November 16, 2016
For generations, vacations required a great deal of planning and consideration. Before the digital age, there were no online reviews, no affordable travel websites, and no airlines designed to save you money. Most people relied on travel agents and fancy brochures to plan their trips and sometimes, things just didn't pan out. Sounds pretty ridiculous now, doesn’t it?
Over the past decade, multiple industries have been impacted by technology, new business paradigms, and new approaches to how the world works. This evolution lies with the much talked about millennial generation.
The millennial age demographic of 20-34 years, now 75M strong in the US, is in many ways the most powerful and influential consumer group that we have ever experienced. And thanks to this generation, the global travel sector is now a $1.6 trillion dollar industry.
The Sharing Economy
Imagine today’s millennial traveler depending on a specific hotel’s advertising, rather than on peer reviews from actual customers. With their inherent lack of trust in advertising, millennials wouldn't even consider booking a hotel unless it received a glowing recommendation from a person of trust, like a friend, family member, or colleague. With this change in mindset from millennials–the generation powering the economy for years to come–the vacation industry has recognized the need to adapt.
Millennials have trust issues when it comes to businesses in general. They don't want to be taken advantage of, especially when it comes to spending money. Millennials broadly value experiences over material goods, and they are averse to irresponsible credit card use. With this in mind, the vacation experience is important. They want to “buy” a rewarding vacation experience and will go to great lengths to make sure that it is guaranteed.
“Sharing economy companies give millennials a sense of control when it comes to how they spend their money, especially in the vacation industry,” said David Weiss, president of Yapstone. “Millennials will go to great lengths to research and confirm that their travel experience meets their expectations.”
To meet this demand, the travel industry has upped its game in providing content and reviews as often as possible. They have realized that without it, their sales and bookings risk decline. And while many think millennials only interact with their smartphones, a recent study shows that this demographic is exceedingly social and values face-to-face interactions. Again, this behavior forces vacation industry companies to provide ways to deliver a strong human element and the ones that do will be rewarded.
“Millennials are more informed about travel than ever,” said Weiss. “They often want more privacy, more space, their own kitchens, their own outdoor area, they want to create special experiences when traveling with family and friends. When millennials travel to a new city, they often want to experience it like a local. They want to feel like they live there, even if it’s only for a few days. We try to develop products and payment experiences that help our partners meet these specific Millennial demands.”
Another surprising fact is that millennials are smart about budgeting. Combine their practicality with the needs to “buy” experiences and you have a great opportunity for the vacation industry.
“Millennials also have more buying power than ever. When you’re staying in a hotel, you will more than likely feel like a guest in the city of choice and probably spend a lot of money on the vacation in addition to the rental of the room or house,” explains Weiss. “By renting a vacation home, condo or apartment, millennials get exactly what they want. They are living like a local and can save money by grocery shopping and cooking in, laundry, etc. ultimately leaving more money for other fun experiences on the vacation.”
Millennials Demand Convenience
The millennial generation has grown up with technology at their fingertips. Because it is all they know, they exhibit strong preference for businesses that offer robust online and mobile products and services. They expect the convenience and real-time information that mobile offers and more importantly, they demand that vacation industry companies be on the forefront of technology usage.
The millennial consumer demands to be able to handle all of their needs from their phone. From booking a home to paying for it, the entire process should be easy to complete on a mobile device in just a few minutes.
“If you are not tech savvy, this tech savvy group will leave you and find a company that is,” said Weiss. “Service providers in the vacation industry must innovate on their products and services or be left behind.”
The Mobile Solutions of FinTech
Looking forward, consumers have proven that they are comfortable using small mobile screens to handle vacation booking and payments. Because consumers rely on mobile options when it comes to researching and booking travel accommodations, companies have to deliver efficient mobile solutions that deliver a rewarding customer experience from end-to-end. Consumers are more apt to use credit cards in booking vacation so it’s also important to deliver the necessary security standards for trust and security.
It seems that millennials can take credit for just about everything happening today – they certainly have been instrumental in driving fintech disruption as they adopted mobile wallets and P2P payments. The case can be made that millennials are also driving the economy as companies are evolving or even starting to meet the new product demands.
Millennials have been researched, analyzed, and documented more than any other generation due to the sheer influence and impact they are making on long-standing industries, on products and services, on mindsets and behaviors, on marketing and advertising, and on how we interact with each other. This generation of consumers knows what it wants and will not accept anything less.
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