Hotels and the Guest Experience: Changing Consumer Demand and the Role of Airbnb

This report is an in depth study about how the millennial generation is changing the attributes of the tourism and hospitality industry. They are forcing the big hotel groups to modify the grandeur of their state of the art hotel rooms to ‘provide an experience suited to the lifestyle of the millennial. This generation varies from low budget customer to high end wealthy customers, both willing to exfoliate their thirst for adventure and discovery and developing an unique travel experience which they want to frame and share.

Horana Pathiranage Malmi Anushika Pathirana 201918311
Blue Mountains Hotel School Master of International Hotel Management
Hotels and the Guest Experience Ms.SophieA. Seeger
Business Report
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HGE401 Hotels and the Guest Experience
Executive Summary
This report is an in depth study about how the millennial generation is changing the attributes of the
tourism and hospitality industry. They are forcing the big hotel groups to modify the grandeur of their
state of the art hotel rooms to ‘provide an experience suited to the lifestyle of the millennial. This
generation varies from low budget customer to high end wealthy customers, both willing to exfoliate
their thirst for adventure and discovery and developing an unique travel experience which they want
to frame and share. That is why they do not want to spend much on the conventional hotel room
comfort and generally believes in the concept of shared living. In this context, the report also
discusses sin depth the role played by Airbnb in modifying the perception of the millennials regarding
the shared economy of tourism. Analyzing the changes in consumption demand, the research study
also exhibits how the hotel chains like La mama Shelter or Moxy hotels create budget shared living
experiences for the millennial guests.
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Table of Contents
Executive summary..................................................................................................................... 3
Introduction………………………………………………………………………………...............
Background issue........................................................................................................................ 3
Changing consumer demand.......................................................................................................3
Demand for shareable luxury travel experience.......................................................................4
The concept of share-ability.....................................................................................................6
The strategic role of Airbnb......................................................................................................7
Lifestyle experience provided by hotel groups.............................................................................8
Role of La Mama Shelter............................................................................................................. 9
Role of Moxy Hotel of Marriott group.........................................................................................11
Conclusion................................................................................................................................. 12
Recommendations..................................................................................................................... 13
Reference List........................................................................................................................... 15
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Introduction
This task undertakes opportunity of investigating the issue that is allowing the hotel brands to change their
customer service experience for emerging as Lifestyle organisations. The two major issues that will be
explored in this report are the change in the consumer demand and consumption perception of the millennial
generation who like to spend significant amount of money for better consumer experiences in the hospitality,
travel and leisure sector. The changing role of organisations like Airbnb is causing significant change in
demand of the consumer and their tastes. Analyzing the latest consumer trends, this report will make a
detailed analysis of how the hotel groups are changing their portfolio in order to accommodate facilities in order
to complement the consumer preferences. In this context, two specific Hotel groups, namely, La Mama Shelter
belonging to the Accord Group of hotels and the hotel Indigo belonging to the IHG Intercontinental hotel group
will be explored in the course of the report.
Background issue
The rise in business of international agents like Airbnb has changed the consumer behaviour of hospitality and
travel customers around the world. That is why, the luxury premium as well as the boutique hotels are trying to
change the scope of convenience in order to accommodate the demand of guests for or new and develop
experiences (Aceron et al. 2016). There are specimens of many popular Hotel groups which are emerging as
Lifestyle brands for complimenting their portfolio.
Changing consumer demand
The demand of millennial generation is quite different in comparison to the previous generations and
differentiates their expectation from the hotel brands. The millennial customers are demanding for memorable
moment as well as activities over material goods. This has developed a difference in the trend in hospitality
services provided by the newly developed experience economy (Rita, Brochado & Dimova, 2018). The ultimate
experience of travel has contributed to the growth. However, in order to letter to the changing taste of the
minerals, the travel industry has to change also. The travelers, particularly belonging to the millennial
generation look out for local experiences weather in natural, culinary or in artistic experiences. Another major
trend in hospitality is sustainability. The local authorities of major tourist areas are attempting to limit the impact
of the increasing influx of travelers on the local environment, local population as well as the heritage sites.
Seasoned travelers are also aware of the change in perception in travelling.
The latest trend in travel is personalization. Some of the travelers prefer camping; others prefer to stay at the
boutique hotels while some others prefer indoor experience like spa. A major section of Travelers prefer large
Beach Resorts. In terms of User experience, some customers prefer Michelin starred restaurants, while others
prefer to explore street food.
