The European market potential for Gen Y tourism

In 2021, around 150 million millennials were living in Europe. Of all other generations, millennials (also known as Gen-Y) travelled the most. With an average of 35 annual vacation days each and, together, they account for almost 40% of all travel expenditures. The ability to go on holiday is not merely important to millennials; it is even one of their top priorities. After the United States and China, Germany, the United Kingdom and France are the main markets from which these tourists originate. The European market therefore offers great potential for millennial tourism.

1. Product description

Though definitions vary slightly, it is generally accepted that millennials were born between 1980 and 1995, which puts them between the ages of 27 and 42 years in 2022. Together, millennials account for a major share of all expenditures within the tourism industry. They are more willing to pay for unforgettable experiences than they are for material things. Millennials are the first generation raised with the internet. The smartphone and the tablet computer are milestone products for this generation. In essence, they are tech-savvy—often using two screens at once—in addition to being oriented towards sustainability, always looking for new destinations and having their own images of the perfect itineraries and accommodations while planning their next holidays.

In spite of these common characteristics, millennials form a heterogeneous group ranging from young professionals, to new parents, to parents in their thirties with children and stable incomes; although many millennials choose to not have children or not until later in life. Millennials are generally portrayed in the media as innovative thinkers and influential buyers.

Combining the characteristics of these digital nomads, it is not surprising that they are often to be found within the digital world. Almost 75% of all millennials research their trips online, where they search on social media and for inspiration, and authentic or genuine content created by fellow travellers much more than marketer-provided information. The large majority reads reviews on sites like TripAdvisor, finds information on websites of travel brands or destinations, or talk to people who have visited a destination. They have to discover it online to believe it. In addition to searching on the web, 97% of all millennials report sharing what they have experienced. More than half post about their experience at least once per day. This behaviour creates opportunities for tourism suppliers. 

Millennials as a target market

Understanding the online surfing habits of this generation can make it easier for suppliers to identify and approach millennials as a specific target segment. Providing exciting and unique experiences during their stay provide an essential sales point to attract them.

Millennials are 23% more likely to find brands through vlogs or celebrity endorsement and 19% more likely via blogs written by influencers. GlobalData suggests that as many of the travel influencers belong to millennials, it is important to monitor what they think and communicate on their social media channels. Their power to influence others is very significant. Engaging with these influencers across various communication channels is recommended. YouTube and Twitter have been the most widely used online platforms for promoting travel and tourism during the pandemic, while applications such as TikTok represent new possibilities.

The following are several features of this generation in relation to tourism:

• They focus on exploration, interaction and emotional experiences.
• They prefer experiences over possessions (for example, they would rather go on holiday than purchase the latest TV or the latest fashion). They spend more on the things that really matter to them, such as high-end travel experiences, whilst cutting back (often significantly) on those that do not, such as flying (low-cost airlines).
• They value authenticity, fulfilment and sustainability in personalised experiences suited to their own tastes and preferences, over postcard and must-see destinations. They avoid tourism products that appear false, fake or staged for tourists.
• They prefer to relax, to unplug from the world and have fun
• They do extensive research online before they complete a booking, tend to use bucket lists when they choose destinations and experiences and they are more demanding of experiences during the orientation and purchasing phases.
• They expect a stronger link between tourism services and their day-to-day lives. They like to travel as flashpackers, combining conventional social, local, simple backpacking with their enhanced lifestyles and need for flashy experiences.

Although millennials are relatively young in age, in terms of travel, they cherish local cultures and traditions, active getaways, and travelling with friends and relatives. Examples of millennial travelling choices are varied and wide ranging, they include: a holiday to a lesser-known or exotic destination to interact with locals, enjoy a secret concert or immerse in a rare cultural spectacle; staying in a hostel to do mountain trekking; visiting a traditional tourist attraction like going to the Louvre Museum to see the Mona Lisa; taking an educational or culinary vacation; doing voluntary tourism; or simply going to a luxury spa treatment. According to tourism service provider Rezdy, a whopping 83% of millennials worldwide chose to vacation at all-inclusive resorts.

Millennials acknowledge and value green business practices. They do not look for quality only, but for premium personalised service for a reasonable price. Millennials do not appreciate the limitations imposed by traditional tourism products, such as bus tours or limited buffet selections; they want to have a bit of everything and freedom of choice. Enabled by their ever-present mobile devices, millennials do their research on the go so they take advantage of the best travel opportunities and modify them to meet their personal tastes. Millennials travel more often with friends, relatives and colleagues than other generations and stay more frequent in touch with them thanks to social media. The millennial market comprises an above average share of female travellers.

In addition to their online, always connected lives, millennials also enjoy spaces where they can meet new people, such as in hotel lobbies which are more than just check-in counter, but also invites guests to socialise and make connections. Millennial travellers also appreciate diversity in food, including local ingredients, dishes, beers and wines.

