Under indulging: Accom failing to satisfy wants of its big spenders

The generation famed for prioritising travel over traditional goals is splurging on hotels offering indulgent experiences, according to new research.

The latest ‘check in’ report on the Australia hotel sector by CBRE Hotels shows Millennials spending an average $234 per person per year on accommodation between 2014-2018, ahead of Generation X on $231 and Baby Boomers on $165.

The company’s head of hotels research, Chinmay Chitale, said: “It is likely linked to the fact that many have yet to purchase a house, get married or have children – meaning that they can prioritise travel more readily.”

Some 49 percent of Millennials and Post-Millennials (those born after 1997) indicated their reason for staying in a hotel was for “indulgence”, while 22 percent said they chose a hotel to get an “authentic local experience”.

However, Millennials and post-Millennials also favour Airbnb-style accommodation according to the research, making up a significantly higher share of total nights spent in private rentals (56 percent) relative to total nights spent in hotel accommodation (38 percent).

The figures present a challenge for hoteliers to ensure their offering appeals to the adventure-seeking cohort, says CBRE Hotels’ national director Wayne Bunz, with most existing luxury brands in the Australian market not currently responding to the trend.

“There exists an opportunity for the ‘new age’ luxury brand to distinguish itself from Airbnb and typical luxury and upscale brands,” he said.

“Millennials desire not only a good product and service, but a shareable and transformative experience.”

Mr Bunz pointed to the Moxy brand, due to open its first Australian hotel in Melbourne in 2021, as an example of an international brand encompassing Millennial aspirations.   

He argued: “There is also an opportunity for dual-brand hotels to allow properties to target different market segments.

“Simply providing a hotel which is designed to address a very broad market is no longer adequate.”

Post-Millennials recorded an increase in hotel spending of 6.1 percent a year over the past five years, according to the CBRE report.

Ovolo Hotels chief operating officer Dave Baswal told Commercial Real Estate the industry is not paying enough attention to the emerging powerhouse cohort.

“There’s one thing that not many people are talking about, but the reality is that Gen-Z is actually making a lot of decisions in the house, in smaller families they control the wallets of their parents and so it’s interesting to see that the travel pattern is driven by the Gen-Z members of family,” he said.

“The reality is that very soon the trend is going to change…I think the travel decisions of Gen X and Millennials will be very influenced by where their kids want to be.”

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