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Demand for shareable luxury travel experience
The millennial generation is reshaping the luxury travel Industry all over the world. Affluence is no longer a part
of physicality of the major Hotel groups. The new status symbol can be identified with the rich experience of
Living.72% of the millennial generation prefer to spend on gathering experience compared to observe in
material objects and the conventional tourist scenic spots which have been popular among Travelers so far
(Abraham & Harrington, 2015). 23% of the millennial travelers prefer to travel more than their intergenerational
and this change in consumption Trend expects and upcoming benefit of 1.4 trillion US dollars buy the young
and more affluent travelers within 2020.
However, everyone in the travel and tourism industry will not be equally benefited from this consumer
spending. Many luxury Hotels as well as airline groups will be facing challenges because of the long-term as
well as capital intensive pattern of their business. Many companies implemented in the development cycles are
forcing them to undertake critical decisions regarding hospitality.
Big travel companies like the Accor Group of hotels or the IHG Intercontinental hotel group hope that their cell
will experience when the travel experience grow exponentially which will happen with the millennials replacing
the baby boomers as the major target market group. Young travelers, for example you are more interested in
travelling to digital Detox Retreat of Bhutan, compared to relaxing on a hotel beach of Thailand (Stańczyk,
2016). The hotel groups are also intended towards providing some real and unique experience to customers
which becomes critical selling point in consideration to the millennials generation.
The concept of share ability
Social media, specifically Instagram provides a significant to boost hospitality spending for those nations which
are able to attract measure volume of influencer marketing as well as Picture Perfect experiences. Countries
like Iceland, New Zealand as well as Jordan are some of the new destinations which will be able to take
advantage of this demand for original as well as beautiful travel experiences faceting the millennial generation.
For evidence a small Alpine town in Wanaka of New Zealand has been identified as one of the influencer
marketing campaign posters of the country in 2015. They have posted popular Instagram influencers who
shared their stories on the social media. The outcome was a rapid growth of tourism in the country with almost
14% growth every year since 2010 (Grotte, 2018). The online influences on sharing their journey are with
visual impact through Instagram which is creating a demand for aspirational living. The millennials not only
demand to explore the local culture and the authentic adventures they also want to create great shareable
story for the online domain which is a major part of their lifestyle experience.
Travel has taken a different route, in comparison to the role of being remarkable holidaymakers that they have
been two to three decades ago. The millennials have the inspiration of sitting milestones as pioneers as they
believe in the culture of Discovery and adventure. Various spokesperson of major Hotel groups like the Accor
hotel has spoken that the millennial generation do not want to spend time on sun lounges in the costly Resorts,
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they are more likely to stay at the bar camp of Morocco, cooking classes in Umbria or undergo helicopter rides
in New York (Croitoru, 2017). These experiences are not only sharing worthy for Instagram, but also make
them directly connected with the culture and natural resource of the place.
The strategic role of Airbnb
Airbnb has been able to promote the culture of sharing economy which has been adopted by millennials to
travel more as well as create more experiences. The business strategy of the organisation is to capture the
entire spectrum of the millennial generation, from the backpacking Travelers who look for room at only 10 US
dollars to the will be millionaires who are looking for booking luxury resorts and hotels. Exposing the hotel
sector before Airbnb has provided for a new platform that has reduced market shares from the big online travel
agencies like booking.com and so on (Scheiner, 2018).
However, the capacity of Airbnb took over efficient booking platform for hotel. The organisation has accounted
for providing services to about 60 million Travellers in more than 190 countries. They have become a
household name among the millionaires and a recent survey shows that 67% of those Travellers between age
group 18 and 24 and 75% of Travellers between age group 25 and 34 said that they have enjoyed the home
sharing service in international travel, the most in the last 5 years. This is exactly how; this organisation has
transferred to the User experience of millennial travellers. The emergence of internet has created a generation
of consumers who are already quite educated about travel experiences. That is why, did not provide value to
the hotel accommodation facilities in the way they used to do before.
Airbnb offers the facility of booking Scottish Castle for one week, for rent the Hollywood penthouse and even
camp on a Tree House in a Costa Rican rainforest. Since, the organisation has been providing these kinds of
experiences, the millennials feel more attracted towards experience making travel. Whether the traveler is cost
consciousness and looking for Budget hotel or they have enough wealth, PNB is able to Cater to the travelling
needs of all kind of customers. Traditional hospitality groups of standard list of services in their hotels like
restaurants or local services, while the customized tourist guide from the hosts registered with Airbnb provide
inside scoop to the traveler regarding places which are not known to the tourism agencies (Scheiner, 2018).
Guests are able to discover something for exploration which has been taken from the major tourist Groups for
so long.
