Generation X and millennials: targeting the most profitable segments for your hotel

Imagine if you could organize your customers into unique segments, each clearly defined by their specific characteristics and their individual buying behaviors.

What is generation segmentation?

In this article, we’ll show you how to target guests more effectively by splitting them into generational groups, each of whom have different buying habits, unique spending patterns and personal preferences. We’ll also show you how you can identify the most profitable generation for your hotel. 

Understanding generation segmentation properly is a great way to help you to identify the most effective triggers to attract profitable customers to your hotel. 

What makes each generation different?

There are five main generational segments recognized by marketers. You’ve probably heard of some of them already, but just to make it easy, we’ve summarized their main characteristics below:

Which are the most profitable generation segments for hotels?

Generation X (who often spend more in destination) and millennials (who travel more regularly throughout the year) tend to be the hotel industry’s most profitable generational segments. In fact, according to Boston Consulting Group, millennials will account for almost 50% of travel spend by 2020. Generation X also tends to have strong purchasing power and spend as much as 25% of their total budget on hotels. They are more family-oriented, value work/life balance and generally take around three trips per year, often around the school holidays.

TOP TIP:
Generation X is very brand loyal so consider selling your rooms via loyalty plans or points redemption programs. 

Millennials tend to:

• Combine business travel with pleasure travel (the birth of “bleisure”)
• Search for experiences, not just accommodation.
• Be more interested in exploring the local culture than staying by the pool
• Prefer email communication to face-to-face contact
• Love reading good reviews 

If you’re looking to cross-sell leisure opportunities, millennials are worth targeting.

Key tips for attracting millennials to your hotel

Now that we know which are the most lucrative guests for the hotel market, let's dive more deeply into some common ways to attract them. Here are a few ideas:

Last-minute offers:
millennials are a spontaneous bunch. In a recent survey by MMGY, 49% of them reported taking a last-minute vacation in the last 12 months. They also love flash deals, so drive that business with flash sales and watch your profits rise.

Partnering with a B2B distributor:
millennials are loyal, which is good for business. B2B distributors or Bedbanks, such as Hotelbeds, offer easy access to a plethora of points redemption schemes. These distributors can also negotiate the best deal on your behalf, leaving you free to concentrate on giving your guests the best experience possible.

Limited-frills properties:
make sure that millennials who want to spend their money on external experiences know that your budget-friendly hotel makes an excellent basecamp for their excursions. Millennials prioritize travel experience and location over luxury.

TOP TIP:
Consider working with a business-to-business distribution partner such as Hotelbeds, who can help you to access the best travel points redemption, loyalty and employee benefits schemes from the thousands that are available across the globe.

Key tips for attracting Generation X to your hotel

Try to differentiate between being a family-friendly hotel and distributing your rooms to tour operators that offer family travel packages.
Some ways of attracting Gen X guests to your hotel could include:

• Appealing to family groups: Generation X loves family travel, so building a proper environment which includes activities for family groups is a great idea.
• Promoting family-friendly amenities and services such as pools, complimentary breakfasts and laundry facilities to make your property more attractive.
• Using activities like “kids clubs” and babysitting facilities to create memorable experiences. 
• Offering your rooms on a family travel package: family life tends to shape the way Generation X travels. 
• Making sure that your travel distributor is including your rooms on a travel bundle addressed to families. 
• Promoting family-friendly packages around school calendars, since that is when many Generation X guests prefer to travel.

TOP TIP
Try working with a B2B distributor such as Hotelbeds who will connect you with an extensive network of tour operators and give you access to all their itineraries and bespoke packages
 

• Generation X still values its travel agents: the American Society of Travel Agents says that 22% of travelers have worked with an advisor to book a trip in the past year. As more and more people rediscover their travel agents, that number is expected to grow. They understand how to pull together all the individual pieces of an international trip to make sure it is both convenient and efficient.

TOP TIP
Working with Hotelbeds you will get access to more than 100,000 unique retail travel agents around the world. You’ll never have to close individual deals with travel agencies again.

Find out more

To deep dive on how different channel distribution strategies can improve your hotel’s performance, check out the Hotelbeds guide to hotel distribution in 2020.