Millennials overtake Generation X in vacation spending, says US survey
Last week various news channels reported on a new study by MMGY Global on Millennials which revealed to general surprise that the 18 to 35 age group has overtaken baby boomers in their travel spending.
The study revealed that:
- They are expected to spend incrementally more on travel services than any other age group over the next 12 months, well ahead than any of the other generational cohorts: an average of $887 on a previous-year base of $4,499
- 24% of Millennial travellers are planning to take more overnight leisure trips in the next 12 months. This compares with a negative net difference of 1 percent for Boomers, and negative net differences of 3% and 6% for Matures and Xers, respectively
- Millennials (those between the ages of 18 and 35) will be the driving force behind the continued recovery of the U.S. travel industry.
Comments by Steve Cohen, vice president of MMGY Global, were particularly telling: “Six in ten Millennials would rather spend their money on experiences than material things. This is presumably one of the reasons we’ve observed the spike in their intentions with respect to leisure travel in the year ahead. The implications for destination and travel-service marketers are quite profound, as Millennials’ planning, booking and sharing habits are significantly different from those of older leisure travellers.”
The results of the survey were based on a national survey of 2,550 active leisure travellers who reside in households with an annual income of $50,000 or more and who have taken at least one leisure trip of 75 miles or more from home during the previous 12 months on which they used overnight accommodations. The sample is balanced by statistical weighting to ensure the data are representative of all active leisure travellers in America who meet the target profile, according to the study authors.
The study focusses solely on the attitudes of consumers in the US and takes in quite a broad interpretation of leisure trips as those involving one overnight stay more than 75 miles from home. Nevertheless, the findings are revealing and will help to focus minds in the travel industry towards addressing the needs and desires of the next generation of travellers.
To those of us who have studied the Millennial generation and advocated that it is worthy of serious and urgent by the global travel industry, it comes as no surprise that the study found ‘Millennials will become the driving force behind the continued recovery of the US travel industry’.
The difficulty of measuring consumer spending
Data on spending among travellers is notoriously difficult to define and capture since the money that travellers spend often months before, then during, then after their travel can reach across so many sectors of the economy. Since spending can be spread over a period of many months in planning and carrying out travel, consumers can’t always be relied upon to provide accurate recollections of where and how they spent their money.
So while online bookings and the use of mobile technology on the go have helped in capturing data on (especially younger) travellers’ habits, to date these channels have only tended to show one side of a very complex story.
The MMGY study is especially interesting because it compares spending across age groups, rather than focussing on the behaviour of one group in particular, allowing for a genuine assertion that Millennials really are worthy of attention as consumers: especially consumers of tourism and travel products.
Concern about the future
Stories of Millennials’ increased spending power might contrast somewhat with reports about this demographic’s concern that they’re not saving enough and are worried about their future finances (see this news from a recent TD Bank study). However I would argue that it’s all a question of priorities; this really is a generation that lives for the moment and is having to do so with intensity, aware that the future may not be as bright for them as it was for their parents.
However well Millennials are saving for the future or not, when it comes to tourism marketing and management, in the end it is high spending that grabs the headlines and thus decision makers’ attention in the industry. Expect more headlines like this as Millennials’ transition into consumers of family and business travel products increases.
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