Revenue Management and Addressing the Generation Overlap

By Paul van Meerendonk Director of Advisory Services, IDeaS Revenue Solutions | June 08, 2014

Marketers and social researchers have long brandished labels like ‘Silver Surfers’, ‘Gen X&Y’ and ‘Millennials.’ More and more, these demographic terms resonate amongst savvy hoteliers who realize that each generation has very different ways they research, book and evaluate their stays. Hoteliers looking to maximize occupancy and revenues from an increasingly fragmented booking environment must understand what motivates each major generational demographic and understand how their property would be perceived by each generation in order to price and market themselves effectively.

How simple marketing and pricing hotel rooms appears to have been in the past. Before the Internet took over with third-party booking portals and independent hotel review sites, hoteliers typically relied on travel agents, telephone directories and traditional print advertising to attract baby boomer travelers. The number of booking channels available to this demographic was typically limited to calling the hotel directly or speaking with a travel agent who would do this on their behalf. Unless a savvy consumer felt the urge to call a number of hotels in a specific location and compare prices, there wasn’t the instantaneous pricing transparency that is available today through online comparison and review sites.

Just as technology is constantly changing, so too is the way both business and leisure travelers book hotels. These days, when a traveler books a room in an unfamiliar city or location, their selection process is much different than it was in the past. They may not even speak directly with a hotel or travel agent, much less pay attention to the traditional star-rating system once relished by the hotel industry. In many cases, guests now look to third party review sites for impartial reviews to ‘aid’ in the selection process. However, not all guests rely on these new technologies, and many people may still use traditional booking methods. It is important for hoteliers to understand the three major age demographics: Baby Boomers, Generation X and Millennials, and some of the common motivations and desires of these groups in relation to their accommodation wants and needs.

Baby Boomers

Baby Boomers have been faithful customers of the hotel sector for many years and were the primary focus of marketing and promotional efforts for countless years. They were the generation that started traveling purely for pleasure and helped kick start growth in the travel-for-leisure sector. Increasingly, and as the business world became more interconnected in the 1970’s and 80’s, this was also this generation that began traveling nationally and internationally for work, facilitating the expansion of the business travel market.

Baby Boomers have generally been a more straightforward customer group for hoteliers to market toward, relying on traditional media outlets and travel agents to inform them of potential accommodation choices. Baby Boomers are also generally more loyal guests compared with younger generations. In fact, a Baby Boomer traveler will frequently return to the same hotel if they have a good experience with the venue, leading to the adoption and widespread update of hotel loyalty programs across the globe.(1)

Coming up in January 2018...

Mobile Technology: Relentless Innovation

Technology has become a crucial component in attracting and retaining hotel guests, and the need to enhance a guest’s technology experience is driving a relentless pace of innovation. To meet and exceed guest expectations, 54% of hotels will spend more on technology in 2018, and mobile solutions in particular will top the list of capital investments. Many hotels are integrating mobile booking, mobile keys, mobile payments and mobile check-in into their operations. Other hotels are emphasizing the in-room experience, boosting bandwidth and upgrading flat screen TVs to more easily interface with guest mobile devices. And though not yet mainstream, there are many exciting technology developments on the near horizon. The Internet of Things (loT) is taking form in some places, and can be found in guest room control systems, voice activation systems, and in wearable sensors that can be used for access and payment options. Virtual reality headsets are available at some hotels so guests can enjoy virtual trips to exotic locations or if off-property, preview conference facilities and guest rooms. How long will it be before a hotel employs a fleet of robots for room service, or utilizes a hologram as a concierge, or installs gesture-controlled walls that feature interactive digital displays? Some hotels are already using augmented reality for translation services, or interactive wall maps, or even virtual décor. This pace of innovation is challenging property owners and brands to stay on top of the latest technology trends while still addressing current projects. The January Hotel Business Review will explore what some hotels are doing to maximize their opportunities in the mobile technology space.