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The Impact of Generation Y and Z on the Hospitality Industry

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Introduction

The hospitality industry has for the recent past years come to terms with the fact that change is imminent. This is basically attributed to the different factors that affect the hospitality industry as more than a single entity is known to be considered to affect the industry. The basic operation of the hospitality industry is to provide the best services to customers, which is coupled with attracting as many customers as possible. The advancement of society and technology has brought about different generations that have to be considered by every industry in pursuit of growing their profit and also retaining relevancy in the entire market (Behara, & Gundersen, 2001). Generation Y and Z are known to have impacted the hospitality industry in a great way. This can be attributed to the changes seen by most international Hotel companies, in their quest to attract and offer better services to the next generation of travelers and hoteliers (Chaffey & Ellis-Chadwick, 2012).

It is has been extremely crucial to understand that the Generation Y and Z are considered to be a tech savvy generation, where most of their time is spent on smart devices. These generations also have a great demand for technologically advanced service or processes in their daily undertakings. Being fitted out with the best latest technology and seeing how the older generations have undertaken their lives, the generation Y and Z have been on the forefront in trying to attain a work-life balance. There has been a great change brought about by these generations to every industry and this has brought a great demand for change (Jang & Kim, 2016). In some situation, industries or businesses that have lagged behind in changing towards what is expected by these generations have often found themselves left out with no business. Big businesses that had developed strong brand names over the past have been known to close down after being put of business due to their slow pace in advancing technologically (Blocker & Flint, 2007).

Generation Y and Z focused market segmentation, consumer analysis, Hotel brands new product development

The entire hospitality industry has been characterized with an increase in competition, and this has seen hotels benefiting by staying ahead of the game and cultivating some loyal customers. The United States hospitality industry has focused heavily on catering for generation Y and Z (Blocker & Flint, 2007). Customization and personalization of experiences have been developed for loyal guests. The industry has spent over $6.4 billion in 2015 purely on capital expenditure aimed to improve services and amenities like the technological upgrade, improved Wi-Fi connectivity and new concept on services and food. The generation Y and Z are considered to be pragmatic, globally minded, more cautious and money conscious. These generations are quite critical to the hospitality industry as the generation Z are considered to have a $200 billion spending power on an annual basis with generation Y have a much higher spending power (Jang & Kim, 2016). A lot of resources and time has been used in determining the mindset of generation Y and Z, and making necessary changes and advancement to cater for their needs (Cichy & Hickey, 2012). Different methods have been used by international hotel companies to attract, retain and create loyalty towards these generations including:

International Hotel Companies are generating entertaining, memorable and meaningful visual content with aim of reaching generation Y and Z. A worthy example is attributed from the Marriott Content Studio which released its Two Bellmen short film. This has been able to effectively engage its online audience with the slick, youthful and energetic approach to storytelling. The Marriott was also at the forefront of launching its full marketing campaign through Snapchat. This was done by choosing four critical influencers who were tasked with co-creating content within the highly visual Snapchat platform (Flavián, Guinalíu & Gurrea, 2006). The W hotel followed the trend by introducing a Snapchat Geofilters campaign that allowed all the Snapchat users in the world to create some fun and cheeky travel postcard with the words “You Wish You Were Here.” This brought about a great number of generation Y and Z to the marketing campaign of the W hotel. Hilton hotel is also known to be working effortlessly towards creating a strong brand for the generation Y and Z (“Smart Hotel Brands Are Already Thinking About Generation Z”, 2017). The hotel is trying to create compelling contents that will be pushed through different social media platforms. The Marriott also started exploratory research on the so-called “Gen We” that focuses on the generation Y and Z relationship with their brand. This is mainly after a research found out that the targeted generation tends to prefer strong brands that are able to recognize them and what they want (Blocker, & Flint, 2007).

However, the marketing undertaken by the different international hotel company can also turn out to work against them. This is especially in situations where the marketing campaigns tend to be inauthentic and extremely promotional in nature (Kotler, Bowen & Makens, 2003). The generation Y and Z have been known to be looking for ideas from their peers and also for different ways of expressing themselves. This makes these generations very open to receiving brand messages, which can only be positively received if they are authentic. These generations are known to appreciate any branded content that is funny, entertaining and have some good music (“Smart Hotel Brands Are Already Thinking About Generation Z”, 2017). To them, advertisements are considered to be an entertainment source as opposed to a disruption source. They prefer advertisement that they can share with friends easily, hence making them the biggest advocates for brands that work for them and critics for brands that are not in line with their preference. Creativity by the hospitality industry is then seen to be quite critical for their survival in the market and also to be used as a tool in improving their brands. A new way of thinking in undertaking different marketing campaigns has been seen to be readily appreciated by these generations (Burger, 2016).

