It's All About the Three 'A's

By Bonnie Knutson Professor, The School of Hospitality Business/MSU | December 02, 2018

Today, they don't learn cursive writing.

Today, they get a smart phone when they are in grade school.

Today, they don't live by the ABCs.

Today, they live by the AAAs and I don't mean the American Automobile Association, the American Accounting Association, or the American Anthropological Association.

Today, the 'they' is Generation Z and the AAA they live by is Apple, Amazon, and Alphabet.

Just when you think your getting a handle on Millennials, here comes the next generation of guests. And they are quite different than their predecessors.

Generation Z is actually known by several names: Gen Z, Centennials, the iGeneration or just plain iGen. But whatever it is called, this generation is the one that follows the infamous Millennials (Generation Y). While there are no exact dates for when a generation begins and ends, in general, demographers and researchers use about a 20-year time frame for each cohort. Typically, then, iGens are said to have been born between 1995 to 2005, putting them still in school with leading edge finishing up their college years.

But if you believe your hotel doesn't have to think about them yet, think again. Although this cohort is still relatively young, they influence about $600 Billion of what and where their family spends its time and money – i.e. that's about 70% of their parents' spending. Already they are swaying their family's travel decisions. By 2020 – that's less than two short years from now - they will represent 40% of the world's consumers. Within the next five years, they will become the fastest growing group in both the marketplace and the workplace. And don't most hotels work off five-year strategic plans?

Since iGen is still in its formative years, no one can accurately predict how its attitudes, values, and activities will impact the travel and hotel industries. But we do have a glimpse of that future because we do know what key markers have defined them as a generation: They saw how the Great Depression of 2008 impacted their parents with downsizing, outsourcing, job cuts, and the housing crisis. They watched as skyrocketing educational costs burden their older siblings and friends with debt. They embraced an expanding definition of diversity and inclusion with the legalization of same gender marriage, validation of medical marijuana, passage of the Affordable Care Act, the #MeToo Movement, a growing focus on immigration, climate change, and the election of the first African-American president.

They learned how to pack a suitcase early in life because they traveled all over with friends and family – on vacations, field trips, study abroad programs, internships, and just plain back packing through one country or another on their own. On average, this cohort travels about 29 days annually – which is virtually a whole month each year. iGens are truly global citizens.

Of course, the biggest marker that define this emerging generation is technology. They have never really known life without the World Wide Web and 24/7 Internet access to information and social media, giving them instant connectivity to family, friends, brands, as well as what is happening globally or in their own back yards. They are truly defined by Apple, Amazon, and Alphabet. Perhaps the Center for Generational Kinetics says it best: "Technology is the core to how [iGen] operate[s] in the world." It affects and will continue to affect every aspect of their lives, from education to health care to shopping and even to dating. And yes, it will affect how they travel and how they connect with and relate to your hotel. For example:

Mobility

For them, it is mobility, first, last, and always with smartphones being their favorite way of engaging anyone and anything at any time. They have grown used to moving seamlessly between physical and digital spaces, and they'll expect a flawless experience wherever they live, work, play, or travel too. While this may mean your hotel needs 5G Internet service today, who knows when it will become 6G or 7G or even 10G down the road. It also means paying more attention to your website and presence on Instagram, Snapchat, YouTube and Facebook and whatever other communication platforms become "hot" in the future. Today, it is mostly Snapchat and Instagram because of their photo and video-based content. These will be your starting points – i.e. they are communication necessities, not luxuries. After all, 90% of these young people say their travel decisions are influenced by what they get on their social media platforms.

Multi-Tasking

"We watch as they…text-message, surf the Internet, microwave a snack, listen to iTunes, and download a TV show…all at the same time" (A quote from an article in Delta Airline's Sky Magazine). Anyone who has a teenager at home, knows this to be true. In fact, it is true for many of us. For me, multi-tasking really hit home one morning when I was getting ready to head to the office. I was in our bathroom listening to some TV news channel (Yes, there is a TV in our bathroom), while reading an online newsletter on my iPad that was propped up on the counter. At the same time, I'm drying my hair with one hand, brushing my teeth with the other, all the while standing on one foot because I was using a foot massager on my other one. Five tasks at the same time. Too many tasks; not enough day. The culprit is, of course, technology. It has made it easier to do several things at once – to multi-task. And because they grew up with technology, iGen is the most adept of all generational cohorts at this.

Can your hotel's advertising/messaging seamless move from one media platform to another? Can it break through all this clutter? To reach this market, every brand knows that it must talk with them (not just speak to them) through various media platforms, especially on their smart phones. And the messaging can't stop with the booking. It must continue to communicate with iGen while they are guests, whether they are in the hotel or out on the town or conducting business in some office. This means that the experience needs to continue throughout the booking and experience cycles. The one-shot deal isn't going to be enough to engage this Generation Z group.

