Hotels for Millennials: The Next Decade

By Libby Hoppe, March 8, 2015

“We’ve got to be cool,” Bill Marriott says about his company. “Today is a whole new ballgame.” When the 82-year-old chairman and CEO of Marriott International is quoted in The Wall Street Journal talking about how Millennials will dictate the future, you know the conversation surrounding this coming-of-age generation has reached a crescendo in the hospitality industry.

It seems like every other week another hotel company releases a brand targeting the Millennial traveler. Marriott has Moxy and AC Hotels. The luxurious Thompson Hotels launched Tommie Hotels in 2013. The Alofts, Elements and Radisson Reds of the world are appearing globally in up-and-coming neighborhoods. The trend isn’t surprising, especially if you look at the numbers. In 10 years, Millennials will be 75 percent of the labor force, according to the U.S. Bureau of Labor Statistics, which means they will be the majority of business travelers and meeting attendees.

Some of the discussions about Millennials no longer will be important 10 years from now. Most of this generation will have emerged from their parents’ homes and been steadily employed for at least a decade. Many will have families and responsibilities that change how they navigate the world. But some of their habits and desires, specifically when it comes to travel and meetings, will be unchanged. “Millennials have created a new definition of what luxury means,” says Robert Mandelbaum, director of research information services at PKF Hospitality Research. “Their bells and whistles are more simplistic, like technology and accessibility.”

Hotel brands targeting Millennials might not persist. “As people grow up, they want the more full-service experience. Trends are cyclical,” Mandelbaum suggests. The key will be overhauling operating philosophies and anticipating the shift in the next decade. If planners want to stay relevant, they need to book rooms and space from companies that adopt four major features, which will be non-negotiables a decade from now.

 

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AC Hotel New Orleans in the Bourbon/French Quarter area.

1. Urban Locations

Driving the trend: A 2014 Nielsen report showed that for the first time since the 1920s, growth in U.S. cities outpaced the suburbs. Cities are investing in downtown urban centers, and a big reason is Millennial demand. In the study, 62 percent of 18- to 36-year-olds said they prefer to live in mixed-used communities. When traveling, they prefer the same environment.

What experts say: “We see a big population that wants to stay in urban centers at an accessible price point,” says Niki Leondakis, CEO of Commune Hotels and Resorts, behind the Tommie hotel brand. “Research shows Millennials define luxury by functionality over price tag.”

Early adopters: Commune’s Tommie brand will debut in Manhattan’s Hudson Square neighborhood next year, and all future properties will be in up-and-coming areas of large cities. Marriott’s AC Hotels already exist in 75 metropolitan neighborhoods throughout Europe, with plans for more than 30 in the United States. Best Western International has a new brand in the works called Vib (pronounced Vibe). The technology-centered hotels will be developed in urban destinations.

 

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Andaz’s third space concept for guests.

2. Third Spaces

Driving the trend: You can thank (or blame) companies such as Starbucks for the third space phenomenon. By definition, it’s a separate destination from home or work where people can be alone, together. A 2013 study by Millennial Branding, a Gen Y consulting firm, revealed 36 percent of respondents ages 19-30 said they prefer to work in a lobby compared to a room.

What experts say: “Hotels and meeting venues will be much more flexible in how they will be arranged,” says Donna Quadri-Felitti, Ph.D., academic chair at the Preston Robert Tisch Center for Hospitality and Tourism. “The lines between activities like dining, having a meeting, having cocktails or listening to a presentation have changed.”

Early adopters: Link@Sheraton, Holiday’s Inn’s active lobby concept and Le Meridien Hub show brands have eschewed business offices for a more social working space in hotel lobbies. Marriott has introduced a prototype social networking app called Six Degrees to connect people within a single hotel lobby with others who have similar interests. Information is pulled from LinkedIn profiles or self-furnished profile information, and aimed to make third spaces less “alone, together” and more “together, together.”

 

The touch-screen suite at Aria Resort & Casino in Las Vegas.

The touch-screen suite at Aria Resort & Casino in Las Vegas.

3. Wired Hotels with Intuitive Technology

Driving the trend: Almost nine out of 10 Millennials in the U.S. own smartphones, according to a 2014 Nielsen report, and the number continues to grow. This is a generation that’s come of age with a device in hand. Millennials can use their phones to text, talk, surf, network and make purchases, and they expect their travel experience to be an extension of their mobile, wired lives.

What experts say: “We will see more self-check-in, mobile key technology, and applications and platforms that allow guests to submit requests to staff and track responses in real time as well as alter in-room conditions such as temperature,” says Charles Pinkham III, vice president of development at Portman Holdings.

Early adopters: Marriott’s European Moxy Hotels are targeting techie travelers. Rooms have USB ports in all wall sockets, and guests can check in using mobile devices. High-speed Wi-Fi is free throughout the hotel. Aria Resort & Casino in Las Vegas has touch-screen control for most room features, and when guests enter the room, blinds open, lights go on and temperature adjusts automatically. TheWit hotel in Chicago uses an IP system to automate service; any guest request is sent to the nearest staffer’s mobile device.

 

Art in Le Meridien Atlanta Perimeter Hotel’s check-in area.

Art in Le Meridien Atlanta Perimeter Hotel’s check-in area.

4. Ties to Local Culture

Driving the trend: One of the early landmark reports on travel preferences of Gen Y conducted by PGAV Destinations showed that 70 percent of Millennials felt they could only achieve learning something new in immersive, cultural destinations. In other words, they want an authentic, local experience when traveling, and they don’t want to leave the hotel to find it.

What experts say: “This is one hallmark of Millennials. They seek unique experiences and environments,” says Michael Dail, vice president of global brand marketing at Marriott International. “And with the advent of social sharing, guests love to share their travel experiences online.”

Early adopters: Some ahead-of-the-curve brands are influenced by their neighborhoods, building upon a boutique hotel mentality. Hyatt’s Andaz Hotels is one of them. “We make each guest feel like a local” is part of its message. The burgeoning 21c Museum Hotels, which started in Louisville and is expanding into Cincinnati and Durham, North Carolina, is a contemporary art museum-hotel hybrid defined by its local community and marketed to the culturally curious traveler.

Photo credit: Garret Meier; Magnus Lindqvist; James Kruger

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