The Fuss Over Millennials

The buzzword du jour among hotel marketers and strategists is millennials. Every hotel company and marketing consultant seems obsessed with analyzing the propensities of what many believe will be the next great travel demographic.

My initial reaction is this hubbub is overblown, and while millennials (also called Generation Y and loosely defined as people born sometime after the early 1980s) today seem to act differently than any other class of consumers, I suspect one day they will fall in line and become as brand-conscious, status-seeking and conformist as the rest of us.

Perhaps not, however.

These folks grew up in an age in which the Internet and technology have always been dominant and in a time (sadly) when global war and conflict were constants, two social trends that could permanently skew their philosophies, lifestyles and opinions. Time will tell.

I’m old enough to remember writing about this same topic when the subject was Generation X, the group before the millennials that many also thought had little in common with us Baby Boomers. And while that was true as they went from puberty to young adulthood, many of them settled into lifestyles we’re familiar with once they launched careers, families and responsibilities. I only need to look at my own two sons (ages 34 and 33) to see this metamorphosis.

A few years ago, I was staying in a traditional large resort in the U.S. South, the kind of place where everyone dresses up at dinner and dances to a live orchestra between courses. In talking to the GM, I asked how he’s able to attract Gen Xers to the hotel, given its look, vibe and service culture more attuned to the Mad Men era than today’s culture. He said as Gen Xers approached their late teens, they often turned their backs on the values and habits of their parents (including where and how they vacation) but once they had families of their own, they wanted to give their children the kinds of experiences they had as kids, including visiting these types of resorts.

The loyalty gap
One common wisdom about millennials is their reputed lack of loyalty to brands, presumably including hotel brands. If true—and if that tendency holds as the demographic matures—hotel brands have a marketing challenge and independents have an opportunity.

Last week, TravelClick released some fascinating data about hotel brand loyalty. According to the company, in the first five months of the year, 60% of all transient roomnights were booked by members of hotel loyalty programs, up from 56% during the same time last year. And perhaps more importantly, loyalty club members accounted for 77% of room nights booked directly through hotel websites, the most cost-efficient distribution channel for hotels. If, indeed, millennials aren’t brand loyal and remain that way, these percentages will probably shrink over time.

And because millennials rely heavily on technology for all aspects of their lives, the TravelClick data presented more bad news: 85% of room nights booked through online travel agencies came from guests not affiliated to the hotel’s loyalty program. Those two trends intersect in a bad place for hotel brands. Millennials aren’t brand loyal and as technophiles they’re more likely to turn to OTAs to select hotels.

Of course, the hotel industry is responding. Marriott International, in particular, is planning for a future dominated by millennials. Its new Moxybrand speaks directly to the generation’s lifestyle (at least Marriott hopes so), and its Travel Brilliantly campaign is aimed at tapping into the social media world of Gen Yers.

At some point, the hotel industry will come to grips with changing realities, but I still wouldn’t be surprised if some day aging millennials drift back to the travel experiences they had as children. It’s important, however, for the hotel industry to also be prepared if they don’t.