Millennials travel spending behaviour
Millennials - also known as “Gen-Y” by academics, born 1980-2000, fluent with technology in the age of computers. Half of them entered the workforce slightly more than a decade ago, during the Y2K. The Pew Research Centre has sized Gen-Y as a much larger group compared to the “Baby Boomers” and three times the size of “Gen-X”. How can businesses cater to this viable consumer market apart from being wired with them?
To uncover the root of spending, companies need to realize what do Gen-Ys yearn. Sisy Vincente, general manager at Chase Card Services (the U.S. consumer and commercial banking business of JPMorgan Chase & Co), revealed, “This is a generation that ‘values social connections, convenience and opportunities to indulge in luxuries’.”
Chase commissioned a nationwide phone survey in the States, reaching 1,002 travellers (between the ages of 18-67 years old), who stayed in a hotel at least five nights per year for business, pleasure or both.
There are 3 main findings as followed:1. Millennial travellers want to make connections – both in-person and via social networks.
Being mobile comes along with being connected. The Internet gave rise to a few things that are part of Gen-Y’s lifestyle. Online Travel Agents (OTAs) like Expedia, Priceline and Agoda, services travellers who like being proactive in their itinerary. With the wide-spread use of the smartphone, mobile applications of these sites and new sharing-economy businesses like Airbnb, Roomorama are now ready for browsing and
Millennials are also more likely than their parents and Gen-X to look for opinions or reviews on social media or online travel review directory e.g. TripAdvisor before proceeding to confirm their bookings. Because most businesses have adopted a social media presence to communicate with these tech natives, it’s advised to monitor their pages and address concerns without delay.
2. Millennials look for hotels with conveniences and luxury services.
They are more sophisticated in taste, being brought up in dual-income households, the millennial travellers are prone to self-indulgence.
48% surveyed mentioned experiencing a hotel’s luxury services determines their choice pick. This is a stark contrast to the majority of older travellers who are more budget-conscious. It would be more challenging to cater to polar-opposites of customer preference. Hotels with a wide portfolio of brands are at an advantage, catering to specific groups of customers.
An example of good strategy is adopted by InterContinental Hotels Group’s (IHG) subsidiary, Holiday Inn. With four main tiers of service, Holiday Inn, Holiday Inn Club Vacations, Holiday Inn Garden Court (only available EMEA) and Holiday Inn Express. Each with a distinct branding from the family-oriented vacations to resort focused stays and fuss-free properties for the business and leisure travellers.
Of the late, Holiday Inn Express is the fastest growing brand in IHG, available in 2,200 locations (as of 2013). Designed as a mid-price hotel for the smart traveller in need of being productive on the go, Holiday Inn Express seems like an ideal choice for the millennial traveller.
A key characteristic of location of the hotel has been identified by the survey. 58% of older travellers valuing the location near a landmark or airport. Convenience in terms of location near a main public transport is essential to the Millennials for easy commute. Not forgetting how instantaneous their lifestyle has been, these young adults love promptness, and employs what The Boston Consultancy Group label as ‘reciprocity principle’ to relationships with companies and brands.
3. When it comes to travel rewards, Millennials prefer status.
Lastly, how can companies guarantee a returning patron?
Chase’s survey indicates that among travellers, both genders have different preference in being rewarded for their loyalty to a brand. Women prefer free flights or stays in a hotel while the men look forward for redemption of points in exchange for travel-related items.
Rather than sourcing for rewards that are of no value to customers in your company’s loyalty programme catalogue, pursue these sought-after incentives for customers to continue using your service.
Aside business travel, the survey has captured a trend among millennial travellers. Four out of five would extend their trip to include a person vacation, Vicente comments. This is something for airlines and hotels to look into. Perhaps offering a waiver or special fee for extension of air tickets or hotel stay to accommodate them.
About the Chase Card Survey
The phone survey was fielded by Braun Research from April 16-April 25, 2014. The survey reached 1,002 18-67 year olds who stayed in a hotel at least 5 nights per year for business, pleasure or both. The survey has a margin of error of +/- 3.1% with a 95% confidence level.