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The Millennial Mindset: How a Generation is

Reshaping Hospitality

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Introduction

America’s Millennial Generation, the roughly 80-100 million people between the ages of 17 and about 35, might be one of the most misunderstood groups by service-oriented businesses.

Common refrains, echoed through popular media for several years, describe Millennials, aka Gen Y, as self-involved, coddled, entitled, and even “Generation Me.”

To what extent any of that is true, it’s irrelevant in a business sense. Other relevant, documented facts about Millennials are far more useful when seeking to evolve services to attract to this group. Try these: Relatively wealthy but frugal, environmentally conscious, no-nonsense, techno-savvy, connected, socially aware, diverse and open to new ideas.

And there’s this key fact: In the next few years, Generation Y will make up roughly 40 percent of the U.S. population. If you’re in business, you dismiss Millennials at your own peril.

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Introduction (cont.)Indeed, many hospitality businesses already are reshaping what they do in order to cater to the sensibilities of a rising tide unlike any previous generation. Others are scrambling to come up with a plan.

Take a step back and you find the “traditional experience” in the hospitality industry rapidly becoming a thing of the past.

Gen Y wants quality and convenience without the fuss and muss (and surcharges) of upscale living. They don’t care about attentive waiters or three-course meals when they go out to eat. They simply want to get in, get out and get on with their day.

For businesses hoping to attract this generation, understanding Millennials’ mindset is paramount. Read on for details on some of the driving forces behind their consumer habits and tips on how business might become more appealing to Gen Y.

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Lots of Spending Power, But Careful Where the Dollars Go

This generation exercises more than $200 billion in direct spending power every year, according to Hanover Research. The Pew Research Center estimates it even higher: $600 billion per year.

On the other hand, Gen Y has inherited one of the bleakest economies since the Great Depression and it owns a combined $1 trillion in student loan debt.

According to a 2010 Pew study, 55 percent of 18- to 29-year-olds said they were watching their spending “very closely,” up from 43 percent for the same group in 2006. A 2012 Pew study found 36 percent of Millennials still living with their parents.

Other research indicates the group is more conscious of spending on products or services they feel “give back” or are environmentally responsible. According [V�H�NSVIHS�Z\Y]L`�SHZ[�`LHY�I`�[OL�W\ISPJ�YLSH[PVUZ�ÄYT�,KLSTHU��ULHYS`�OHSM�VM�consumers said they buy at least one brand supporting what they consider a good cause every month – a 47 percent increase from the same survey two years earlier.

TRANSLATION FOR THE HOSPITALITY INDUSTRY:

Millennials might be willing to splurge on quality, but they are frugal – and mindful of where their dollars are going. That has helped fuel the rise of Fast Casuals among restaurant concepts.

And Fast Casuals with a reputation for environmental and community friendliness are some of the fastest growing. Chipotle, for example, announced recently that P[�PZ�TV]PUN�[V�M\SS`�YLTV]L�HU`�NLUL[PJHSS`�TVKPÄLK�VYNHUPZTZ�MYVT�PUNYLKPLU[Z�in its food. The company for years has used the slogan “Food with Integrity” and tries to use sustainably grown products that are, when possible, grown locally.

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The First Generation Native to a Connected World

This just in: Millennials are the most tech-savvy generation in history. They are digital natives. Very few know of – or can remember – a world without cellphones, the Internet and, of course, social media.

Naturally, young adults turn to these outlets to interact with their friends, get news updates and share their opinions about the world around them. Millennials also prefer the Internet – over TV and certainly over older media like newspapers and magazines – to learn about businesses and brands.

This age group increasingly accesses the web via smartphones and tablets.

Tablets will soon outnumber desktop computers with IDC projecting growth of 174.5% between 2012 and 2017. In fact, there will be more tablets shipped in 2015 than desktops and laptops combined.

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The First Generation Native to a Connected World (cont.)

