The travel industry is witnessing a cross-current of demographics: on one hand, the Baby Boomer generation is retiring and leaving the work force; on the other hand, the millennial generation is entering the workforce and beginning to climb the income ladder.
To a large extent, the way a travel company handles this transformation over the next ten years will determine its success. It will have to adroitly adjust to the changing travel habits – and budgets – of the graying boomers and become aware of – and knowledgeable about - millennial lifestyles and travel preferences. In some ways the challenge of millennial travelers is unique; certainly the influence of technology is unprecedented. But in more ways, it’s no different from what the travel industry faced when the boomers arrived decades ago; a new, significant, market requiring insight and innovation.
Who are the Millennials?
Born between 1980 and 2000, millennials witnessed rapid change as they grew to adulthood. These changes gave them a worldview; priorities; and expectations different from previous generations. In Europe, the 1989 fall of the Berlin wall meant millennials grew up with little or no remembrance of the cold war era. In the U.S., a record-breaking economy boomed between 1990 and 2007, providing millennial children with unprecedented prosperity. While no generation can be captured in a few brief observations, they can shed some light on these young adults.
Size: the demographic presence of millennials in the U.S. and Europe is very different; in the U.S. millennials have overtaken Baby Boomers to become the largest generation by over 15 million people; within the EU, on the other hand, people ages 50 and older account for a far higher proportion of the overall population than millennials.
Technology Lifestyles: the first generation with technology available as a leisure activity, 50% of millennials regularly played video games growing up – compared to 25% of Gen X and 15% of Boomers. This group literally pioneered the concept of a device-related user experience.
High Social Connectivity: again, the first for whom technology became part of socializing, millennials currently communicate product or service search experiences to friends as follows: text – 44%; social media – 38%; IM – 38%; blog – 16%.
Empty Wallets & Purses: with older generations still recovering from the 2007 economic downturn, millennials are struggling to just get started up the income ladder. In Europe, slow growth is a challenge. In the U.S. the economy is stronger but many young people are burdened with large student debts. The result is the same – low descretionary incomes which crimp lifestyles.
Fewer Wedding Bells: for economic reasons and complex cultural shifts, millennials in both Europe and the U.S. are delaying marriage and households. To illustrate the profound nature of this change within the U.S.: in 1968, 56% of 18-31 year olds were married and living on their own; by 2012, that number had been more halved – to 23%.
What attracts Millennial Travelers?
While these bullets provide a starting point for understanding this new generation, travel companies must avoid the temptation to reach logical but incorrect conclusions. For example, it makes sense to believe these tech-savvy young people are using apps to research and configure their own travel plans. There’s no question they’re tech-savvy and they are certainly comfortable using travel technology; 59% actively use online ratings and reviews to select hotels.
Yet, despite these facts, 35% of millennials would rather put those tools aside, find a travel agency and use their agents for hotel bookings. All of which means the picture is more complicated than it appears at first glance. Here are other findings to help a travel company capture more millennial travelers:
Travel – attracts them, justifying a serious marketing effort by the travel industry. One-third of millennials, more than any other age group, said they will be increasing travel, with 35% planning one or two large vacations, compared to only 23% of the 45-54 age groups.
A Responsive Travel Website: in which content & forms display well regardless of the user’s device, is an essential travel technology for acquiring and maintaining millennial customers. Whereas older customers may be annoyed when a site isn’t as usable from a phone as it was on their laptops, millennials are very likely to view a site first from their smartphone and immediately dismiss it for poor performance.
Expertise: yes; millennials can be self-confident and independent, but this is also the generation that launched YouTube videos with tutorials on everything from fixing headlight to building bookshelves. They know when to seek experienced guidance and heed advice. This generation will value advice from a travel agent, particularly when the agent takes the time to learn what they’re most excited about experiencing in their travel.
Efficient Technology: millennials take technology as a given – it’s only efficiency and effectiveness that impact them. A clean and intuitive user experience is paramount. Even a poorly designed search/result can cost a site these customers; they expect websites that are focused on essentials and get to the point without distractions. There are simply too many simple, elegant, competitors for millennials to compromise standards.
Spontaneous: travel plans for this young generation can be very last minute. This year, 19% of them plan to travel on a whim – only 11% of Gen-Xers and 10% of Boomers will do the same. Is your travel company ready to handle – and encourage – twice the spur-of-the-moment business you’ve seen from your older clients?
Good Deals: of course, everyone loves a bargain; but few love them as much as millennials. 69% view freebies like welcome gifts and to-go breakfasts as more valuable than loyalty or reward points. Does it seem likely retired Boomers are the most frugal demographic group? In fact, millennials are much more focused on watching their dollars: 24% of them plan to become more deal conscious about travel plans – but only 16% of the Boomers feel the same way. It’s often about where the money’s spent. This generation is apt to cut corners in order to spend money on memorable activities.
Up Close & Personal: despite the fact millennials seem glued to their phones, travel companies which provide innovative and personalized services will find them to be an enthusiastic audience. Fully 75% of millennials want to learn something new from their travel and 57% would like to meet new people. This new generation is adventurous: 23% are keen to hang out with as many nationalities as possible while travelling; compared to only 8% who prefer travelers from their own country. Travel companies should recognize many young travelers may choose to cut corners on flight seating and hotel locations and spend more money on activities that leave memories.