Lifestyle experience provided by hotel groups
Major Intercontinental Hotel groups are developing new life style division to attract the fast growing Boutique
Hotel companies. In this context, when it is observed that User experience is being enhanced by the boutique
hotels, shared living and the homestay centres, the major International Hotel groups are trying to acquire this
Boutique Hotel and Homestay Agencies so that they can also deliver not customised living experience to this
Millionaire generation (Suciati, Maulidiyanti & Lusia, 2018). Nevertheless, example of the acquisition of 24
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hours hotel and mama shelter brand by the Accord Hotel group can be specified here.
The boutique hotels are actually small, designed in a stylish way. They are upmarket hotels which have grown
in popularity with the emergence of the millennial generation. Major Hotel groups like Accor hotels as well as
Marriott, Hilton as well as Intercontinental group focusing on increasing their lifestyle experience for catering to
the need of the millennials home they are expecting to be the biggest group of Hotel customers as of 2020 and
further. Newly developed Boutique Hotel brands like Mercure or Novotel have been developed, and the big
International Hotel brands are behind their operations. It is evident that, in the last two years the major Hotel
groups are not revealing their brand names while operating this Boutique Hotel rooms. Hence, analysing the
situation Shoaib (2016), has reflected that it is everyone that the millennial generation is not care for brand
names or the luxurious Hotel living experiences. On the contrary, they are interested in overcoming the
security fears and travelling in obscure and remote areas which has not been explored as difficult tourist areas
(Lu & Gursoy, 2016). Interesting in creating experiences, the millennial generation travellers are ready to pay
more money compared to the conventional room rent of traditional hotels for staying at simple home stays
where they will be able to create an unique user experiences.
Role of La Mama Shelter
This brand has been largely popular among the millennium tourist and in the last five years they have opened
five popular hotels in Europe and even more in America. The factors that have been able to attract customers
and specifically the millennial generation tourists are the opportunity of staying in exquisite locations at
reasonable price with an aura of personality and complementary neighbourhood profile. This combination is
introduced by the mama shelter group in the US. The hotels of mama shelter group are typically located in
block off locations like Hollywood word for walk of Fame (Kruger & Saayman, 2015). The factors that are
utilised by this hotel room is exploration of localities that is less peopled, less localised, less cheesy, but more
interesting with specific elements of tourism that will be able to extract specific demographic and Groups Like
The millennial Tourist groups (Abramek et al. 2016).
There are hotel located in the typical Hollywood location of mama Shelter where the cost of living per night
might be more than the average weekly income of the local people. However, with the introduction of the
mama shelter hotel, the shape of economy of tourism has changed.
However, this is not the only way in which the mama shelter Group of hotels is changing the User experience
for the millennial generation. This psychographic group of tourists are generally unorganised and they do not
want their hotel rooms have classy Looks or Crave for a classy and unique living experience particularly,
surrounded by luxury in costly hotels. The CEO of the Hollywood located La Mama shelter speak that the
unique advantage of their Hotel is that the furniture in the hotel room are inflatable and the tables are on
wheels (Gajdošík, 2019). In case, if a party breaks out, the kitchen units can be sweetly moved also. Although
there are not the elegant facilities like Sunburn Arena or swimming pools, there are guitars left in corner which
are ready for a rapid jam session. Projectors are hung from the ceiling which the visitors can use anytime to
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see their recordings on a giant screen and the fridges are fully stacked up with beer. In almost all locations of
the room there are USB points (Kline, Duffy & Clark, 2018).
For the health conscious customers there is a smoothie machine which is powered by a bicycle. These are the
small user experiences which mama shelter is trying to refer to the millennial customers. According to the CSO
of the Accord Hotel group, the user segment of millennial generation will not get such unique experiences as
they get in any of the outlets of mama shelter (Abramek et al. 2016). They will feel like they attending overnight
parties in friends houses which will provide them with a certain sense of Liberty, individuality as well as
freedom. However, considering the change, which has been brought about in the hotel user experiences, it can
be evidently commented that all major Hotel groups are convinced that will be in the year 2020, the major
target market selection of potential tourists will be comprised by 70% millennial generation tourists
(Mamashelter.com, 2019).
The major token of profitability is also a stored in the mama shelter hotels. The room prices start at 25 Euro.
The sleeping arrangements of the casual rooms are very simple with the centrepiece in a shared room which is
surrounded large enough for accommodating 10 people (Tussyadiah & Wang, 2016). Comparing the luxury
Hotels of Accor hotel group, it is really possible to believe that mama shelter is actually a hotel for a commodity
all classes of international tourists including well the millennial Tourist as well.
