What Millennials want: The next generation of hotels

 —  Article by Kelsey Burgess
Image credit: Shutterstock
Image credit: Shutterstock

The Millennial takeover is upon us as brands adapt their strategies to cater to the next generation of consumers, and the hospitality industry is no exception.

Long established brands such as Marriott International, Hyatt Hotels and Hilton Worldwide have received plenty of media attention surrounding their current transformations to engage the world’s most hashtagged generation.

With annual investment sales growth up 56 percent for hotels around the world, many of the major hotel brands are thinking now is the time to make changes to stay on top of the changing marketplace.

“There’s been a surge of activity in the market, and with that activity comes the perfect opportunity to make necessary improvements to ensure that these hotels can fulfill Millennial demands,” says David Black, Managing Director of JLL’s Hotel Project and Development Services. “It’s time for the industry to evolve and adapt, and so far, hotel companies are rising to the challenge.”

Functionality tops fluff

Luxuries that once appealed to all travelers are no longer as attractive to Millennials. Instead, ease of convenience and instant gratification are the focus of this generation.

No-frills technology plays a big role – the availability of check-in options, including advance check-in from your smartphone, an abundance of WiFi hotspots and keyless room entries are essential to the satisfaction of millennial guests.

Not only do the big name chains have to worry about competing with modernized boutique hotels, Airbnb has proved to be a popular platform with Millennials, creating real competition to traditional hotels. Unique accommodations and down-to-the-detail preference options allow users to customize exactly where they stay.

“We are talking about a generation that places a large emphasis on convenience,” Black says. “With intense competition from companies such as Airbnb, we are not seeing as much brand loyalty from Millennials. It’s critical that hotel brands provide an appealing environment as well as select and desirable services. It’s now more about the total experience and not just a stay.”

Hyatt recently launched a new hotel brand called Hyatt Centic to combat this trend. Focused on retaining millennial guests, the hotels are positioned close to the city-center and offer modern incentives like the option to bring pets and a “knock ‘n’ drop” service as opposed to formal and traditional room service.

Along with practical amenities, Millennials seek reasonably priced rates with a neighborhood-like feel to the atmosphere. For example, Canopy by Hilton offers locally inspired design, drinks, music and food. Guests are offered local perks ranging from jogging routes to welcome gifts from local businesses. This modern take on luxury allows millennial guests to feel valued and comfortable, adding to the overall lodging experience.

#CustomerExperience

With the rise of photo sharing apps like Instagram, Millennials are looking for experiences that they can document on social media platforms. It is now necessary for hotels to create an ambiance that is not only inspiring but is worth sharing with the guest’s network.

Everything from the lighting design and communal spaces to music selection and unique décor is now being considered when renovating to appeal to this generation.

Even 40-year-old hotel chains like Residence Inn are embracing the trend. The brand has recently undergone several changes, including regular food truck stops, reward program mobile technology and even themed Millennial happy hours—cleverly dubbed “The Mix.”

“Our younger customers were telling us that they wanted a better ambience, so that was our focus,” Diane Mayer, Marriott Residence Inn’s vice-president and global brand manager, tells Fortune.

Risk and opportunity in rebranding 

Since 2009 hotels have seen a 25 percent increase in the overall number of brands with 26 new brands making their debut – an approach that allows hotels to target new customers and fuel growth while still complying with radius restrictions that can occur in a particular market.

However, introducing an entirely original brand to the market can be risky – even in pursuit of the sizable Millennial market – as this strategy can involve substantial start-up costs and uncertainty with respect to revenue potential and market adoption.

“As the market has become increasingly saturated with brands, it becomes difficult to introduce a new brand that offers a truly differentiated experience,” says Kent Michels, Vice President, JLL’s Hotels & Hospitality Group. “Looking forward, hotel companies are considering mergers and acquisitions as an alternative means of broadening their customer base while leveraging established reputations and revenue. This allows brands to reinvent themselves to build a loyal Millennial following.”

Catering for all generations  

Although Millennials now outnumber Baby Boomers for the first time ever, hotels must still cater for older generations, who also have changing tastes.

“The hotel industry continues to alter its design direction based on the changing needs and demands of today’s travelers,” Vito Lotta, senior director of design for Hilton Worldwide, tells Hotel Business Magazine. “However, this preference for local relevance and a unique experience is not limited to Millennials. The parents of the Millennials now commonly share this mindset and typically travel with more purchasing power.”

One example of a hospitality brand appealing to a wider generation range is the Chicago Athletic Association Hotel, a 125-year-old former exclusive club on the National Register of Historic places that has recently been transformed into a four-star, lifestyle boutique hotel operated by Commune Hotels.

The re-designed hotel takes numerous classic features including original walnut floors, ballroom chandeliers and detailed molding, and blends them with new age features – like an emphasis on modern, shared spaces and restaurants that are open to the public to feed into the local, neighborhood-like experience. It’s a blend of old and new that hotel brands would be wise to consider.

“Hotels should acknowledge the reality that although Millennials are driving the cool new brands and re-engineering of existing brands, they cannot yet forget the necessity of appealing to Baby Boomers, Generation X and Y,” Black says. “An appreciation for a cool guest experience isn’t limited to one age range.”

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