It’s hard to believe it’s been more than six years since the recession forced consumers to focus on reducing their expenditures. Now, for the first time since 2008, it looks like the hotel industry is returning to normal — whatever normal is. It’s heartening to see statistical evidence, which shows occupancy rates are on the rise and consumers are travelling again (see Hospitality Market Report, p. 22).
The roller-coaster ride has been tumultuous and the industry has been forced to adapt, driven by technological advances and shifting consumer preferences. More recently, the role of the millennial traveller is also spurring significant change in all facets of the hotel business in North America. It’s a fact substantiated through countless surveys, including the recent “Portrait of American Travelers” study, released this summer by Florida-based travel marketing firm MMGY Global. One of the study’s biggest finding should come as no surprise to most hoteliers: “Millennials are the driving force behind the U.S. travel industry recovery.” According to the study, the travel spending of this group “is up an astounding 20 per cent over last year, dwarfing the average year-over-year gain of 12 per cent for all U.S. households.”
According to the study, 24 per cent of millennial travellers (aged between 18 and 35 in 2014) are planning to take more overnight trips for leisure reasons in the year ahead, compared to 14 per cent who are planning fewer trips, yielding a net positive difference of 10 per cent in travel intentions. This compares with a negative net difference of one per cent for boomers, and negative net differences of three per cent and six per cent for matures and gen-Xers, respectively.
Interestingly, though American travellers have been careful about their spending habits since the recession, millennial spending represents the biggest year-over-year spike since pre-recession years. Looking ahead, the study shows millennials also plan to spend significantly more on leisure travel services next year than any of the other generational cohorts: an average of $887 on a previous-year base of $4,499. Gen-Xers intend to spend the second-highest increment: $666 on a previous-year base of $4,341.
“Six in 10 millennials would rather spend their money on experiences than material things,” says Steve Cohen, VP of Insights for MMGY Global. “This is presumably one of the reasons we’ve observed the spike in their intentions with respect to leisure travel in the year ahead.”
“The implications for destination and travel-service marketers are quite profound,” reads the study, “as millennials’ planning, booking and sharing habits are significantly different from those of older leisure travellers.”
So, one question remains — are you doing enough to market to this cohort?