How addicted is Gen Y to its mobile devices? Here are some stats:

� ���WLYJLU[�WVZ[�YL]PL^Z�VY�YLZLHYJO�I\ZPULZZLZ�VU�[OLPY�ZTHY[WOVULZ�� ���WLYJLU[�ZH`�[OL�[LJOUVSVN`�THRLZ�[OLPY�SP]LZ�LHZPLY�� ���WLYJLU[�ZH`�[LJOUVSVN`�RLLWZ�[OLT�JSVZLY�[V�MHTPS`�HUK�MYPLUKZ�� 4VYL�[OHU����WLYJLU[�VM�[HISL[�V^ULYZ�HYL�4PSSLUUPHSZ�� ���WLYJLU[�ZSLLW�^P[O�[OLPY�WOVULZ�UL_[�[V�[OLPY�ILKZ�� ���WLYJLU[�SPRL�[OL�JVU]LUPLUJL�VM�\ZPUN�H�ZTHY[WOVUL�� � � or tablet to research a product on the go.

This generation, more than others, also has an unwavering need to check with others before acting and to give others their feedback. Seventy percent of Millennials say their friends’ approval is very important to them; 55 percent share their negative experiences online.

On average, 61 percent of Millennials say they rate products or services online, either on review sites such as Yelp or on social media. Nearly a quarter seek opinions on social media before making purchases.

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The First Generation Native to a Connected World (cont.)

TRANSLATION FOR THE HOSPITALITY INDUSTRY:

Bottom line: If you want to communicate with these folks – and you do – you need to go where they are: on mobile devices and social media. Don’t ^HZ[L�[PTL�VY�TVUL`�VU�PULɈLJ[P]L�TL[OVKZ�[OH[�[OL`�WYVIHIS`�^VU»[�see. Mobile marketing tactics such as SMS texting programs allow you to interact with your customers in a way that will actually get their attention.

You also can’t ignore their need to give and receive feedback. After all, it takes only one negative review to cast a shadow of doubt on your establishment.

Businesses in the hospitality industry can avoid negative reviews by keeping a close – and by close, we mean real-time – watch on service and identifying and resolving issues on the spot, before a customer even walks out the door.

Technology such as digital survey tablets is a proven way to gather instant feedback in a technological package Millennials already love. Restaurant or hotel employees can customize survey questions to target each aspect of the customer experience.

Tablet software can alert a manager if anyone records a negative L_WLYPLUJL��HUK�OL�VY�ZOL�JHU�ZWLHR�^P[O�[OL�J\Z[VTLY��VY�Z[HɈ�TLTILY��to correct the problem. This solution allows the patron to leave happy and the business owner to prevent similar negative experiences from happening in the future (and avoid the backlash from a nasty review).

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Love to Dine Out, Dine Right

As we noted earlier, Gen Y is a major force behind the rise of Fast Casuals. It’s easy to see why.

Millennials dine out more than older generations, averaging four meals a week at restaurants. But they’re not just hitting up a burger joint every night. They want something fresh, something unique. Millennials also are the most racially and ethnically diverse generation in history, according to the Pew 9LZLHYJO�*LU[LY��;OL`�^HU[�[OLPY�MVVK�[V�YLÅLJ[�[OH[��3HZ[S �̀�[OL`�HYL�HZ�interested in the dining experience as with what they eat. They want sleek, modern interiors with healthy, environmentally friendly menu options.

Fast Casual is responding to all that. You can eat Asian cuisine one night and ,[OPVWPHU�[OL�UL_[��;OLYL�HYLU»[�HU`�MYHaaSLK�waiters, stale breadsticks or overpriced entrees. There’s simply good, quick food they can order to their preferences.

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Love to Dine Out, Dine Right (cont.)

TRANSLATION FOR THE HOSPITALITY INDUSTRY:

Good, fresh food might be the easy part of serving this group. Fast JHU�IL�TVYL�KPɉJ\S[��NP]LU�[OL�X\HSP[`�-HZ[�*HZ\HSZ�HYL�[Y`PUN�[V�W\SS�VɈ��:LY]LYZ�^LH]PUN�[OYV\NO�JYV^KLK�YLZ[H\YHU[Z�ZLHYJOPUN�for paper table tents can seriously impede delivery times.

