SAN FRANCISCO—Gen Z and millennials are willing to spend big for superior service, according to a recent report. But, how can hoteliers effectively capture this audience?
“We are living in an age where customer service has become a critical part of business strategies across industries. In the hotel industry, however, guest service is the business,” said Ford Blakely, founder of Zingle, a real-time customer engagement solution for hospitality, travel and retail verticals.
Blakely’s study found that more than one in three millennial guests are willing to pay up to $50 more for hotels that provide better service than nearby competitors with similar amenities.
“Gen Z and millennials are coming of age at a time where customer experience leaders like Amazon and Netflix are continuously redefining what it means to provide remarkable customer experiences and service. Because of this, their expectations are incredibly high,” he said.
Blakely continued, “On top of that, these cohorts have a propensity to spend on travel and favor experiences over material things. For baby boomers and Gen Xers, the ownership of items defined status. Purchasing a television, owning a car, and buying a house were all significant milestones that these generations strived for. Millennials, however, have flipped this paradigm, and thus, created the experiential economy, where milestones are marked by memorable experiences rather than material goods.”
When it comes to providing memorable experiences, service is a huge factor. The younger generations recognize that and are willing to pay for it because they value the experience over all else.
“Beyond being a point of differentiation, quality service is actually a revenue driver,” he said. “Further, as experience-focused alternative accommodation providers continue to syphon off market share from traditional hotels, the need to understand guest service is more important than ever.”
So, what do hoteliers need to know about Gen Z and millennials as it pertains to the guest service experience? Start by opening the lines of communication.
“Hotels must be ready to engage Gen Z and millennial consumers on their terms—when, where and how they want,” he said. “Today, that means through texting. Our report also found that Gen Z and millennials were far more likely (58% and 57%, respectively) to say that if given the option, they would prefer to report issues over text or via messaging applications versus reporting them via phone or in person.
“If your service strategy doesn’t include a way to establish regular lines of communication with your customers in ways that meet their communication preferences and needs, the chances of identifying issues and righting the ship in real time are near impossible,” he added.
Blakely noted that while Gen Z and millennials may have high expectations and demands when it comes to the guest service experience, they’re also the most likely to reward the hospitality brands that meet their expectations.
This cohort’s willingness to spend $50 or more for a hotel with superior service than nearby competitors is more than any other generation and double the amount of baby boomers who report the same, according to the report.
“Even further, 93% of millennials say they would at least consider staying with a hotel again if it turned a poor experience into a positive one, and an additional 36% admit that they feel more emotionally connected to a brand when it solves a customer service problem,” he said.
While this data point might be good news for hotel operators and their service teams, meeting the guest experience and service expectations of Gen Z and millennials has its share of challenges. According to the findings, millennials and Gen Z are more likely to share their experiences, but not service issues.
“Just 17% of Gen Z and 18% of millennial hotel guests say they report any issue that impacts their overall guest experience. This creates a significant blind spot that hotels must solve for,” he said.
“While Gen Z and millennials love to share experiences online, and equally value hearing the experiences of others—with 58% saying that online reviews greatly impact their decision to give a company their business—when it comes to sharing their guest experiences they don’t feel empowered to do so,” he said.
Nearly one in three Gen Z and millennial respondents said that the main reason they don’t share service issues is because they don’t like confrontation. This was followed by “Because businesses make mistakes too” (27%) and “Not an easy or quick way to do so” (22%), according to the data.
“Given Gen Z and millennials’ preferences for digital and mobile over face-to-face communication, it’s not surprising to see that two of the main barriers preventing this cohort from reporting issues are because they don’t feel empowered with solutions that fit their needs,” he said.
It’s important to embrace missteps as opportunities for this cohort. There’s always a chance to make the stay memorable.
“Naturally, a hotel team’s primary goal is to surpass customer expectations and delight customers from the moment they check in all the way through to when they check out. But when the inevitable mistakes happen, opportunities arise as well,” he said. “In fact, 41% of millennials and Gen Z say they would return to stay at a hotel if it turned a poor experience into a positive one and an additional 51% of this cohort say they would certainly consider it.”