How loyal is Generation Y to hotel brands? Which criteria are important to them when selecting a place to stay? And how do they define loyalty anyway?
To find out, Bridge.Over Group surveyed 350 Millennials (average age is 26) to better understand their attitudes toward hotels and hotel brands. Below are 3 key findings of the study.
1. Generation Y think they are less loyal than the previous generation
70% of Millennials (born between 1980 and 2000) who responded to the survey think their generation is less brand-loyal than previous generations. The figure rises even higher when asked about their perception of their own customer loyalty: A whopping 81% of respondents do not consider themselves as being loyal to a specific hotel or hotel brand! Among the ones who consider themselves as loyal customers, the majority of respondents mentioned Starwood as a brand they felt loyal to, followed by Hilton and Marriott.
2. Generation Y see brand advocacy as proof of loyalty
Generation Y is known for its lack of loyalty (whether as consumers or employees). But what does loyalty really mean to them? When asked the question “what does being a loyal to a specific hotel or hotel brand mean to you?”, it appeared that loyalty is not only about consumption for the Millennials.
Of the respondents surveyed, 65% see “frequently staying in a specific hotel or with a hotel brand” as the most obvious display of loyalty. However, it is very interesting to see that “recommending a hotel or hotel brand to a friend” ranks close behind (58%). This shows that Millennials see advocacy as a true component of loyalty. In other words, they believe that one can be loyal to a brand without necessarily making a purchase.
Moreover, only 23% of Millennials associate brand loyalty with paying “a premium to stay in a specific hotel or hotel brand”, a shockingly low number which confirms that loyalty, for this demographic, does not necessarily equate with being price insensitive. Hoteliers, therefore, may need to find new ways, besides price, of cashing in on their brand equity.
3. Generation Y values “getting a good deal” above everything else
“Price-value ratio” and “location” are the two most important criteria for Millennials when selecting a hotel. This shows that Millennials are price conscious consumers who are used to comparing prices across multiple-channels, in order to find the best possible deal.
And yet, Millennials still favor good old fashion advice from members of their close social circles, over the opinions of anonymous reviewers. “Peer recommendations from friends and family” ranked higher than “online reviews” – quite surprising, considering that this demographic is a generation of digital natives.
Looking at the importance of loyalty programs when booking a hotel, 55% of respondents rank it as the least important criteria. This shows that existing point-based loyalty programs are not attractive to Millennials.
What does this mean for hotel brands running loyalty programs?
The fact that Millennials do not see themselves as loyal to a specific hotel or hotel brand is obviously not pleasant news for hoteliers. However, there are two simple things that can be done to make your hotel attractive to them
- Don’t waste too much energy on building a complex point-based retention programme. Instead, focus on delivering and communicating great value for money. And remember, “Best available rate” is not a good enough value proposition for the Millennials.
- Incentivise advocacy by making the hotel search and booking process social. It is not because a Millennial doesn’t book your hotel that he/she won’t recommend it to their friends and family.
This Generation Y survey shows that there is a necessity for marketers to include attitudinal measures such as intimacy and advocacy when looking at loyalty (in addition to behavioural metrics such as average spend, frequency and recency of purchase). The ultimate challenge with Millennials is that even the ones who feel loyal are less likely to visit your property as frequently as “traditional regular customers”. This means that it is much harder to keep the flame alive in the relationship. In other words, if you are after a love story with Generation Y customers, get ready for a long-distance relationship.