Bucket List

It seems somewhat ironic that the terms Bucket List and iGen appear in the same sentence, but they do when it comes to choosing a hotel. In one survey, more than 80% of this generation said that crossing an experience off their bucket list is important when they travel. This offers unique opportunities to every hotel because authenticity and uniqueness play a part in everyone's bucket list. Because they are well-traveled and have a global mindset, they are looking for cultural immersion and "Instagram-worthy" design. Like their older counterparts, this generation enjoys and values the outdoors and being active. As you think ahead, this has implications for renovations, partnerships with local venues, and a hotel fitness center that does not look like it was an afterthought with two ancient treadmills and maybe an elliptical. They want to be able to visually tell their travel story with family and friends via social media. Look around your hotel – inside and out – with a fresh eye for the "road less traveled" and the "biggest bang for the hotel buck" opportunities to add a little to that bucket list and their visual travel story.

While they will invest in a unique travel experience, it is important that we all remember that this Generation Z is just beginning their careers and don't have a lot of money to spend. So, they are always looking for the best deals for the best hotel experiences. In fact, Expedia Media Solutions found more than 90% look for the best value for the dollars spent. As the formula for Value points out, V = E – P (Value = Experience – Price, which includes time as well as money.)

Life-Work Balance

Ol' Ernie Ford got it all wrong for this generation when he sang his famous line, "I owe my soul to the company store." (A line from Merle Travis's song, Sixteen Tons, recorded by Tennessee Ernie Ford in 1955, it reached number one in the Billboard charts) For iGen, it is all about Life-Work balance. While their two most important career goals are job security and work, they are not putting all their eggs in one basket. For them, rewards are a basic human right, and that means far more than just vacation time off. It means long weekends, it means social time, it means flexibility, it means choice, it means sustainability, it means taking care of mind, body, and spirit. It also means that it is all about mobile communication, anytime, anywhere. iGen is really swimming upstream here considering a recent OECD report that ranks the U.S. 29th out of 30-member countries on work-life balance. (OECD = Organization for Economic Co-operation and Development). The report attributes this to long work hours and a lack of social activities. Another opportunity for your hotel.

Finally, remember that, for the first time in history, there will be five generations in the marketplace as well as the workplace. And this fifth iGeneration is expected to be larger, wealthier, and more demanding than any of the four that preceded them. They will redefine many industries to fit their needs, including hotels. So, while iGen is just now beginning to collect their degrees, move to a new city, and find their apartment, hotel management should start thinking about their impact on hotels today because iGen will be guests and employees tomorrow. And tomorrow will be here before you know it.

Your REVPAR will thank you!

Ms. Knutson Bonnie J. Knutson is a professor in The School of Hospitality Business in the Broad College of Business at Michigan State University. She is an authority on emerging lifestyle trends and innovative marketing. Her work has been featured in The Wall Street Journal, USA Today, and on PBS and CNN. She has had numerous articles in industry, business, and academic publications. Bonnie is a frequent speaker for executive education as well as business and industry meetings, workshops, and seminars. Dr. Knutson is also editor of the Journal of Hospitality & Leisure Marketing. Bonnie Knutson can be contacted at 517-353-9211 or drbonnie@msu.edu Extended Biography

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Coming up in January 2019...

Mobile Technology: The Future is Now

Mobile Technology continues to advance at a relentless pace and the hotel industry continues to adapt. Hotel guests have shown a strong preference for mobile self-service - from checking-in/out at a hotel kiosk, to ordering room service, making dinner reservations, booking spa treatments, and managing laundry/dry cleaning services. And they also enjoy the convenience of paying for these services with smart phone mobile payments. In addition, some hotels have adopted a “concierge in your pocket” concept. Through a proprietary hotel app, guests can access useful information such as local entertainment venues, tourist attractions, event calendars, and medical facilities and services. In-room entertainment continues to be a key factor, as guests insist on the capacity to plug in their own mobile devices to customize their entertainment choices. Mobile technology also allows for greater marketing opportunities. For example, many hotels have adopted the use of “push notifications” - sending promotions, discounts and special event messages to guests based on their property location, purchase history, profiles, etc. Near field communication (NFC) technology is also being utilized to support applications such as opening room doors, earning loyalty points, renting a bike, accessing a rental car, and more. Finally, some hotels have adopted more futuristic technology. Robots are in use that have the ability to move between floors to deliver room service requests for all kinds of items - food, beverages, towels, toothbrushes, chargers and snacks. And infrared scanners are being used by housekeeping staff that can detect body heat within a room, alerting staff that the room is occupied and they should come back at a later time. The January Hotel Business Review will report on what some hotels are doing to maximize their opportunities in this exciting mobile technology space.