Are Hotels Coveting only Half of the Millennial Market? Part One
September 17, 2017 9:58am
By David M. Brudney, ISHC, Founder and Principal, David Brudney & Associates
Like so many of you, I am smitten with reports on how hotels - - heavily coveting the critical millennial market - - are battling competitors such as Airbnb, HomeAway, and other short-term home-sharing lodging industry providers, for share of market in this new sharing economy age.
Millennials currently spend more than $200 billion annually on travel; and they plan to increase frequency and spending
Inspired by destinations and authentic experiences
44 percent of millennials prefer rentals to hotels
Airbnb understands the millennial’s mindset
Nearly half are making less money than their parents did
One in three still living with parents
These millennials - - more than 75 million aged 18-34, born between 1982 and 2004 - - are projected to be the now and future leisure and business traveler guests for whom hotels have been gearing up.
Marriott and Hilton have lost some lower-end customers to Airbnb and other home-sharing services, while most luxury and business guests have so far kept booking.
With millennials in mind, Marriott has made core changes in both their Element and Aloft brands. Hilton, Wyndham, and Choice among others are following suit as well.
Personalization, local expertise, location, and technology
Hoteliers are becoming aware that the best ways to compete against the alternative-accommodations providers is through personalization, local expertise, location, and technology.
That market is vast: millennials currently spend more than $200 billion annually on travel, FutureCast, “Millennial Brief on Travel and Lodging”.
Millennials plan to increase the frequency of their travel compared with Boomers (52.8 percent vs. 32.1 percent), and more millennials plan to increase their travel spending compared to Boomers as well (58 percent vs. 41.3 percent) an American Express report.
Questioning how deep is the size of the millennial market
That’s why I was somewhat startled to read a survey conducted by researchers at both Stanford and Harvard (released on line December 8th) that begs the question, will all those millennials be able to afford such travel and become hotel guests?
That survey concluded nearly half of today’s 30-year-olds are making less money than their parents did.
Since 2010, the percentage of millennials moving back in with their parents has increased from 24 percent to 26 percent. Millennials are less likely to be living independently of their families and establishing their own households than they were during the recession, Pew Research Center.
According to the U.S. Census Bureau, 22.9 million 18-34-year-olds in America live with their parents. That’s one in three! Way more than at anytime since the 1940s.
A look inside the numbers
There has been so much written about these millennials, most interesting of all for me, however, was how millennials crave real experiences, adventure - - plus ways to do good and have fun at work. And that craving, as I understand it, is a leading factor in why so many millennials seek out shared housing alternatives over standard hotels. Here’s what we know:
The U.S. economy has contributed to this situation. It hasn’t been expanding as fast as it once was. The U.S. GDP was only 2.6 percent in 2015 as opposed to 7.4 percent in 1984; annual growth has not reached 5 percent since then.
More contributing reasons:
All this begs the questions:
Are the Millennials who have been or will be patronizing our hotels only those millennials who are primarily living on both the east and west coasts - - with dot.com jobs? Those who command much higher incomes? Are they “privileged” millennials? Did they graduate from better, top schools? Did they receive inheritance from their parents? Are parents supporting them financially? What’s your take?
Well, whatever the answers are, one thing is for sure: what, if anything, are hotels doing about it?
Part II addresses what hotels can do and are doing to compete for traveling millennials with Airbnb and other alternative-lodging providers.
Tags: marketing to millennials,
David M. Brudney, ISHC, principal and founder of David Brudney & Associates, a hospitality marketing consulting firm based in Carlsbad, CA, provides customized, professional sales and marketing services including independent sales and marketing operational assessments, sales training, mentoring, and speaking for hotels, resorts, conference centers, and destination marketing organization worldwide.
A sample of properties and destination marketing organizations where Brudney conducted comprehensive operational assessments include the Cosmopolitan of Las Vegas, NV, Westin Diplomat, Hollywood, FL, Ritz-Carlton, Kapalua, HI, Skytop Lodge, Skytop, PA, Tourism Vancouver, B.C., and Visit Baltimore (MD).
A sample of properties where Brudney has provided successful sales training and mentoring services include the Peabody Hotel, Orlando, FL, Westin St. Francis, San Francisco, CA, and Renaissance Hotel, Seattle, WA. He has lectured at UCLA’s Anderson School of Management, Michigan State University’s School of Hospitality Business, Penn State University’s School of Hospitality Management, and Cal Poly Pomona’s Collins College of Hospitality Management. Brudney has been a featured speaker for the Colombia Hotel & Tourism Association (COTELCO), Medellin, Colombia, the Irish Tourism Board, Dublin, Ireland, Destination Marketing Association International, Hospitality Sales & Marketing Association International, Eugene, OR Conventions & Visitors Bureau, and Las Vegas Chapter of National Speakers Association.
Brudney is a nationally recognized hospitality industry spokesman who has been interviewed on Fox News and quoted on/in ABC News, the New York Times, Dow Jones/Market Watch, and the Los Angeles Times. He is a featured columnist for Smith Travel Research’s Hotel News Now.
Prior to launching David Brudney & Associates in 1979, Brudney had a long and distinguished career in hotel sales and marketing with Hyatt Hotels Corporation, Westin Hotels & Resorts, and Marriott International, Inc. In addition to serving as National Sales Manager of Westin’s Century Plaza Hotel, Brudney directed the sales and marketing efforts of the Westin Michigan Avenue Chicago and the Grand Hyatt San Francisco.
Brudney is a founding member and now serves as chairman emeritus of the International Society of Hospitality Consultants’ Marketing Committee (www.ishc.com) and a charter member of Laguna Strategic Advisors (www.lagunastrategicadvisors.com). He received a B.A. degree from San Francisco State University and currently sits on the university’s Broadcast and Electronic Communication Arts Advisory Board.
Contact: David M. Brudney
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