Commerce Connected

Deep Dive: Travel, Hospitality Get A Millennial Makeover

Millennials have long been sought-after travel and hospitality customers, partly because they are perfectly placed to seek such experiences. They are old enough to have disposable income, but young enough that they can travel without major health and wellness risks. This unique status creates both opportunities and challenges for firms in the space, as millennials search for the experiences they crave.

Furthermore, millennials are set to spend $1.4 trillion on travel annually, and make up more than 50 percent of hotel guests worldwide by the end of 2020. This means crafting experiences that satisfy them will require travel and hospitality services to go beyond merely supporting digital and mobile payment methods. Such payment tools are table stakes for younger consumers accustomed to using connected devices, but they tend to gravitate toward services that provide the same convenience and ease when booking accommodations.

Hotels have traditionally relied on their loyalty programs’ discounts and perks to lure customers, but many are finding it difficult to win millennials’ business with these offerings alone. Younger consumers do not exhibit the same brand loyalty as previous generations, and this trait extends to their interactions with hotel and travel companies. Industry players that want to earn millennials’ revenue must, therefore, determine how to generate loyalty among a consumer group faced with more hotel, transportation and travel options than any previous generation.

Confronting Millennial Misconceptions

Hotels and travel firms must first understand what drives millennials’ interest and brand loyalties. Research has shown that these consumers redeem travel rewards more than any other generation, and 41 percent of them use credit cards to pay for travel. Millennial and Gen Z customers are also open to sharing data, so long as it benefits them, with a separate study noting that 81 percent approve of brands using their details to create personalized insights and offers.

Millennials may be eagerly redeeming travel points, and unperturbed by data collection, but 54 percent of travel loyalty memberships are inactive. This could indicate that current loyalty programs do not cater to millennials’ interests, as members of this demographic prefer indulging in experiences rather than material goods or services, meaning perks like airline miles or travel discounts no longer appeal to them. In fact, millennials frequently cite loyalty products’ rigidity as a reason why they do not utilize such offerings.

Loyalty programs have historically allowed consumers to earn free products by spending specific amounts on certain services, but such models are ill-suited to experience-driven millennial travelers. This quandary is presenting challenges for travel and hospitality firms, especially as the share of millennial travelers is rising annually. These consumers already account for 20 percent of worldwide travelers, and take more trips than any other generation, meaning the travel and hospitality industries must begin targeting their loyalty programs toward millennials to stay relevant.

The Push For Millennial Loyalty

Some companies are offering their loyalty programs online and via the mobile channels, with which millennials are familiar. British Airways allows fliers to use its Avios rewards currency to book discounted airfares or cruises, and make duty-free purchases when waiting for their flights. The Marriott hotel chain is, meanwhile, directly targeting millennials’ desires for experiences with its Marriott Bonvoy rewards service, which enables customers to book tickets for music festivals, concerts and other events.

Companies that do not have the revenue to completely revamp their loyalty services are instead partnering with third-party providers for greater access. One such service is mobile-optimized loyalty program provider HOOCH, which works with approximately 250,000 merchants. End consumers can use the app to access various rewards, including hotel booking discounts. Third-party hotel booking site Rocketmiles has likewise put its own spin on rewards, allowing customers to turn hotel loyalty points into air travel miles, or exchange them for gift cards at select retailers.

Such services are designed to capture younger travelers’ attention, but companies can struggle to stand out amid the numerous brands with which they compete. Those that succeed in earning millennials’ business must take care to not let misconceptions about the generation’s brand loyalty cloud their innovation efforts.

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PYMNTS LIVE VIRTUAL PANEL: HOW WE TRAVEL 

On Tuesday, April 7, 2020 at 12:00 PM (ET) join PYMNTS CEO, Karen Webster and panelists from innovative travel companies for an in-depth discussion on the state of travel in the midst of the COVID-19 pandemic and beyond.

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