Millennials and Generation Z customers
Many of today’s Millennial and Generation Z customers have travelled from an early age. Most will have journeyed overseas by the time they reach their teenage years. These early travels have shaped their perception of being members of the “global village”, underpinned by deeply-held beliefs around diversity and inclusion as well as an openness to cultural and racial differences. Customers in these age groups prioritize experience ahead of price when choosing where to travel, where to stay and what to do. Our work on understanding customers in these groups indicates they are seeking real, authentic cultural experiences that offer opportunities both for personal development and for making lasting memories.
Tech-savvy Millennial and Generation Z customers take “mobile-first” to the next level, expecting to manage arrangements and complete all transactions on their phone or tablet. They are most likely to turn to social media to get information about brands and to find inspirational content, insider tips and travel deals. These customers expect next generation digital experiences; they want to buy (via their smartphone) from businesses and organisations that provide a genuine, ethical and responsive service offering. Functionality such as online chat is popular; they want to be able to ask questions and get answers to these questions within minutes.
The impact of these customers on the global hospitality industry
Digital and social media present exciting possibilities to the hospitality industry. They offer effective and impactful ways to raise brand awareness, engage with potential customers and to cultivate their loyalty over the long term. Digitalisation allows customers to access non-traditional routes into their travels through platforms like Airbnb. In many countries more research needs to be done to explore how widespread the use of these apps is and how they impact the tourist industry. To attract Millennial and Generation Z customers, hotels need to have a strong digital presence. Display advertisements and social media can be effective in communicating local offerings and experiences, showcasing destinations, introducing local people and emphasising sustainable travel in a compelling way that underlines the opportunities to “discover” something authentic.
Visual images are hugely important. Experiences must translate easily onto Instagram, and increasingly on TikTok. Food tourism and tasting experiences are also highly desirable; many will research where, what and how to eat before they travel. Word of mouth publicity in the digital space has become increasingly powerful with Millennials being heavily influenced by friends’, family and colleagues’ experiences as well as by social media influencers’ thoughts and reviews.
Surprisingly, too few hotels across the globe are making any effort to capture the attention of this younger generation. Those who take the trouble to research and understand them know how to leverage marketing influencers and tap into passion points like sustainability to drive business. Savvy marketeers know these customers want to buy from brands that show a commitment to environmental protection and socially-conscious travel. These customers will research which businesses pay fair wages, have sustainable operations, are minimising their impact on the environment and give back to the local community. They will not be convinced by greenwashing or social and sustainability programmes that are simply tick box exercises and deliver little impact.
Sri Lanka as a destination for Millennials and Generation Z customers
With Sri Lanka in the midst of an economic crisis, times are challenging for the country’s tourism and hospitality industry. With fewer tourists visiting the country, those working in this sector are witnessing employers struggling to pay wages, jobs being lost and businesses folding. Small, home-grown businesses such as surf schools, independent shops and cafes are particularly vulnerable to difficult economic conditions. Many have had to close. If tourists stay away for a couple of years, these pop-up, informal, seasonal (but authentic) businesses, offering shoe shining, foot massages or sarongs for the beach will vanish, possibly forever. Local people’s livelihoods and skills will be lost.
Millennials and Generation Z tourists are seeking a more immersive experience in the local culture than generations before them. Before the economic crisis took hold, there was a growing trend of younger tourists staying with local families, opting to experience local hospitality, cuisine and no holds barred village life. One big draw for tourists to Sri Lanka has historically been the warmth of the welcome offered by the locals. In this digital age, younger tourists have gone to Sri Lanka for the human experience; to explore social interactions and make personal connections on a quest for places away from the ‘always on’ digital world back home. Our experience is that a lot of returning tourists report how warm, hospitable and friendly the people are. Many also rave about the cuisine and the quality of the local produce. Although Sri Lanka is an exciting destination that appeals to Generation Z and Millennials the economic crisis has, for now, limited this popularity.
Planning for better days ahead
Marketeers should emphasize the positives of Sri Lanka as a tourist destination. ‘Humanising’ the brand, emphasising the warm welcome and friendly culture that awaits tourists to the country, should be considered. Even with the current economic difficulties this has not changed. These human qualities are attractive to both Millennials and Generation Z customers. More could be done now to exploit these ‘destination’ advantages, especially by creating content for digital platforms. The industry should also invest more in digitising services over the next few years. We are aware that a number of Sri Lankan travel agencies are already working to this end. This will become more and more important as younger generations’ spending power increases.
Now would also be a good time to explore market segments more comprehensively. Businesses need to have a realistic understanding who their customers are today, as well as who they will be in future years. If hotels, restaurants and travel agencies are focussing on services aimed at narrow market segments, they are excluding other opportunities for business growth. Market research is key to understanding what specific customer segments want. This knowledge should inform business strategy and planning.
We know that lots of new entrants to the market understand they need to emphasise their sustainability and green credentials. Information and data on how businesses minimise their environmental impact, or are a force for social good by supporting local communities, can be used as a marketing tool. Millennial and Generation Z customers increasingly expect and look for information on eco-friendly policies and practices. It is important to communicate these effectively as they influence potential customers’ decision making. It also underpins the authenticity of the destination and validates the choices they make as customers.
Picture of health
The post pandemic interest in health and wellbeing is particularly noticeable amongst Millennials. Many seek opportunities for spa treatments, yoga and relaxation. Generation Z customers are more likely to focus on memorable experiences such as adventure sports and activities (although they are interested in health and wellbeing too). Both groups of customers are looking for rich, rewarding experiences but – in the current global economic climate - they have to balance this with having less disposable income to travel. Finding destinations, accommodation and activities that offer value for money continues to be important.
We think the time is ripe for the industry in general, and for Sri Lanka in particular, to reconsider the way hotels are designed. It is clear there is a growing trend for wellness, as well as for recreational and sports facilities. After living through multiple lockdowns, people are cautiously looking for ways to come together and interact socially again on a greater scale. The preference now is for simpler, minimalist interiors that imbue calmness and serenity, offering spaces that allow people to relax, release stress and recharge the batteries. People are looking for places and an atmosphere that will help create powerful, long-lasting, emotive memories and recollections that can be recalled and remembered for the rest of their lives.