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While the wealthiest members of the millennial generation are on the threshold of their peak earning years and primed to travel, their luxury travel choices are likely to be quite different from what Baby Boomers wanted during the same stage of life.
That’s partly because luxury in general isn’t all that important to millennials, according to affluent consumer expert Pam Danziger. This generation prefers substance over style, and their buying patterns will reflect who they are, not how much money they are capable of spending. In particular, millennials’ focus on personal self-expression in work and life will shape all their travel choices, from destinations to travel suppliers.
Danziger is president of Unity Marketing, a consulting firm focusing on the buying behavior and motivation of luxury consumers, and the author of two books about the upscale consumer. She says a generational shift is on the horizon, one that heralds a brand-new definition of all things luxury, including travel.
TravelAge West spoke with Danziger to garner a few key insights into the generational differences that are redefining luxury travel patterns.
You emphasize that marketers who expect the next generation of affluents to restore the luxury market to the patterns of the past are missing the boat. Most of the babies of the Baby Boomers — the millennial generation — haven't hit affluence yet. But once this generation gets to be about 35, they will be growing in professional status and getting rewarded for their contributions in business. They’ll be accumulating money, and they will have an appetite for luxury.
But to think that this generation is going to define luxury the same way as Baby Boomers or Gen Xers did is ridiculous. That’s going to get a lot of brands and marketers into a lot of trouble because there's a generational shift coming. Many of this younger generation have grown up in very affluent circumstances, so affluence and luxury may not have the appeal for them that it did for people who didn't grow up that way.
Why wouldn’t luxury have the same appeal as it did for the Baby Boomer generation? I'm thinking of my own family. I grew up in a middle-class family. My father was a white-collar worker, but there was just one income, and there were two children. I went to public school and so on. It was a very middle-class background. My children grew up in a much more affluent environment, and I don't see any indication that they're striving for that same level of affluence. They're striving much more for personal self-expression, and trading off money for other things when it comes to their career goals and their life goals.
You’ve said that growth in the luxury market is destined to slow down, since there are fewer potential luxury customers coming along to build a bridge to the future.A new luxury boom could potentially hit around 2020, when the millennials start reaching that period of middle age and affluence in their careers. But I’m very skeptical about whether it will play out or not.
We recently did a series of focus groups with young people who were all in professional fields and had very ambitious career goals. They all had advanced academic degrees. When I asked them what luxury meant to them, they said, “Luxury is just a marketer’s term. It doesn't mean anything to me.” That was chilling, because what they were really saying is: “This isn't important to me. I'm more interested in other things.”
And what kind of other things are millennials interested in? For example, I asked about watches. These are people who are going to be in boardrooms, and their watches are going to show under their suits. Their status symbol watch wasn’t a Rolex. It was a triathlon watch because that says, “I am a triathlete. I need this triathlon watch,” not “I can spend a lot of money on a Rolex.” The triathlon watch says something about who I am; it’s internal. It’s not about the shirt or the coat or the watch I wear or the car I drive. These people are putting substance before style.
In terms of travel, that seems to bode well for experiential travel that features authentic interactions with people and the environment. Baby Boomers are also moving in this direction. Older, more mature people are definitely experientially oriented; they spend and invest in experiences. But they’re going to want to invest in experiences they haven’t had yet.
The mature affluent consumer is searching for different, meaningful, life-changing experiences. I hear this when I do focus groups. For some young people, that first stay at a Ritz-Carlton Resort is a life-changing experience. For someone 55 it isn't. It’s like, “This again?”
Mature affluents want real travel experiences. Many times they want to get their hands dirty and get dust on their feet. They want to really experience the destinations and the locals. There’s a distinct change in orientation.