The 'Next' Challenge

Robbi Jumaa Hamida, a travel agent in Irving, Texas, got a call not long ago from a new client looking for help booking a hotel in New York City for three nights. The client had very precise requirements: stretch limo from the airport, in-room butler service, deluxe spa treatments and classy ambiance. The client planned to propose to his girlfriend, and he wanted everything to be just so.

Nothing particularly unusual about that. What struck Hamida about this lovestruck fiance was that he was only in his mid 20s and had a budget of $3,500.

“A lot of travel agents brush them off, but these 25-year-olds are getting out of school and getting jobs with Nike and making $150,000 a year, and they want more than just a bed to sleep in. They’re looking for an experience,” said Hamida, who booked the young sweethearts at the RIHGA Royal New York, a luxury, all-suite property a few blocks from Central Park.

Not all twentysomething clients have the spending power of Hamida’s bridegroom to be. But the take-away lesson from the story is that a lot of younger travelers know what they want and aren’t timid about asking for it. Their baby-boomer parents at the same age might have been content with an all-day pass to Disney World and a $49 hotel room with a lumpy bed. But today’s under-30 traveler the demographic group that takes in the Generation Y “echo boomers” and the tail end of Generation Xers can be much fussier.

“They want it their way, and they want it when they want it,” said Eric Maryanov, president of Los Angeles-based All-Travel.

Increasingly, that means high-end travel the kind that people used to reward themselves with after a lifetime of hard work. Many under-30 travelers consider luxury travel an entitlement, just like their mobile phone or iPod.

“Look around the Four Seasons, and you’ll see it’s not all 55 and older, it’s a lot of people in their 20s and early 30s,” said Maryanov, adding that he’s booking more twentysomethings on Regent Seven Seas and Crystal Cruises, which usually attract a graying clientele.

Younger travelers “certainly are willing to indulge themselves,” added Caryn Kboudi, vice president of corporate communications at the Texas-based Omni Hotels. “We don’t assume there’s a line in the sand that they can’t afford to cross.”

Straight Talk

Youthful big spending is the type of behavior that the marketing and research firm Yesawich, Pepperdine, Brown & Russell (YPB&R) refers to as “age nullification” in its 2006 National Leisure Travel Monitor. In short, consumers aren’t acting like they’re supposed to at their particular stage of life. Twentysomethings are sipping expensive single-malt whiskies and sleeping on 300-thread-count sheets, while 45-year-olds are downloading tunes into their iPods and moving back in with mom and dad.

In a telephone survey of 1,353 leisure travelers, YPB&R found that echo boomers those born between 1979 and 1988 were even more interested in hotels with “formal and elegant atmosphere and decor” than those who have had more time to develop a taste for the finer things in life boomers and the so-called “matures,” defined as those 61 and older. While the popular thinking holds that echo boomers are turned off by history and culture, the YBP&R survey found that these younger travelers are nearly as interested as their older counterparts in visiting sites of artistic, architectural and historic interest.

Surprisingly, a Travel Industry Association (TIA) of America survey showed that under-35 travelers spent about the same as did 35- to 54-year-olds on their last leisure trip $1,321 for the former and $1,336 for the later.

Younger travelers don’t defy all the stereotypes. Fifty-eight percent of echo boomers in the YPB&R survey responded that nightlife and entertainment are extremely or very desirable elements of leisure travel, compared to 47 percent of baby boomers and 32 percent of mature travelers. Not surprisingly, echo boomers, most of whom have only dim memories of life before the Internet, are more interested than boomers or matures in being able to go online when they are away from home on leisure travel.

Hamida’s deep-pocketed fiance isn’t necessarily the norm. Travelers in general are still looking for good value for their money, the younger ones being no different.

“What I hear probably 70 percent of the time is that when it comes to rooms, they want something nice but it doesn’t necessarily need to be fancy because they’d rather spend their money on activities,” said Chris Russo, who sells travel at Travel Partners in Broomfield, Colo.

A big segment of the younger market is interested in adrenaline-pumping adventure all the better if it’s something out of the ordinary that their friends haven’t done. Russo’s clients tend to be young and outdoorsy. When they come to him looking for help booking a trip to Hawaii, he mentions a bike-hike-sail program on Oahu. His clients come back with rave reviews for both him and the bike-hike-sail outings.

“When you can show them something about a destination that they thought they knew everything about, it really makes your credibility go up,” said Russo, who is chairman of ASTA’s Young Professionals Society. Russo recently booked a group for the running of the bulls in Pamplona, Spain.

The cruise industry, regarded by many under-30s as a refuge for shuffleboard players and crossword-puzzle addicts, has finally caught on to what young people are looking for. Among the first to kick up the action a few notches was Royal Caribbean Cruise Lines, which set the pace with its hard-driving “Lust for Life” theme song.

The cruise line recently added a surf park to shipboard rock climbing, ice-skating rinks and inline skating tracks. Guests on the 18-deck Freedom of the Seas, the world’s largest cruise and passenger ship, can hang ten 100 miles out at sea on a specially built wave generator that stretches over two decks. The cruise line has already ratcheted up the excitement factor on its shore and off-boat excursions, offering all-terrain vehicle tours, Alaskan sleigh rides and zipline tree-top tours.