One solution is to invest in a table tracking solution that not only speeds ZLY]PJL�I\[�HSZV�PTWYV]LZ�Z[HɈ�LɉJPLUJ`�^OPSL�JSLHYPUN�\W�JS\[[LY�VU�tabletops and eliminating dining room confusion. The cashier simply gives each customer a device smaller than a compact disc. Once place on a table, the device sends that table’s number to a touch-screen display kitchen.

That touch-screen display plays an important role in assuring good service. It shows a running timer on each order. Diners get their food faster and fresher, and restaurants generally need fewer runners.

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Convenience, Community Matter When It Comes to Hotels;OL�<�:��OV[LS�PUK\Z[Y`�THKL�H�����IPSSPVU�WYVÄ[�PU�������HJJVYKPUN�[V�[OL�:;9�(UHS`[PJZ»������/VZ[�(STHUHJ��PU�UV�ZTHSS�WHY[�[OHURZ�[V�4PSSLUUPHSZ�

In 2010, Gen Y’s travel spending increased 20 percent, and they’re expected to account for half of all travel spending by 2020, according to a report from The Boston Consulting Group. The same report stated that, on average, Millennials take four overnight leisure trips per year.

And, while they like their privacy like anyone else, this generation craves community and being around others in group settings, even if all they do together is surf the web on their phones and tablets.

Research also indicates that Millennials don’t need a lot of fuss from service people. However, when they do want attention, they want it quickly and e!ciently. Don’t waste their time.

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Convenience, Community Matter When It Comes to Hotels (cont.)

TRANSLATION FOR THE HOSPITALITY INDUSTRY:

Smart businesses can take cues from hotels that already are making dramatic changes to accommodate the rising generation.

Some are building entirely new hotels targeted solely at Millennials, with free Wi-Fi and central charging stations for cellphones, tablets and laptops, among other amenities. (Needless to say, Millennials won’t give a second thought to hotels that aren’t tech-friendly. This even extends to hotel bars and restaurants.) And to cater to the desire for community, some newer hotels are even developing lobbies or common areas conducive to large groups.

One simpler way to cater to Gen Y and enhance the guest experience is to focus on reducing wasted time during check-in or while waiting for a restaurant table.

Nobody likes to wait, but this generation knows it doesn’t have to – another option is just a Google search away.

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Convenience, Community Matter When It Comes to Hotels (cont.)

TRANSLATION FOR THE HOSPITALITY INDUSTRY (CONT.):

Hotels have gone away from the old clipboard method of keeping wait lists and instead adopted modern paging systems. Guests are freed to do something more productive – like browse the gift shop – without fear of losing a place in line. They can be alerted by pager or on by smartphone text when their room or table is ready.

To cater to Millennials’ aversion to fussy service, hotels are employing push-for-service button pagers in locations such as resort cabanas, at the beach or at poolside – places where you mostly want to be left alone while RUV^PUN�`V\�JHU�Z[PSS�NL[�H�^HP[LY»Z�H[[LU[PVU�X\PJRS`�HUK�LɈVY[SLZZS �̀

Hotels also are adopting the same advanced survey methods used by restaurants to close the loop with Millennials and ensure the best guest experience. Remember, they love to be asked what they think, and anyway they’ll probably soon be telling [OL�^OVSL�^VYSK�VU�ZVJPHS�TLKPH��@V\»YL�IL[[LY�VɈ�RUV^PUN�UV^�^OH[�[OL`�[OPUR�

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ConclusionMillennials have been subjected to a lot of monikers in the past few years, but there really are only two words business owners in the hospitality industry need to associate with them: The future.

The wisest hospitality industry leaders are working to get inside the minds of Millennials and leveraging technology to ensure the WYVK\J[Z�HUK�ZLY]PJLZ�[OL`�VɈLY�HSPNU�^P[O�ZL]LYHS�RL`�]HS\LZ!�Speed, responsiveness, frugality and constant connection.

What Gen Y wants from you is no-nonsense value that takes full advantage of technology. After all, the technology wonders that still amaze older generations are old hat to them. To this generation, it’s LP[OLY�JSPTI�HIVHYK�[OL�[LJOUVSVN`�[YHPU�VY�NL[�VɈ�[OL�[YHJRZ��