The identification of baby boomers, and their spending power, popularized giving names to generations and, while we wait for Generation Alpha to be old enough to hold a credit card, millennials — or Generation Y — are making their presence felt in travel.
According to BVA BDRC’s latest “Hotel Guest Survey,” millennials have left the boomers and Generation X behind in terms of both business and leisure travel. Over the last two years, British millennials took 1.8 domestic business trips and 1.1 overseas business trips and took a break from work with 3.5 domestic leisure trips and 2.2 overseas leisure trips.
In early 2021, the most important driver of booking decisions for all these trips was value for money, as one might expect for that age group, although values had less impact on the overall decision than it did for other age cohorts. But while millennials might not have limitless wealth, the choices they are presented with on booking are much more lavish than those of previous generations.
A 20-year-old entering the hotel market now would have at least four times the choices of one who entered it in 1995, with, according to our tracking, 165 brands to choose from, against 48 in 1995.
Anyone who would like to speculate on how many brands we’d have to include if everyone announced had made it to, say, three sites, is welcome to drop me a line. It’s a similar skill to guessing the number of gobstoppers in the jar at a village fête but better for the teeth.
The top 20 brands have significantly lower levels of awareness within this cohort than for other generations. Generation Y perhaps just doesn’t come into contact with as many, and how could they, with all those other things to do with their time. This is combined with millennials' propensity not to think direct when they are booking. They remain less exposed to the hard work of branding experts.
Generation Y believes that the online travel agencies offer the best rate. And, when you look at 165 hotel brands against the two or three big OTAs, all of which spend a great deal more on marketing, you can see that the big booking platforms might offer a clearer view.
While some hotel brands may have fallen off the radar for Generation Y, others do continue to spark recognition.
Flags including Four Seasons, W and EasyHotel have a higher awareness than those we might consider to be more established brands, such as — and this is not an exhaustive list — Marriott, Holiday Inn and Sheraton.
Names that we would have thought to be a permanent fixture of the sector have the potential to fade as this generation comes to the fore, and, with the youngest boomer reaching 68 years of age in a decade’s time, garnering loyalty and recognition with the next generation is about to become pressing for those holding 25-year management contracts.
The states of brand unawareness might not be permanent, of course. As people travel and age, will they naturally increase their knowledge through exposure and thereby maintain a perpetual equilibrium? But even with each passing year adding more brands, can they ever become aware of them all? Or are we seeing a fundamental changing of the guard through an irreversible erosion of the establishment?
Even if that somewhat bleak-sounding outlook comes to pass, is that such a big deal, really?
To me, what is more important is the conversion of awareness to selection and preference. There are certain brands that could “lose” my awareness without consequence because I’m simply not in the market for them, or because they are just too awful to comprehend using. Although clearly an accelerating factor, I’m no longer convinced that awareness for awareness’s sake is the most important measure of brand health.
The good news for the seemingly endless number of hotel brands jostling for attention is that there are some factors that have an impact on booking, although they are different from those which brought boomers through the door.
What might seem like obvious drivers — a good past experience, for example — are not as relevant as ratings and reviews on review websites. The wisdom of the crowd supersedes personal experience. Likewise, the lack of cancellation fees — something which we have seen as rising in prominence as a factor during the pandemic — is not as motivating as an easy-to-use website and an integrated digital experience during the stay.
And don’t forget that consumers are not robots, making detailed assessments of accommodation options against exhaustive lists of features and attributes to make a rational, utility-maximizing selection. Emotions affect decisions, and fundamentally we seek mental shortcuts to lighten the cognitive load of decisions. A brand, a word, a logo, a slogan are all perfect shortcuts to communicate messages quickly to time-poor travelers.
As for the hotel itself, location, location, location is no longer the catchphrase it was. The priority is no longer a specific location in a destination but the atmosphere in the hotel itself and that it has shared or public spaces that provide space to work and relax or socialize.
This gives hope for those hotels that might not be able to afford prime sites but can become destinations in their own right.
One of the key factors to bring millennials into your hotel are your eco-credentials, a factor that is only likely to build in coming years. Our own study found that providing sustainable options can attract guests but that the current sustainable messaging can come across as confused. Consumers are calling on companies to “help me help,” creating an opportunity for hotel brands and, of course, an opportunity to support the environment.
Increasingly, net-zero carbon targets will force hotels to act and improve their sustainability.
Any hotel that acts ahead of the pack will win what could be a long lifetime of loyalty for this generation.
James Bland is director at market-research and business advisory firm BVA BDRC.
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