Millennials Travel More, but Spend Less... For Now

by  and  rew Sheivachman
Millennials Travel More, but Spend Less... For Now

Millennials are traveling more often than older travelers—creating a huge opportunity for travel agents, according to PhoCusWright.

The company drew that encouraging conclusion from data it presented during a webinar on “The U.S. Millennial Traveler: Leading a Travel Revolution.”

The webinar covered the demographics on why millennials are important to the travel industry along with how their booking methods will shape how people buy travel in the future.

And in a surprising finding, the company said that more millennials, 6%, book air tickets through travel agents than older travelers, 3%.

All in the numbers
“The big reason [millennials are important to travel] is their spending power,” said Marcello Gasdia, senior analyst of consumer research at PhoCusWright.

Millennials also account for a quarter of the total U.S. population, meaning they comprise a large portion of those who already travel.

“Their relevance to business comes simply from sheer numbers, and they are particularly important to the travel sector,” said Gasdia. “A huge percentage of them travel for leisure every year.”

Frequent travelers
Millennials travel the most of any age group, according to PhoCusWright’s data on travel in 2013.

“Eighteen to 34-year olds have the highest incidence of leisure travel across all age groups,” said Gasdia. More than 70% of millennials took at least one leisure trip in 2013.

“There are a good portion of millennials taking four or five trips a year,” Gasdia added.

According to PhoCusWright’s data, 66% of millennials consider travel a very important part of their lifestyle. They also consider travel very important on a psychographic level.

“We see these trips come in a lot of variety,” said Gasdia.

He said 71% of millennial travelers took quick getaways of three nights or less. But they were also twice as likely as older travelers to take trips of 14 or more days.

Spending less
Not surprisingly, though, millennials were found to spend less on their travel than older travelers.

Two-thirds stayed with friends or family for trips in 2013 while only half took a purely discretionary trip that year.

Older travelers spent an average of $3,381 on leisure travel in 2013 while millennials spent just $3,217. Spending less on hotels translates to less overall travel spending.

“Overall, when it comes to travel, millennials are still finding their legs,” said Gasdia.

“It’s actually an amazing position for travel companies to be in—they are not the core customer for travel brands, but they will be when they reach their peak earning and spending years.”

Booking online
Millennials also book primarily online, while older travelers prefer to go direct to suppliers’ websites.

“With older travelers we see a trend of sticking with travel websites they know and have had a good experience with in the past,” said Gasdia. “There is a price sensitivity with the millennials.”

But since millennials often use new technologies before age other groups—and teach others how to use them—their overall booking behavior may trickle down to more tech-savvy Gen Xers and Boomers.

“Millennials have been the trendsetters and ambassadors for technology,” said Gasdia. “Older siblings and parents are learning about technologies from them.”

The sharing economy
A final interesting note relates to the new sharing economy and sites like Airbnb which millennials are increasingly embracing.

Millennials reported using sites like Airbnb to book lodgings, not due to reduced cost, but because these sites provide them with more flexibility.

“Millennials rent for reasons related to trip experience-- things like freedom and privacy,” said Gasdia.

Growing older
The question remains: Will millennials’ current booking patterns continue as they grow older and have more money to spend, or will millennials adopt the habits of older travelers?

“If this rise in rentals is something confined to the younger age group, will it disappear as they get older?” asked Gasdia.

Tip of the Day

That’s how you get to know your clients better, the nuances of their desires. Here’s a trick – story begets story. So, if what you want from them is a story, give them a story and they will give you a story back.

Kindra Hall, Steller Collective

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