Making room for the Millennial traveler

SUITS THE C-SUITE By Jose Pepito E. Zabat III and Marites G. Babalcon-Lontabo

Business World (11/24/2014 – p.S1/6)

MARKETERS like to coin terms for demographic groups as a means of qualitatively defining them. We’ve heard of “Baby boomers” and “Gen X” for people born in particular decades. One such group is the “Millennial,” also known as Generation Y — the cohort born between 1980 and 2000. Marketers have pegged group as being self-assured, optimistic, globally connected and curious. In the Philippines, this group makes up roughly 35 million people.

Millennials are expected to account for 50% of all employees worldwide in the next four years and will enter their peak earning period within the next five to 10 years. It is expected that Millennials will also be the largest spenders in terms of travel and leisure, as detailed in the recent EY report titled Global Hospitality Insights: Top Thoughts for 2014.

Millennials are the children of a technological age. The rapid changes they saw in the world while growing up have promoted the development of viewpoints, beliefs and desires that deviate significantly from previous generations. This in turn drives Millennials to seek out new kinds of lodging experiences.

What companies, particularly lodging providers, need to do is develop a deeper understanding of the Millennial mind in order to innovate their products and services to reach this tech-savvy generation. Here are some of their characteristics as identified in the EY report:

They want things fast. Millennials are seen to seek instant gratification, specifically in terms of speed, efficiency and convenience. Most Millennials tend to value fast service over face-to-face contact or friendly service, hence the increasing popularity of self-service mechanisms in some hotels. Take online reservations. A luxury hotel in Metro Manila that developed a downloadable application for direct room bookings has noted a threefold increase in online bookings compared to traditional reservations through travel agencies or phone calls.

They share their lives. Social media has become a powerful communications medium for many Millennials where they document and share their life experiences, notably funny, unique, inspiring or artistic content that is meant to generate a response from their social network.

Understanding this, hotels should consider providing interesting products and services which are then likely to be disseminated through free, targeted peer-to-peer marketing.

They “like” or “unlike” as a group. With the proliferation of Web and mobile applications that allow users to immediately post feedback, hotels are under greater pressure to ensure round-the-clock service quality. Many Millennials who have a negative experience immediately go online to voice their complaint, whether on public sites or private networks. This means that their opinion becomes available almost instantly to a large number of other online users who have a tendency to share the posts. Many Millennials also rely on crowd-sourced review sites and social media before making a reservation, so major hotel companies should capitalize on such real-time feedback by emphasizing customer care on online media to express appreciation, respond to complaints or offer ways to help the customer. This can also help them control any possible damage to their reputation.

They are socially responsible. Millennials often like the idea that the money they spend also in some way makes the world a better place. For example, they tend to be more willing to patronize companies or brands that have a “green” element or those that support local businesses or charitable causes.

They need virtual presence. While Millennials seem to put less emphasis on direct personal contact, they often need to remain connected either via telecommunication or social media. Many subscribe to the phenomenon of isolated togetherness, meaning having simultaneous social interaction in both the real world and online. This pattern of behavior has become a significant consideration for the design of hotel public spaces, such as lobbies, lounges and restaurants.

They want a “native” experience. When Millennials travel, they often want to be exposed to local cultures and will want to try out unique experiences that help them understand foreign customs or lifestyles better. This has given rise to a wave of hotel brands who promote being able to “evoke individual tastes and cultures from their communities into their architecture and cuisine.”

They make snap decisions. Due to the on-demand nature of the internet and the easy availability of smartphones, Millennials have developed the habit of making last-minute decisions. This is one reason why mobile applications that allow users to make last-minute, on-the-spot hotel bookings are enjoying greater success and adoption. The report believes that last-minutes sales channels will increase in importance over the coming years.

They spend smartly. Millennials are today’s savvy shoppers, being much more picky about consuming and spending. They are always on the lookout for the best deal, offering the most value-for-money, and are particular about amenities that are now considered de rigueur for the industry. One example is internet connection. Previously, one of the luxury hotels in Manila would charge a fee for internet connections in rooms via cable connection. Wireless internet connections of Wi-Fi was available for free only in common areas. However, because of a number of complaints from guests, the hotel eventually began offering free standard-speed internet connections in rooms and Wi-Fi common areas as part of their amenities. Guests who desired a faster connection would need to pay for it as a premium service. The hotel even included in their capital expenditure budget the cost of the IT system upgrades to accommodate a high number of internet users.

As mentioned earlier, the report anticipates that Millennials will become a core customer group for travel and leisure in the next five to 10 years.

As it is, they are already establishing perceptions, developing brand preferences and creating travel habits. This means that hotel companies who wish to secure the patronage of these future customers should already begin implementing strategies and tactics to capture the attention of Millennial travelers.

One important thing to remember is that Millennials want more value for their time and attention. Given the sheer number of brands and companies that they interact with, companies looking to market to this generation need to change their customer acquisition paradigms. With the always-on, ever-connected and highly demanding lifestyle of Millennials, creating a competitive advantage will require more than a tactical product, price, service of feature — it will mean spending time, money and resources to build trusted relationships that leverage on new technologies and an online social presence.

JOSE PEPITO E. ZABAT III is a Partner and Marites G. Babalcon-Lontabo is a Senior Director of SGV & Co.