Buzzwords are nasty. They get used so often that readers forget what they mean. Writers will often use buzzwords without understanding them–words like “synergies” and “pivot”. This leads to complicated writing that uses a whole lot of words to say very little.
“Millennials” is one of these buzzwords. Every month we see content that shows us how to market to Millennials, understand Millennials, “5 reasons to hire Millennials”–and so on. But these pieces never tell us why we should focus on Millennials more than the other generations–The Silent Generation, Gen Xers, and Baby Boomers.
The reason to market your property to Millennials is because they are future spenders. There will come a time when Millennials will be the generation that owns most of the wealth, making them the most frequent travelers. But that time is not today. Today, The Silent Generation owns the most wealth, and travels the most. While it is important to include Millennials in any hotel’s marketing strategy, doing so at the expense of Silents can harm, not help, your bottom line.
Silents were born between 1928 and 1945. They grew up during The Great Depression, and adopted thrifty habits that served them well throughout their lives. They also emerged from World War II into an excellent housing market. Many of them bought homes for a fraction of what they are worth today. They also enjoyed a booming economy. GDP grew 3.5% per year during their prime working years. Today, it only grows by 2.6%.
Silents, as a generation, have character traits that lead to greater wealth, as demonstrated by their actions. They planned ahead. They consumed less than other generations, and they were more likely to invest in long-term wealth growing strategies, rather than spend money. They had more stable work environments. Silents tended to take jobs they would keep for decades, leaving with large pensions. Today, jobs are seen as temporary way-stations. Millennials are twice as likely than even Gen Xers to leave a job after only two years.
Silents are also living longer than previous generations. This can lead to concerns about outliving one’s money, but it also gives money a longer time to earn returns. For Silents who have been faithfully investing for decades, this leads to exponentially greater wealth year over year.
This is why the median net worth of The Silent Generation is $194,800. Compare this to the median net worth of the previous generation from 1980–$130,900.
On top of it all, Silents are more likely to travel than any other generation. According to a recent Nielsen study, 25% of Silents plan to travel in their spare time. Compare this to 22% of Boomers, 22% of Gen Xers, and only 18% of Millennials. The pool of Silents may be smaller than the pool of Millennials, leading to fewer travelers from this generation overall, but a greater percentage of them travel than any other.
Millennials born between 1981 and 2000, of whom your humble author is a member, are the future. But that future looks grim. Millennials earn less money today, adjusted for inflation, than every previous generation up to the Silents. This is due to post-recession low wages, a poor housing market, and crushing student loan debt. Forbes predicts that this bleak financial outlook for Millennials will rob the U.S. GDP of $244 billion by 2019–that’s $49 billion each year.
Like Silents, Millennials are living through harsh economic times. The difference is that Millennials are emerging from the recession into a slow-growth economy with lower wages and crushing student loan debt. Today, debt is seen as a part of everyday life, but it was seen as something one should avoid by Silents. This can help explain why 86% of Millennials are in debt, compared to 58% of Silents.
Millennials are the most educated generation in U.S. history, but this education does not lead to greater wealth or wise habits. They make poorer long-term spending decisions than the Silents. They are more likely to spend than to invest or save. Millennials spend more on food than any other generation, and they spend 27% more on food than Silents do. 58% eat out at least once per week, while only 26% of Silents do. Despite their higher education, only 20% of Millennials spend their free time reading, compared to 42% of Silents.
These spending habits are good for the travel industry. For now. Even though Silents are more likely to travel than any other generation, Millennials spend the most money on travel than any other generation. The 18% of Millennials who travel in their spare time splurge on travel services. The problem with this is it means they have less money to invest for future travel, bringing into question their ability to travel in the future.
Millennials are also more likely than any other generation to take a “staycation”, where they take time off work but don’t travel far from home. They’ll still spend money on food and local entertainment, but none of that goes into traditional travel sector industries like air travel or hotels.
On paper, this data looks woeful for any hotelier whose marketing strategy revolves around Millennials. One thing these stats do not take into account is how people change over time. It’s possible that Millennials, as they age, will spend less on food, short-term travel splurges and staycations, and invest more, leading to greater wealth for future consistent travel.
It’s also possible that the U.S. economy will recuperate more quickly, and that educational expenses will lessen given time. The fact is that we don’t know what will happen. Planning for one scenario over another is a risky game.
Today, Millennials spend plenty on travel, making them an excellent marketing target for any hospitality business. But will they be in ten years? Over the next decade, Silents will finish their travels. Remember to accommodate and market to them–the generation more likely to travel than any other.
Cloudbeds creates cloud-based hospitality management software that simplifies the working lives of professional property owners, operators, and employees. Tens of thousands of hotels, hostels, vacation rentals, and groups in over 135 countries trust Cloudbeds’ award-winning software. Founded in 2012, Cloudbeds has expanded to hundreds of team members in 31 countries who altogether speak 17 languages.