Millennials have grown up. They are not only replacing baby boomers in the workforce, but they also are becoming an important source of business for the travel and tourism industry.
Different from baby boomers, millennials are known for their chic, urban lifestyle and tech-savvy trait. Many hotels and restaurants immediately responded to the shifting landscape in the marketplace by taking one or more of the following approaches:
1. New product development
New product development is probably the most traditional method of meeting new market demands.
On one hand, companies can add a new product/service/concept to existing product lines. For example, McDonald’s is now competing in the "coffee war" by launching the McCafé concept in the company's existing restaurants and adding new items such as McCafé Frappé Mocha to the menu.
On the other hand, companies may develop new brands that tailor to a new market. Starwood Hotels and Resorts, for instance, introduced Element as the "healthy lifestyle" brand and ALoft as the "modern and hip lifestyle" brand to attract those stylish travelers.
2. Acquisitions
Even though buying out an existing company could be costly, there are many advantages associated with acquisitions, such as immediate market penetration and savings in research and development (R&D) costs for new product development.
A good case in point is Marriott Hotels and Resorts, which recently strengthened its presence in Europe by acquiring AC Hotels, a Madrid-based, mid-price hotel brand that is designed for millennials.
3. Brand makeover
Having a complete brand makeover is probably the most challenging approach a company can take.
Often times, it involves the process of turning around an "outdated" or underperforming brand. However, this strategy allows a company to leverage consumers' brand recognition of an existing product and more importantly, to maintain the company's large loyal customer base.
Holiday Inn Hotels just finished a complete transformation of the brand. It took a lot of effort from both the brand and the franchisees, but it has paid off with increased revenues and higher customer satisfaction.
Regardless of which strategy is chosen, a company has two options to market the new concept and/or the new product to younger generations. Some companies had chosen to make an explicit statement that they especially designed the new concept and product for millennials. Others only made a general statement that they responded to consumers' changing lifestyle with a new concept or a new product/service.
But why would a company want to develop a brand that only targets one specific generation? Is it because the company has magnified the differences among millennials and other generations?
If a hotel or a restaurant is designed for millennials, does it mean Gen X or baby boomers are not welcome in the facility? Would it be better to market a new product as a "classic" brand that would welcome Gen Z, Gen X, and baby boomers in addition to millennials?
What would be your choice?
