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The age gap makes a difference: How younger and older Millennials spend their...

The age gap makes a difference: How younger and older Millennials spend their travel dollars

Wednesday, February 27, 2019

TORONTO — Millennials are often seen as being fixated on their phones, blocking out the world around them with their noise-cancelling headphones while dining on avocado toast.

But if you’re trying to cater to this sought-after generation it’s best to forget about these clichés and stereotypes.

As of 2018, Millennials account for one-quarter of the Canadian population, which makes them the largest generational cohort since the Baby Boomers.

What many forget is that this cohort captures everyone aged 20 to 39 (born between 1980 and 1999).

The experiences and perspectives within this group vary significantly, given there are 19 years separating the oldest and youngest.

To put this into perspective, the early Millennials were born just as the Buggles’ ‘Video Killed the Radio Star’ ushered in the MTV era, while the latter part of this generation entered this world when Christina Aguilera and Brittney Spears commanded the airwaves.

It’s worth noting that many Millennials are now focusing on their families, mortgages and careers. Understandably, the travel habits of these older Millennials are very different from their younger counterparts.

Older Millennials, for instance, are more likely to use loyalty and rewards points, such as Aeroplan or Air Miles, to offset the cost of vacationing with their children.

Typically, their trips range from a few nights to weeklong getaways when they go away on vacation. They also tend to favour domestic destinations, which is likely affected by school schedules and work vacation allotments.

Without the responsibilities of family life, younger Millennials are more flexible with their travel plans. Although all Millennials travel internationally at about the same rates, younger Millennials are more likely to pursue adventurous trips that take them out of the country for months at a time, trekking to exotic destinations such as Asia and Africa.

If there are similarities between older and younger Millennials, it’s in their preferred domestic travel destination. Both groups visit Western Canada at rates nearly twice that of other Canadians. How they get there is another matter. Older Millennials are the most likely to fly, outspending their younger counterparts by nearly 20%.

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Overall, older Millennials were more likely to be in the air than all other age group in the past year. While younger Millennials also travel by air at above average rates, they show a greater willingness to hop on a train or bus.

Their move towards ground transit may stem from their reduced discretionary income, which can often lead to a lowered cap on travel budgets – but it could also be a deliberate choice. Unlike their older counterparts, many young Millennials do not hold strong values on the importance of price or saving on principle, which suggests they may willing to pay for any form of travel, be it in the air or on the ground, if the trip appeals to them. Arguably, the economic value of trains and buses, coupled with their flexible schedules allows young Millennials to still take the trips they desire while travelling the more scenic routes.

But perhaps one of the more interesting differences between the older and younger Millennials can be seen in how they spend.

The common assumption would be the longer the trip is, the more it costs. Knowing that younger Millennials are travelling further and for longer periods, it may come as a surprise that their spending on travel tends to be lower than their older counterparts, who are outspending all Canadians for both domestic and international trips.

The larger household size and reduced flexibility likely means that older Millennials are paying more for shorter family vacations to the United States than younger Millennials are paying to backpack around Europe.

Coupled with this, younger Millennials may be finding other ways to stretch their travel budgets. For instance, they are far more likely to opt for cost-effective accommodations, such as Airbnb or hostels, compared to the high-end hotels, resorts and spas often chosen by older Millennials.

When marketing to Millennials, it’s important to consider these different preferences according to their age, rather than treating them as a homogenous group.

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Younger Millennials may be more receptive to ads that appeal to their adventurous nature, perhaps with ads that emphasize backcountry global destinations where travellers can immerse themselves in the local culture.

Conversely, given the time pressures facing older Millennials, they may be more receptive to offerings that make their lives easier, such as vacation packages that take care of their transportation and accommodation needs, bundled with fun activities.

Their more stable financial footing also means they’re able to afford paying the higher premium that comes with those packages.

As is indicative of the Millennial cohort as a whole, this generation is comfortable researching and booking their travel accommodations or transportation through online channels. But the older, established Millennials are more likely to seek out full-service agencies.

Travel companies hoping to connect with younger Millennials will understandably find higher concentrations of them in university towns such as Waterloo, ON and Windsor. Travel companies hoping to build relationships with older Millennials will want to focus their attention on satellite suburban areas, such as Milton, ON or Cochrane, AB.

Whoever the traveller, it’s important to consider the ways in which these groups differ. Older Millennials tend to be taking shorter, more expensive trips with their families, opting for convenience and luxury. Comparatively, younger Millennials are taking lengthy, budget-friendly vacations that allow them to escape to exotic destinations. Very frequently, we see Millennials categorized as a primary and synonymous target for marketing campaigns within the travel industry.

Leveraging the divide between Millennial groups can help brands effectively target and understand their existing and potential consumers appropriately. By using these insights, the travel industry can more effectively target advertising and direct mail to specific groups to boost their response rates.

Hassan Amarsi and Kasia Kosticin are both members of the Insights team, specializing in the travel and tourism sector, at Environics Analytics. Environics Analytics, based in Toronto, is one of North America’s top marketing and analytical services companies.
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