A new report recommends hotel owners and operators target big spending Millennials to boost their returns.
The report by CBRE found Millennials are willing to spend more on hotel accommodation then Generation X and Baby Boomers.
Those aged between 24 and 39 spent on average $234 per capita per year on accommodation between 2014 and 2018, according to the report.
Generation X (aged 40 to 54) spent $231 per capita per year on accommodation while Baby Boomers (aged 55 to 73) only spent $165.
The challenge for hoteliers is that Millennials make up a significantly higher share of total nights spent in private rentals such as Airbnb (56 per cent) relative to total nights spent in hotel accommodation (38 per cent).
“There exists an opportunity for the ‘new age’ luxury brand to distinguish itself from Airbnb and typical luxury and upper upscale brands,” said CBRE Hotels national director Wayne Bunz.
“Millennials desire not only a good product and service, but a shareable and transformative experience.”
The growth of private rental such as Airbnb within the Generation X market was also a threat to traditional hotel brands, according to Bunz.
“The immersive aspect of private accommodation coupled with Airbnb’s relatively lower pricing point provides a point of difference to typical hotel brands, meaning that hoteliers need to differentiate themselves by delivering authentic experiences tied to local cuisines, people and events,” he said