The research shows millennials are spending more money on travel. So the travel and hotel industry should focus on them to hold the marketing in the future.

Data from industry researchers shows millennials are spending more on travel.

Millennials spent 20% more on travel over last year, surpassing the 12% average year-over-year gain of all U.S. households, according to the “2014 Portrait of American travelers,” released by MMGY Global, a travel and hospitality marketing firm. This surge is the largest year-over-year spike in spending since pre-Recession years, according to the report.

The research looked at more than 2,500 people in four generational categories who have traveled within the last 12 months, all of whom had an annual household income of more than $50,000. The four categories were:

• millennials (ages 18 to 35);
• Gen Xers (ages 36 to 49);
• baby boomers (ages 50 to 68); and
• matures (ages 69-plus).

Steve Cohen, VP of insights for MMGY, said the demands millennials have are different from previous generations, and they are spending more money on vacations.

“They’ve spent the second-most on vacations in the last 12 months among the four generational categories, and they’re looking to spend the second most among the four categories in the next 12 months,” he said. The mature generation took the No. 1 slot in both time frames.

“Everything we see suggests that millennials are traveling more. … Travel intentions among millennials is up 10%. Compared to the other generational groups, they’re the only ones that are up. Xers are down 6%; boomers are down 1%; matures are down 3%,” Cohen said.

“Millennials are leading the travel resurgence as the economy returns,” he added.

Millennials with an annual household income of $30,000 or more (also known as millennials who have “launched”) spend more on travel than the total U.S. average, second to baby boomers, according to research from D.K. Shifflet & Associates.

In 2013, the average spend per person per travel day for the total U.S. was $193.90, according to the research. Launched millennials spent $197.60 per day, while working baby boomers spent $223.30. However, millennials with an annual household income of less than $30,000 spent below the total U.S. average ($152.20).

A portion of those travel spend dollars are funneling to the hotel property level, according to Guy Langford, accounting principal with Deloitte. Millennial business travelers are willing to pay an extra $41 per night, he told attendees during a presentation at the 6th annual Hotel Data Conference, hosted by STR and Hotel News Now. Millennial leisure travelers will spend an extra $35 per night. (STR is the parent company of HNN.)

Affluence and influence

Cohen said it’s a mistake to say millennials don’t have money to spend.

“We should not focus on ‘none of them make $50,000 a year’ because that assumes they’re living by themselves and not making any kind of traveling decisions on their own,” he said. “We believe the fallacy is thinking none of them make enough money to travel. Well, that’s not true. They’re traveling with multiple people and saving money on travel by doing so.”

“I think that the ones that are launched do have money to spend,” said Chris Klauda, VP of lodging research services at D.K. Shifflet. 

She said launched millennials seem more inclined to spend their money on travel. Their experience is much broader than other generations so they understand the value of travel and have more fervor to travel internationally than other generations.

“They view travel as more of a birthright than the other generations, so I think they would certainly be more than willing to spend more on travel—and maybe not on the more traditional things. Maybe they’d spend less on their car or stuff in their houses … but travel resonates with them,” Klauda said.

That spirit is infectious, according to Jim Merkel, president & CEO of Rockbridge, a private equity firm that specializes in hotel investments. He said millennials influence other generations, including their parents, to seek new experiences through travel. 

“If you’re not focused on them, you’re really missing a big segment of the spend that’s out there,” Merkel said. 

Millennials’ future spending power alone is worth hoteliers’ attention, Klauda said.

“I think (millennials) are just going to continue to spend more as their income increases. The flipside is they’re not in their peak income-earning years yet, so I would say the only place they’re going to go is up.”