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The Millennial Makeover Part 2

It’s no longer OK to lump these groups together, now it’s important to understand their role as both business and leisure travelers. Today we look at the leisure side of the equation.

Thursday, January 23, 2014
Teresa Lee
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1. Millennial leisure travelers with lower incomes take fewer, but longer vacations and are opportunistic about travel packages and deals.
OPPORTUNITY: Create bundles and vacation packages that appeal to the millennial lifestyle to entice them to book longer vacations.

Millennial leisure travelers are largely based on income level and the stage of life they are in. The major indicators are: relationship status, financial spending, children, and the number of vacation days they have. Not surprisingly, leisure travel increases with income level. Currently, approximately half of millennials report taking four or more overnight trips a year compared to 75% of non-millennials. However, high-income millennials travel as much as non-millennials. It is also interesting to point out that to save money, millennials will book fewer, but longer trips as airfare is often the largest cost of their trip. They will book further in advance to save money and seek out more vacation packages. Millennials will often view booking as a game and respond to low prices and interesting packages. This creates opportunities for travel deals, combination packages, and rewards.

Millennial Viewpoint:
While I won’t blink twice at booking a last minute $700 ticket to Texas for a business trip, I constantly search and use tools like Airfare Watchdog to check if prices go up or down for my own leisure trips. I book far in advance, particularly if they are international flights. This is just an example of how important good revenue management is for airlines and hotels.

2. Millennials travel more socially and in groups for personal interests and activities.

OPPORTUNITY: Create tools and booking systems that fit the millennial itinerary and booking preferences.

Although millennials still travel for leisure less than non-millennials, the opportunity is presented in how and why millennials travel now and will continue to do so. Millennials are more likely to travel socially with friends or family. This is in line with the trend that millennials are a social generation. There is an opportunity for group travel and building itineraries. Millennials currently think booking travel is very tiresome, so there is another opportunity to use technology or booking tools that they find less cumbersome and fit with their lifestyle. For example, there could be apps to book group travel that reserves plane tickets and other travel plans for 48 hours and having the ability for individuals to log on to a group itinerary and pay for their portion of the trip. This would be helpful in building a group itinerary and payment as many younger millennials would not have the financial ability to cover a flight or hotel reservation for four people, but are able to pay for their own portion.

Why millennials travel is also important to consider. The most popular answer is that they travel to visit friends and family, which is not unique to their generation. However, millennials more than any other generation, travel for personal interests such as food and wine, entertainment, outdoor activities, or shopping. All of these interests are social activities, which again brings back the point that millennials travel more socially than other generation and points to similar opportunities surrounding group travel.

Millennial Viewpoint:
On the most extreme side of this example, I recently took a trip with a fellow millennial who also works in consulting. Between the two of us Excel geeks, our expenses were entered on a shared Google Doc and split with fancy formulas and other nerdy functions where at the end, there were two boxes showing exactly how much each person owed the other. Because we were both fluent in Excel, this was almost a twisted sort of fun for us, but there is demand for better travel tools and technology for group travel.

What are the next steps?
The constant theme in millennial loyalty is the lack thereof. Loyalty programs currently are not designed for millennials and they need to start targeting them to capture that loyalty early on. First, companies should start communicating and marketing to millennials now. Many of these campaigns can be quick and low-cost and should be acted upon immediately. Secondly, companies need to ensure their loyalty programs are what millennials are looking for. Millennials are a generation that grew up with video and computer games. There is no reasoning to Angry Birds or Candy Crush. We are used to games where we simply want to get to the next level, so companies should make their loyalty programs more game-like and fun to encourage millennials to reach the next status level or earn more points.

There are also many more variations in loyalty programs now. Gone are the days where Marriott Rewards and Hilton Honors are the only players in the hotel loyalty game. Starwood’s SPG program has improved vastly in the past several years and their points are much more valuable now. There are also reward programs for independent hotels such as Stash Hotel Rewards. And most recently, even Expedia has their own reward program that incentivizes people to double-dip rewards and book using Expedia. Cross-promotion within the industry is also possible as this was seen when airlines and hotel chains created partnerships to double-dip rewards and status matches such as Delta and Starwood Hotels.

Thirdly, travel distribution and booking strategies must match millennial lifestyles. It is no secret that millennials use mobile and tablets to reserve travel plans. Companies should make it as easy to book through as many different channels as possible. Millennials are more comfortable with their private information being saved to ease repeat bookings than older generations. Other examples of companies using technology to change the travel process include how mobile check-in went global at Marriott hotels this year or how Lowes Hotels even started allowing guests to start booking room reservations via Twitter recently. Companies must be able to keep up with millennials’ technology demands and lifestyle.

Fourth, millennials should definitely be segmented between business and leisure travelers, but this can be segmented even further with target marketing, micromarketing, and social media. There is so much data available that general campaigns are not acceptable anymore. Lastly, no matter how good the marketing and loyalty programs are, the product is still the most important and must be what millennials desire and prefer. Free wifi and social lobbies are just a start. These may be longer term and more capital intensive, but research and focus groups should be used to continually improve and change products that do not fit the millennial lifestyle because above all, millennials are flexible and fluid.

Conclusion
To tie together millennial travelers, it is important to remember that one person, such as myself, can be both a millennial business and leisure traveler. Our preferences and practices change as we switch roles between the two. But eventually, all millennials will age, progress in their careers, and move to higher income levels and have more disposable income. Loyalty built with current millennial business travelers will carry over to leisure travelers eventually. This leaves many opportunities for cross-promotion rewards. But even as we age, the generational trends such as our tech-savvy, group and social travel preferences, and desire for in flight and airport amenities will stay the same. To put it simply, we will always want free wifi and we will always expect it to be free. I promise you, that will never change.

Credit
Teresa Lee    Teresa Lee
Author
Hotel Interactive® Editorial Division

Bio: Teresa Y. Lee is a Consulting and Valuation Associate with HVS’s New York office. Teresa graduated from Cornell University with a B.S. in Hotel Administration and Minor in Real Estate Finance. Teresa has worked at various hotels and resorts both in the country as well as internationally. Since joining HVS in 2012, Teresa has appraised hotels in various states throughout the country. She will begin the MBA program at Columbia Business ...
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