Hotel owners and companies have undertaken massive investments in their properties to a record 9 percent more than the investment made in the previous year. The biggest part of the investment was recorded to be made on the improvement of technology by having better Wi-Fi connection, installing and enabling digitally enabled room keys, putting up smart TVs in the hotel rooms and lobbies, and even in some situation, some robot butlers were dispatched (Ehrenberg, Uncles, & Goodhardt, 2004). Hilton hotel increased its focus on mobile technology is aimed to reach all it guests across the different segments. According to Hilton management, the use of mobile devices tends to give their guests a more personalized control and choice (“Smart Hotel Brands Are Already Thinking About Generation Z”, 2017). Hence, it becomes critical for the hotel to be high-tech in order to suit the generation Y and Z.

Technology has been described to lay a critical role in the overall journey of any customer within the hotel industry. Through useful technology created by the Hotel, a better customer journey is created with engaging content that informs inspires and even makes life easier and memorable (Kleinschmit, 2015). The generation Y and Z are also seen to be very eager to make new and memorable experiences, and they tend to prefer places that are associated with new experiences. This has been seen as a shift from the old ways of the previous generations which mainly preferred places that they know and understand the working principle of every process (Donavan, Janda & Suh, 2006). The older generations tend to be against change and they prefer the old way of doing things. However, the generation Y and Z prefer hotels that are making the necessary technological change as it opens a platform for creating a more frictionless collection of experiences and customer journey (“Smart Hotel Brands Are Already Thinking About Generation Z”, 2017).

Hotels have gone ahead to use the most common mobile messaging application like WhatsApp and Facebook Messenger to cultivate a frictionless travel experience for their customers. This has also been able to build and increase customer loyalty. Hyatt Hotels has been using WeChat and Facebook Messenger to communicate to all it guest, while Starwood has made good use of WhatsApp for more than a year (Harrington, et al., 2012). Marriott Hotels have undertaken an expansion of their Mobile Request services to also cater for their Marriott rewards members (Jang & Kim, 2016).

Taking into consideration the needs and wants of generation Y and Z, a good experience is seen to be more preferred when compared to good products. More than 60 percent of these generations were known to prefer having cool experiences in their traveling and hotel visits as opposed to the less than 40 percent that preferred to have a cool product (Watson, 2015). This has prompted international hotel to create special experiences that are packaged as part of their loyalty program, which later creates an effective cost-benefit analysis (Oh, et al., 2016). Generation Z has been described as a suvvy consumer that knows how to do a perfect research. This generation needs to know that they are getting the best deal from every product and service provider. The best deal is not only perceived in term of the price but also a good reason as to why the generation should pay more for what they get. Hotels are then trying to provide special and memorable experiences with a higher cache as compared to the dollar, and hence driving up loyalty (Susskind, 2010).

Most international hotels have been employing a more personalized experience features and services to their clients through the various loyalty programs designed for different clients. However, a twist to the concept has been suggested by the most stakeholder who tends to target the generation Y and Z members (Ting, 2016). The twist involves the concept of individualization that is expected to work better and have a higher client retention rate as opposed to the personalization concept. Loyalty, as described by critical hotel stakeholder, is seen to move to individualization and away from personalization and customization (Ford, Sturman & Heaton, 2012). This is accredited to the fact that loyalty will be defined by various machines that learn where people are getting exactly what they need, and when they really need it. Through using different algorithms, machines will be able to understand your behaviors (Oh, et al., 2016).

Hospitality brands that are treating the generation Y and Z member as individuals are seen to be more likely to remember them even after they are not part of them. A good example is seen from the Trump SoHo Hotel which made a significant launch in 2013 of its Young Entrepreneurs program. The program is designed to include personalized complimentary meals, business cards and even a monogrammed robe for all guests between 17 year and 3 years (“Smart Hotel Brands Are Already Thinking About Generation Z”, 2017). This gives the guest a taste of what it feels like to travel as a C-suite member. According to the hotel management, the young generation could not find a similar experience anywhere else, and this made it very unique for them (Lashley, & Barron, 2005). They also loved the kind of attention given to them as they were treated like individuals and even communicated to like individuals. The generation Z tends to pick on the individualization of services at an extremely young age, as the different brands are treating them like an adult which they really resonate (Oh, Han, Nah, & Kwon, 2016).

The revolution of technology has brought about a great change in the hospitality industry with international hotels like Hilton, Marriott, and other making big technological leaps. All this is aimed at trying to stay ahead of the competition and retaining a competitive advantage that has been pursued for quite some time. Generation Y and Z have come up to be the biggest and most demanding users of technology, and this caused a different customer segmentation by the hotels. With international hotels company trying to attract the generation Y and Z member to their hotels, this has basically been attributed to their increased spending power and also on their future respect as the next generation travelers and hoteliers.

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