This generation may be struggling to get into the housing market, but millennials are spending more on accommodation than any other generation, reveals new research.
Between 2014 and 2018, millennials spent an average of $234 per capita a year on accommodation, in comparison to generation X at $231 and cashed up baby boomers at $165.
The CBRE Hotels’ Australian check-in report says that millennials, born between 1981 and 1996, are a key market segment to hoteliers in the Australian context and should be on hoteliers’ radars.
“It was still surprising to see millennials as the highest accommodation spenders,” CBRE’s head of hotels research Chinmay Chitale said.
“Which is likely linked to the fact that many have yet to purchase a house, get married or have children – meaning that they can prioritise travel more readily.”
Post-millennials, or generation Z born from 1997 onwards, are emerging as a key market according to the report, with accommodation expenditure rising by 6.1 per cent annually over the past five years.
The check-in report also found that post-millennials and millennials make up a higher share of total nights spent in private rentals such as Airbnb (at 56 per cent) relative to total nights spent in hotel accommodation (at 38 per cent).
The proliferation of home sharing platforms, such as Airbnb, have recorded strong year on year growth of private rental guest nights over the past five years.
CBRE Hotels’ national director Wayne Bunz said that private rental growth within the generation X market at 27.5 per cent annually posed a growing threat to traditional hotel brands.
“Given that this generation currently accounted for the highest share of hotel guest nights nationally at 32 per cent,” he said.
“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,” Bunz said.
“Simply providing a hotel which is designed to address a very broad market is no longer adequate.”
The report notes an opportunity for “new age” luxury brands entering the market.
“There is also an opportunity for dual-brand hotels to allow properties to target different market segments,” Bunz said.
