereas 37 percent of those 30 and older do the same.”
Historically, creating loyal guests involved a membership points program that grows over time and eventually rewards people with complimentary hotel stays. But how does this system work with younger travellers? Will millennials continue to shop around despite accumulating loyalty points with a hotel group, and does an instant gratification discount instead attract them for the long-term? One thing is clear, with the socially connected millennial traveller they are seeking to create unique experiences, ones that create memories and opportunities for them to share them with their various networks. A discount may get them in the door but a personalised experience will get them talking about the hotel and its service.
These are important considerations when building a loyalty initiative that will encourage return patronage of younger travellers. What hotels should also consider is what their initiative consists of, who they are targeting and how do they entice those guests with the greatest lifetime value. As an example: Guest A is a seasoned business traveller toward the end of their career, loyal to a hotel brand to a fault. They book their business trips directly with your hotel, and then leverage their various loyalty benefits to also book direct for personal vacations. Since this traveller has very little, if any, price sensitivity, what benefit does a hotel or this guest have in receiving an additional 10 percent off their stay and are they even aware they are receiving it? Guest B is the up-and-coming millennial. They are at the infancy of a career that will end up spanning over decades of business travel. The lifetime value of this guest is extraordinary, making them an ideal long-term consumer.
While loyalty programs are proven revenue management initiatives, hotels still need to humanise the guest experience. Strong considerations for the marketing strategy, booking experience and stay experience need to be made. When a millennial guest decides to stay with a hotel, an entire life-cycle of opportunity emerges to interact, learn and, in turn, convert that guest into a loyal customer – whether they booked direct or through a third party, on a discount or at a premium rate.
The millennial age demographic should be a key focus for the hospitality industry over the coming years given this group’s spending power is increasing, particularly in leisure travel. It is those hoteliers that continue to optimise the online experience and the rich data being made available to better understand guest behaviour that create experiences tailored to attracting and retaining today’s millennial traveller.
Charles Wang is the Regional Head of Advisory Services, based in Beijing and working in Asia Pacific and Greater China for IDeaS.