Having convinced twentysomethings that cruising isn’t just for fuddy duddies, Royal Caribbean is going after the teen market next. The cruise line recently launched Generation Y Spa, which features acupuncture and teeth whitening for teens, and a late-night dance club on the top deck of Freedom of the Seas.

“It has become very popular, and we’re extending it to all ships,” said Alice Norsworthy, senior vice president of marketing for Royal Caribbean.

Allen Kay, communications director for the Travel Industry Association of America, said that younger travelers who are putting off marriage and child bearing into their 30s and 40s are helping drive the steady increase in shoulder-season travel.

“It used to be that shoulder season was something that the industry dreamed about how can we get people to travel during that period immediately before or after the primary summer season and also into the fall and spring?” Kay said. “Well, that dream is coming true. Baby boomers are helping drive that but so are the X and Y generations because they’re not tied to that school schedule.”

Taking on the Net

Of course, the big question for travel agents is whether younger travelers will come to rely more heavily on the Internet to book travel.

The TIA survey found that the percentage of 18- to 34-year-olds that use the Internet to make at least some of their travel bookings increased from 61 percent in 2003, to 67 percent in 2005.

But the numbers don’t tell the whole story. Booking online travel can be a minefield for inexperienced, younger travelers. Many do what their parents would do find a good travel agent for expert advice.

“I talk to a lot of travel agents who say, ‘Damn the Internet!’ But the Internet is not their enemy,” Hamida said. “They have to realize that yes, younger people do a lot of research on the Internet, but you know what? They want a lot of help, too. So that’s how you get customers you have to give them customer service.”

GoGo Worldwide Vacations sells exclusively through travel agents and has no plans to change its business model.

“A travel agent has the ability to say, ‘For an extra $20 you could have that oceanview room or private car transfer, or if you go to that museum in Italy at such and such an hour, there won’t be a line. I think that’s really important,” said Laurie Palumbo, a senior vice president for sales and marketing at GoGo.

Many travel agencies and tour operators are so busy targeting baby boomers the dominant market in leisure travel that younger travelers can almost slip through the cracks.

Tauck World Discovery specializes in educational and adventure tours. Helicopter hiking in the Canadian Rockies is one of the company’s hottest offerings at the moment. The helicopter ride is a big thrill and the scenery spectacular, but trying to sell a group tour to the iPod generation is “a big challenge for us,” said Joanne Gardner, a market planning manager for Tauck.

So, how does the tour operator do it?

“We don’t, really,” Gardner said.

The company hopes that younger travelers who learned the Tauck name from their parents and grandparents will naturally gravitate toward the tour operator as middle age approaches and escorted tours start sounding more appealing.

For some segments of the travel industry, reaching out to younger clients is a necessity not an option. No one does it quite as well as Contiki Holidays, the Anaheim, Calif.-based tour operator that sells exclusively to 18- to 35-year-olds.

Contiki offers complex packages that often involve multiple countries and modes of travel, so the majority of its tours are booked through travel agents, says Frank Marini, Contiki president. But 63 percent of Contiki travelers first heard about the tour operator through friends, so the big question that confronted the company was how to build brand awareness among a demographic that wasn’t keyed in to traditional advertising.

Marini said that Contiki decided to hang out where its potential clients hang out: on the Internet. The company early on signed partnerships with two of the biggest social networking sites on the Web Facebook and MySpace. Future travelers can join Contiki “communities” at Facebook and MySpace, where they can chat with past travelers to find out what the trips are like. The company uses Facebook and MySpace to distribute marketing material about upcoming trips and to query young people about where in the world they’d like to go and what they’d like to see and do.

Contiki also uses so-called viral or buzz marketing. Each school year, the company hires 50 influential students from major U.S. universities to act as field marketing interns. During the summer before the start of the school year, Contiki sends the students on a free trip to Europe to experience the company’s product. Once school starts, the marketing interns are expected to spread the word about Contiki by blogging, submitting stories to student newspapers, giving formal presentations in marketing classes and talking to focus groups.

As a reward for a job well done at the end of the school year, Contiki sends the interns on a free, two-week trip to New Zealand. Marini said the program has been a big success; long after their internships end, participants are still talking up the Contiki product, Marini said.

Marini suggests that travel agents interested in going after younger travelers start with “the low-hanging fruit kids and grandkids of current clients.”

“Your student traveler is your honeymooner and family traveler of tomorrow, so why not grab that person much earlier and start working with them from the get go?” he said.

That’s the philosophy of Danny Genung of Harr Travel in Redlands, Calif. Genung sells travel to college students going abroad for the first time. There’s not a huge amount of money to be made in selling airline tickets, Eurail passes and hostel stays, but because he works with large groups of students, Genung does pretty well financially.

Moreover, he’s amassed a huge database full of young people who’ve had a good experience working with him. Soon, they’ll be planning destination weddings, expensive honeymoons and family vacations. When they do, he’s the one they’ll call.

While the popular wisdom holds that young people aren’t interested in the product that travel agents are selling, what’s happening in the real world tells a different story.

“I’ve been in this business for 15 years and for the last five, all you’ve heard is the demise of the travel agent. But I think it’s just the opposite,” Russo said. “People will always travel. And as young people get busier and busier in their lives, their time will become more precious, and they’ll have no trouble calling a travel agent.”