Role of Moxy Hotel of Marriott group
Although, all major hotel rooms like Hilton, Marriott, Intercontinental and so on trying to attract the millennial
generations, there are some specific Hotel groups which have been able to create better User experience for
the millennium generation (Moxy-Hotels.marriott.com, 2019). The Downtown hotels of moxy hotel group are
one such facility. To speak of the Chicago downtown facility of this hotel, this is a story building with 156
rooms. There is state of the art facilities along with amenities focused on technology. The spaces created
around the rooms are modern and open which particular focus on the location of the building. It is not located
in Prime location of the city from where easy tourist attractions can be accessed. The Marriott group developed
this brand of hotels for the cost-conscious group of millionaires (Skinner, Sarpong & White, 2018). Cost cutting
is a major part of the point of sales of these International hospitality groups like Marriott or Hilton (Lund
Segtnan, 2018). Since, they offer these facilities to customers at contrastingly lowest prices compared to the
luxurious hotel room prices, they have to undergo cost-cutting practices so that they can retain their return on
investment ratio. This is why; the organisation had collaborated with IKEA for developing prefabricated modular
room compartments (Bernardes, Guzzo & Madera, 2019). Initially, when the Moxy hotel was developed for the
USA best locations only, the so had perceive that this micro hotel concept will be working only for the United
States.
The main purpose of developing small hotel rooms was that the Grandeur of the 400 square foot rooms of the
hotels in Europe has gone out of trend. The size of the rooms of Hotel areless than 200 square feet which is
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half the size of typical luxury hotel rooms. The organisation has developed the room decoration with a free
spirit thing where the customers will be able to do all kind of Crazy fun stuff that they feel like doing at their
home or any house party (Ordun & Akun, 2016). Facilities like selfie stations, complete which crops in the
Elevators game Arena in the lobby as well as round the clock bar station this is going to be the biggest
attractions among the millennial. In fact, the attitude of employees serving the customers is also out of
etiquette (Önder, Gunter & Gindl, 2019). In the last year, the Marriott group has developed one 15 storey Moxy
hotel in Europe and another 11 storey Moxy hotel in USA.
Conclusion
The luxury premium as well as the boutique hotels are trying to change the scope of convenience in order to
accommodate the demand of guests for or new and develop experiences, keeping in mind the demand of the
millennials. The demand of millennial generation is quite different in comparison to the previous generations
and differentiates their expectation from the hotel brands. The millennial customers are demanding for
memorable moment as well as activities over material goods. Some of the travelers prefer camping; others
prefer to stay at the boutique hotels while some others prefer indoor experience like spa. The luxury travel as
well as hospital marketing for the baby Boomer generation used to be the glossy images of cocktails by
swimming pools. This generation has been raised upon individualism and their demand Independence,
authenticity as well as shareability above everything. Airbnb has been able to promote the culture of sharing
economy which has been adopted by millennials to travel more as well as create more experiences (Bruwer &
Rueger-Muck, 2018).
The business strategy of the organisation is to capture the entire spectrum of the millennial generation, from
the backpacking travelers who look for room at only 10 US dollars to the will be millionaires who are looking for
booking luxury resorts and hotels. The factors that have been able to attract customers and specifically the
millennial generation tourists are the opportunity of staying in exquisite locations at reasonable price with an
aura of personality and complementary neighborhood profile. This combination is introduced by the mama
shelter group in the US. The hotels of mama shelter group are typically located in block off locations like
Hollywood word for walk of Fame. Similarly in Moxy Hotels, facilities like selfie stations complete which props
in the Elevators game Arena in the lobby as well as round the clock bar station this is going to be the biggest
attractions among the millennial. In fact, the attitude of employees serving the customers is also out of
etiquette.
Recommendations
The first suggestion for the big hotel groups trying to set up their business based on the demand of the
millennial is that they have to choose such locations that will be favourable for the millennial to be able to
explore the nearby located urban centres. Again, as the hotel groups need to provide rooms to the millennial at
a comparatively lower cost, they have to do cost cutting on some aspects. For evidence, there is no need of
elegant furniture that will distract the millenials towards sense of extreme luxury. Rather, exclusion of delicate
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furniture and inclusion of more cabinet spaces will be favoured.
The unorganised lifestyle of the millennial will need them more space to accommodate their stuffs. Lastly,
analysing the changing demands of the millennial it can be highlighted that complimenting the growing culture
of shared living and home-stays, the hotels like La Mama Shelter or the Moxy Hotel group should include more
bed space with average comfort level, have high end technology products like projectors or enlarged
televisions and music systems and provide luxurious bathrooms.
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