Millennials may be the largest hotel spenders as soon as 2017


Another day, another tipping point: Millennials will become the largest spenders on hotels as early as 2017, claims Sabre.

At ITB this week, Sabre’s vice president of marketing for hospitality solutions Sarah Kennedy Ellispresented a sneak preview of some research into millennial trends in hospitality.

Her comment about the spending tipping point is a projection from the company’s analysis of the 10,000 or so booking engines which it runs on various hotel dotcoms — that’s 20 million transactions.

“It’s known that millennials will become the largest spending travel demographic by 2020. But we’re seeing that, in hospitality, the trends are sharper, and we think that by 2017 or 2018 millennials will be the hotel industry’s most important market.”

Other insights from the soon-to-be-released report are that European millennials are currently converting more slowly than their North American peers.

“There is a lag in Europe between shopping habits and revenues. North American millennials currently account for nearly half of the shopping traffic on the sites we looked at and are generating 35% of revenues.”

In Europe, there is more shopping by millennials (between 30-40% of total), but this group only accounts for revenues of between 25% and 32% of the total — meaning that European millennials are converting with fewer shops than North Americans are, on average.

That implies European millennials may not be as price sensitive or they are simply more efficient at booking (assuming all other factors, such as site usability, are equal).

This data is in line with other statistics that Sabre has seen on how European millennials often have an efficient approach to mobile shopping and booking on mobile devices.

One trait that millennials on both sides of the Atlantic have in common is that they all generally spend less time on sites than other groups. “They know how to navigate a booking engine,” she said.

Kennedy hinted at some of the future-gazing around millennials going on at Sabre HQ, quick to point out that many of the ideas are still in the discussion and brainstorming phase rather than live product releases.

Online dating app Tinder doesn’t get a lot of attention in the travel tech world but she referenced its age-based pricing – older people have to pay a higher fee to join (apparently).

But in Tinder-world, “older” means 28 and above.

“So these people are still millennials, and this opens up the idea of age-priced pricing….

“Legality issues aside, it is a pricing concept which millennials are familiar with and maybe hotels could think about this in some way.”

One idea closer to becoming a reality is “privacy as a service” – something which has moved beyond the digital whiteboard and is actually being experimented on at Sabre Labs.

“One part of the whole personalization discussion is the need to be anonymous – not everyone will want to share all their data with the hotel. So we’re looking at ways to offer this option.”

Bottom line, “consumer demand” will drive the capital investment decisions which hotels need to take when it comes to kitting out their properties for the millennials. There is a cost to replacing keycards with mobile-enabled locks, a cost to installing air-conditioning and a sound system which can be operated from an iPhone.

The fact that the big hotel chains are launching small boutique hotels to appeal to millennials is a sign that the traditionally conservative hotel industry has woken up to the fact that, in a few years’ time, most of their guests will be more interested in superfast wifi than waiting half-an-hour for room service to bring up a club sandwich.

NB: Image of laughing friends via Shutterstock.