By Matt Norcia, executive director, development at Brand Union
Technology has redefined the world, and no sector has gone untouched. Every industry has changed in some way or form; travel and hospitality is no exception. And despite its resistance, this extends to the luxury travel sector as well.
Millennial travellers are the key drivers of this change, with an appetite for unique adventures and experiences that give rise to shareable content and enviable storytelling opportunities.
Social media, especially Instagram, has been at the forefront of this shift. This generation has a hunter-gatherer approach to gaining insider knowledge, and is therefore eager to take holiday planning into their own hands.
They often gain inspiration from social media influencers or branded travel content; 85% of millennial travellers were inspired to book their most recent trip based on the online travel content they viewed. Consequently, there’s more social cachet than ever before in exploring uncharted waters and going somewhere “different.”
Unlike older generations, millennials aren’t as happy to make an annual trip to a timeshare or holiday house in the same safe and familiar location. Some of the destinations that are predicted to grow fastest over the next decade are testament to this taste for adventure: India, Angola, Myanmar, Mozambique and Vietnam feature in the top ten.
This opens new windows of opportunity for hotel brands looking to capture this exploratory audience’s attention.
Along with influencing the millennial consumer’s choice of destination, services like Tripadvisor and Airbnb also make the booking process easy, even enjoyable; browsing a user-friendly platform and creating curated wishlists feed into the excitement of the holiday itself.
Airbnb has profited significantly from this generation’s tastes and habits, and is spearheading the growth of the sharing economy. According to the San Francisco-based unicorn, 17 million travellers stayed with its hosts in 150 countries in 2015.
Furthermore, “The Sharing Economy” study by PwC showed that the sector was worth $15bn in 2013, with a predicted value of $335bn by 2025.
The desire for unique, personalised and authentic adventures mean that consumers are increasingly making their travel plans online, and shunning the cookie-cutter offers of traditional travel agents.
Morgan Stanley research predicts a 6% growth in the number of people booking holidays through Airbnb in the 12 months from November 2015 (and 3% growth in those using HomeAway and other rental sites), while high street travel agents are set to lose customers.
What’s more, 75% of millennials use smartphones or tablets to research their travel plans, with 46% actually using these devices to book their trips. Control over where younger travellers go and what they do is now literally in their own hands.
Hotel brands will have to adapt to survive in this new climate. The new generation of travellers are researching, booking and documenting their trips online, and are open to new and exciting destinations, presenting both opportunities and challenges for more established hotel brands.
It’s interesting to look at these changes in the context of luxury travel in particular. Where budget-conscious travellers may be happy to book a trip through Airbnb and the easyJet website, the same can’t yet be said of the luxury sector. But this doesn’t mean it’s safe from the seismic shifts taking place around it.
On the surface, it appears it’s business as usual for upmarket travel agents, with Hayes & Jarvis and Zicasso both reporting recent growth in their tailor-made packages.
However, this is no doubt due to a rise in disposable income and a fundamental paradigm shift in luxury, with consumers – especially millennials – increasingly favouring enriching experiences over ownership of objects; it’s hard to attribute this to a growth in popularity of the package holiday.
Exceptional service and tailor-made experiences, of course, are still key to the success of any luxury hotel brand. The crucial point to note, however, is that brands cannot rely on service being provided by travel agents acting as the middle man.
Nowadays, the hotel experience begins long before a guest checks in, and their relationship with the brand (with any luck) extends long after checkout.
Luxury hospitality brands have ignored the importance of digital, social and mobile interactions at their peril. The trend of researching and booking tailored holidays online is a hallmark of the next generation of consumers, and it shows no sign of stopping, even as they amass more disposable income.
Take high-end fashion as an example: just a few years ago, it would have been inconceivable to buy a thousand-pound handbag on a mobile device; now, Gucci, Louis Vuitton and Lanvin among others have launched mobile commerce interfaces, to cater to this digitally-minded audience.
Instead of relying on agents and tour operators, luxury hotel brands need to become part of the conversation, speak directly to this new audience, participate in a content curation project, and facilitate the sense of adventure and discovery that millennials yearn for.
Practically speaking it’s more difficult to create a luxury experience in an emerging destination, for example Angola, where infrastructure and the economy may be harder to work with. Equally, it’s hard to stand out in destinations that are already well-established and crowded, like London or the Maldives.
That said, a stand-out digital experience can cut through the noise; in hospitality terms, this means countless pictures of white sandy beaches or laundry lists of amenities. The key is to provide access to the brand, even before consumers may be able to afford the product.
Burberry is the best example of this. By using Snapchat, WeChat and other social platforms, the brand engages with a younger generation of consumers who become brand evangelists long before they can afford the iconic trench.
In much the same way, the Beaumont hotel in London recently partnered with influential photographer David Loftus – whose job it was to Instagram shots of the hotel and of London life – giving followers an intriguing glimpse into a wider lifestyle.
We know that millennials are using simple, digestible and engaging platforms to get excited before a trip, making the digital experience almost part of the trip itself.
What luxury hotels need to do now before it’s too late, is adapt and future-proof their brand for the digital age, instead of relying on the traditional travel agent model.
Brilliantly designed digital experiences and enticing social media feeds give space for the imagination and appeal to the millennial taste for discovery and adventure.