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Futurecast's Millennial Brief on Travel & Lodging OCTOBER 2016 THE MILLENNIAL BRIEF ON TRAVEL & LODGING TRENDS REPORT ALL OF THE MATERIAL IN THIS DOCUMENT IS COPYRIGHTED AND MAY NOT BE REPRODUCED IN WHOLE OR IN PART WITHOUT EXPRESS WRITTEN PERMISSION. FOR PERMISSION, PLEASE CONTACT JEFF FROMM, [email protected]. NO DISTRIBUTION OR REPRODUCTION WITHOUT PERMISSION. COPYRIGHT © 2016 BARKLEY, INC. AND FUTURECAST, LLC. ALL RIGHTS RESERVED. 1 TABLE OF CONTENTS Introduction .........................................................................2 Travel for a New Generation ................................................3 Who are Millennials Travelers? ............................................5 Experience Pioneers ....................................................... 6 Digital Functionalists ..................................................... 8 Travel Day Traders .......................................................... 9 Spontaneous Planners ...................................................11 Social Validators ........................................................... 12 Expert Opinion: Q&A with Vicki Poulos, Global Brand Director - Moxy Hotels ................................. 14 The Future of Traditional Lodging .......................................17 Conclusion ........................................................................ 18 Contact ............................................................................. 19 Sources ..............................................................................20 NO DISTRIBUTION OR REPRODUCTION WITHOUT PERMISSION. COPYRIGHT © 2016 BARKLEY, INC. AND FUTURECAST, LLC. ALL RIGHTS RESERVED. 2 BARKLEY AND FUTURECAST, A BARKLEY PARTNER COMPANY, PROUDLY PRESENT THIS REPORT. About FutureCast® About Barkley FutureCast® is a marketing consultancy At Barkley, we take pride in future- that specializes in millennial trends and proofing business models and modern consumer behavior. We actually modernizing iconic brands. However, wrote the books on it. Marketing to we are more than an ad agency. We Millennials and Millennials with Kids are are integrated business partners who top selling marketing books that have are analytic and innovative at the renovated businesses all over the world. core, using data to drive marketing We utilize our deep understanding of conversation and strategies. This the Millennial Mindset® audience and a culture of innovation allows us to proprietary typing tool to help brands partner with our clients to create the identify their unmet consumer needs solutions of the future. Our emerging across generations fueled by millennial technology innovation practice has cultural trends to unlock their greatest built and deployed new technologies opportunities for activation. that create more engagement with the savviest generation of consumers we’ve ever seen. NO DISTRIBUTION OR REPRODUCTION WITHOUT PERMISSION. COPYRIGHT © 2016 BARKLEY, INC. AND FUTURECAST, LLC. ALL RIGHTS RESERVED. 3 Millennials’ vested desire to explore TRAVEL FOR A coupled with their willingness to spend on experiences that allow them to do so NEW GENERATION is good news for the overall hospitality industry, which includes food and Travel doesn’t just stand for getting from one destination to beverage, recreation, lodging and another for millennials. Traveling is a part of their identity travel and tourism, as it is leading to — a vital experience that helps them understand, grow significant advancement in the space. and continuously reinvent their sense of self. In fact, it is so important to this generation that it ranks HOWEVER, WHEN IT COMES TO THE higher than escaping from their student loans, buying a LODGING SECTOR SPECIFICALLY, “big ticket” item, improving relationships with family and THE GROWTH HASN’T BEEN SHARED friends or even starting a family of their own.1 EVENLY. LODGING IS FACING GREATER HARDSHIPS COMPARED When we put this into consideration, it comes as no surprise TO OTHER HOSPITALITY SECTORS that millennials are more likely than any other generation DUE TO EMERGING TECHNOLOGY to take vacations. They also travel more for both leisure and AND THE VAST AMOUNT OF business compared to generation X and baby boomers.2 DISRUPTOR BRANDS CROPPING UP. Additionally, millennial attitudes toward travel and travel- related spending are the most favorable among all These disruptor lodging brands are so generations and they have the highest average spend per far resonating highly with all travelers, trip at $879.3 In total, millennials are spending an average of as Airbnb alone has seen revenue and $200 billion on travel each year, and this amount is only set bookings double from 2014 to 20155 to grow as the number of travelers among this generation and an increase of value to $25.5 increases and reaches their most lucrative spending years.4 billion as of June 2016.6 NO DISTRIBUTION OR REPRODUCTION WITHOUT PERMISSION. COPYRIGHT © 2016 BARKLEY, INC. AND FUTURECAST, LLC. ALL RIGHTS RESERVED. 