Mr. Catrett

Executive Leadership

'Generating' Profits - Developing Tomorrow's Hospitality Concepts for Today's Influencing Generation

By Jeffrey Catrett, Dean, Kendall College Les Roches School of Hospitality Management

How will generational effects determine the successful hotel concepts of the next decades? As the influential Y Generation begins to have economic power and as the still influential Baby Boom enters yet another life stage, the question is essential for hotel marketers to consider.

The past has proven eloquently that the company able to anticipate generational tastes (until now more through intuition than through planning) will be the company that defines one or more decades. It is easy enough to see how generational effects in conjunction with life-stage elements, technological advancements, business cycles, and historical events have shaped the hotel products of the past.

So what will the new hotels for Generation Y look like, and how will they change over the duration of this influential generation's economic life? How will Boomers finish out their travelling days (a question often overlooked)?

Although demographic science in general is not especially new, generation-watching is relatively recent as an important marketing activity with significant research conducted throughout the 1990's. Unfortunately, generation-based prognostication can easily fall into the over-simplification trap of technology-based futurism and wildly miss the mark, for it is not as simple as it looks. A number of overlapping factors must be taken into account:

Dramatically altered social and technological influences on the first half and last half of a generation combined with parental learning mean that the second half of a generation differs from the first. Researchers now suggest that the second half of Generation Y (sometimes referred to separately as the Millennial's) is markedly different from the earlier Gen Yer's.

What, then, do we know about today's generations? Research suggests that the first half of Generation Y is:

They are in their early to late twenties and are already an economic factor. They are the first group who may seriously consider podcasts and webinars viable substitute products for hotels. They will, however, enter their own "yuppie years" by the end of the decade which may mean that i-pods and flip-flops will give way to travel expense accounts and high fashion. So far, the industry has responded to the characteristics of this generation by limiting lobby socializing spaces focusing instead on bars, offering fusion cuisine, providing high speed wi-fi connectivity, and developing economy products with design integrity in line with twenty-something's budgets.

The second half of Generation Y, growing up with 9/11, is characterized as:

• They grew up with Starbucks, concept restaurants, and branded clothing boutiques. They are in their teens and not quite yet of economic interest to hotels.
• In the rest of the first and second worlds, Generation Y like Generation X is inadequate to maintain populations, creating labor as well as consumer issues for virtually every developed country except the US.

Generation X, of course, is still around but will probably be overwhelmed by Generation Y in terms of influence. The Baby Boomers are greying but are still an influencing generation and an economic entity to be reckoned with. They will not want stodgy outdated products, but will look for comfortably stylish and somewhat more traditional luxury, avoiding any cramped boutique offerings.

Generational effects in the labor market may influence hotel styles in the next decades. For a period, Generation Y will profit from the small size of Generation X and the retirement of Boomers. They will have power during this period and will command higher salaries for more interesting jobs. Hotels will be forced to incorporate technology into new processes in order to find ways to improve salaries and enrich jobs while maintaining margins. This trend will be particularly important in Europe despite the eastern expansionism of the EU. Nationalist political parties are already poised to take advantage of the inevitable cultural backlash of widespread immigration should it occur.

Because of the divergence of tastes and needs across generations and within Generation Y, the industry will continue to be challenged to balance industrial economies of scale against boutique customization. It is unlikely, however, that the psychographic segmentation already begun in the hospitality sector and well-established in the automotive industry and retail will roll backward.

Because of the individualistic tastes of Gen Yer's and the increased psychographic marketing within the industry, it is possible that we will no longer see one dominant hotel type emerging each decade from generational effects. Nevertheless, it is clear that successful companies need to be ahead of the curve in providing options appropriate to today's influential generations if they wish to be perceived as market leaders.

Jeffrey Catrett is Dean of the Les Roches School of Hospitality Management at Kendall College, Chicago having served previously as Dean of the Ecole hôtelière de Lausanne in Lausanne, Switzerland and Academic Dean at the original Les Roches School in Bluche, Switzerland. Prior to joining academia, he held a number of management positions in hotel companies including Omni International and Swissôtel. His career spans twenty-five years and four continents. He holds a BA from Middlebury College and an MMH from the Cornell University School of Hotel Administration. Mr. Catrett can be contacted at jeffrey.catrett@hotelexecutive.com Extended Bio...

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