4 BUT DON’T WORRY JUST YET Fortunately, there is an opportunity to connect with a new — THERE IS STILL A PLACE FOR generation of travelers. Millennials make up 70 percent of TRADITIONAL LODGING. all hotel guests,8 and those between the ages of 25 and 34 with a yearly income of $75,000 and higher are staying at While millennials are the travelers traditional hotels more often than they are embracing the driving prosperity for disruptor brands, sharing economy.9 their behavior indicates they still have a loyalty to traditional lodging brands. However, lodging brands will need to step up their efforts in Last year 86 percent of hotels were order to see growth in market penetration and rank higher able to raise their room rates and in the consideration set of these millennial travelers. It starts another 80 percent saw an increase in with getting inside the mind of this consumer group and revenue per room available (RevPar), exploring the unique approaches used by brands on the according to research conducted by forefront of this category evolution. the CBRE group. This allowed many This report is filled with the most valuable information found U.S. hotels to reach the top of the from our own proprietary FutureCast/Barkley research and business cycle last year. However, that of credible third party firms to highlight what we believe the challenge is that the demand has to be the most important characteristics of millennials in this reached a peak for many businesses in space, best-in-class examples of lodging brand strategy and the space. what millennial influence means for the future of the lodging “This [increase in occupancy] is an industry. indicator that hotels are approaching the top of the cycle when occupancy is at near capacity levels and in certain markets the negative consequences of new supply growth are being felt,” said Mark Woodworth, Senior Managing Director of CBRE Hotels’ Americas Research in an interview for Hospitality Online.7 NO DISTRIBUTION OR REPRODUCTION WITHOUT PERMISSION. COPYRIGHT © 2016 BARKLEY, INC. AND FUTURECAST, LLC. ALL RIGHTS RESERVED. 5 WHO ARE TENSIONS How can I explore COMFORTABLE What am I outside of my expected to do? MILLENNIAL VS. EXPERIENTIAL comfort zone? How can I live in the TRAVELERS? Is this an experience DIGITAL VS. IRL moment and not be I want to share with distracted by daily (IN REAL LIFE) my social networks? When exploring the world of millennial technologies? travelers, especially as it relates to the REALISTIC VS. lodging category, it is important that What can I afford? What do I want? ASPIRATIONAL we consider the various tensions that exist in the space (chart at right). How do I take Can I fit everything PLANNED VS. advantage of These tensions come to life when I want to do in my in-the-moment SPONTANEOUS itinerary? we explore the characteristics that opportunities? define millennial travelers today. They What brands can I What brands can I also serve as a foundation for better INFORMED VS. rely on for accuracy rely on to inspire my understanding their motivations and INSPIRED and transparency? next adventure? consumer journeys. Brands cannot expect to see their occupancy rates increase or generate higher demand in the market without first understanding the motivations of this powerful group of travelers and potential lodging guests. NO DISTRIBUTION OR REPRODUCTION WITHOUT PERMISSION. COPYRIGHT © 2016 BARKLEY, INC. AND FUTURECAST, LLC. ALL RIGHTS RESERVED. 6 MILLENNIAL TRAVELERS ARE... PART 1 EXPERIENCE PIONEERS We know that millennials are highly experiential consumers, placing a higher value on experiences than products. In fact, one out of four millennials would rather spend money on a desirable experience or event instead of buying a product or service, according to Eventbrite. These experiences range in magnitude and price but all have one thing in common: the experience Millennials are looking for is not a commodity product. It is not something that can be packaged and sold on a store shelf or purchased in an online checkout cart. We’ve found that millennials over index when it comes to a desire for acquiring experiential capital and collecting memories worth sharing with their networks. Millennials are less interested in packaged travel reminiscent When it comes to travel planning, of yesteryear’s family vacation to the beach and instead this group is largely motivated by the desire to engage in immersive, interactive and hands-on collective experiential value of the trip. opportunities. After all, millennials view traveling as vital to However, they see decisions related to the development
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