According to IPK International, one-third of millennials’ holidays are city trips, and half of all luxury holidays worldwide are made by millennials. Older generations define luxury in terms of comfort, whereas millennials define it as unprecedented experiences they can share with friends. Luxury is considered to be a feeling instead of a category. For most millennials luxury means unusual, limited edition, rare, bespoke and sustainable experiences.

While being adventurous, millennials are also very conscious of their safety and security. They are very sensitive to security threats such as terrorist attacks or geopolitical unrest. Some 29% of millennials have cancelled a trip in the past due to security risks. These facts help us understand why only 7% of the millennials travel alone, with 42% travelling with their partners and 37% preferring to holiday with friends. Various online applications were developed in the past years to tackle this issue, such as the safety function on Facebook or the GeoSure security application that can indicate the risks for a specific location.

2. What makes Europe an interesting market for millennials?

Research And Markets expects millennials to reach their peak in earning and spending power during the next decade, which is likely to be a strong driver for the tourism sector and thus a very lucrative target market for travel and tourism businesses. Half of all luxury travel worldwide is already made by millennials, and they were expected to dominate this market by 2020. However, due to COVID-19, the number of Europeans travelling outside of Europe decreased by 98% in June 2020 compared to June 2019. Millennial travel outside of Europe almost completely disappeared.

This target group nevertheless offers promising opportunities for the future. In 2020, GlobalData described the vital role that millennials would play in the recovery of the tourism industry. Despite the suggestion that millennials would be the first to take international trips again when restrictions were lifted, the study also indicated that the target group would continue to be concerned about the pandemic. Initially, millennials seemed willing to take more risks and plan to travel sooner than other generations, but finding the required financial resources apparently posed an obstacle.

Specific data on the global destination volumes of millennials tourists are scarce. According to trend data, however, the following destinations appear to be trending. In addition to these destinations, city breaks have increased by 84% since 2004, and now account for 22% of all vacations by millennials worldwide. Moreover, 40% of global millennials plan to spend a holiday at a beach resort within the next year, and 38% plan to visit a metropolitan city. Table 1 lists the millennial destinations that show a clear upward or downward trend

Table 1: Trending global travel destinations for millennials (2020/2021)

Source: Condor Ferries

In 2022, new trends are apparently emerging as the COVID-19 pandemic develops into a more stable situation. The rise of the moderate Omicron variant has motivated millennials to experience a ‘new sense of urgency’, whereas they were previously limited to spending their holidays close to home. Millennials feel as if they have missed two full years of travel opportunities, and the experience of being in lockdown for such a long period has created an urge to escape, preferably to international, exciting, dream-worthy, once-in-a-lifetime types of destinations. This sudden urge to travel is also referred to as ‘revenge travel’.

The COVID-19 pandemic, lockdowns and other governmental measures have also forced companies to integrate both remote working and working from home into their operations. Many millennials have turned this into an opportunity and relocated their work to more scenic locations. For the remainder of 2022, more travellers are likely to follow this trend and/or attempt to turn remote work in scenic places into a permanent situation. The phenomena of ‘workcations’ and ‘bleisure’ (a combination of business and leisure) are thus likely to increase in popularity.

Table 2: Examples of appealing activities for millennials

Source: ETFI

Hotel chains can provide you with inspiration as to how they try to attract Millennial travellers. Some chains have even developed specific brands for millennial travellers, such as: Radisson RED, Moxy by Marriott, Tommie by Hyatt, AC Hotels by Marriott, Hyatt Centric, and Hilton’s Canopy.

3. Which European countries offer the most opportunities for millennial travel?

Millennials are a demographically defined market segment, so it is important to look into the size of this cohort in the populations of individual European countries. Germany has the most millennials in Europe (over 20 million), followed by the United Kingdom (18 million) and France (15 million). Proportionally to the total population of each country, the numbers of millennials range between 24% (Germany) and 37.6% (Poland).

Hover your mouse cursor or pointer over the countries in blue on the map below to see the number of millennials in each European country.

Germany, the United Kingdom and France offer the biggest potential in the millennial market, as they have the largest proportion of their populations in this demographic segment. Italy and Spain follow those three in terms of market potential. Poland wraps up the top-six markets with the most potential in Europe. Niche markets for millennial travel in these countries include backpacking, student travel, work experience and language learning.

Germany

Germany has the largest absolute number of millennials in Europe, so it can be considered the market with the largest potential for Millennial travel. In 2020, Germany will have 20 million millennials in a total population of 84 million.

Table 3: Key statistics on German millennials’ travel behaviour

Source: Millennial Travel report by Expedia and Future Foundation

The United Kingdom

The UK is the country in Europe with the second-largest number of millennials, after Germany, so it offers a large potential for this market segment. The UN projects that the UK will have a population of 68 million people in 2020, of which 18 million will be millennials.

Table 4: Key statistics about British millennials’ travel behaviour

Source: Millennial Travel report by Expedia and Future Foundation

France

France offers the third-largest potential market for millennials in Europe. In 2020, France is expected to have 15 million millennials among a total population of 65 million.

Table 5: Key statistics about French millennials’ travel behaviour

Source: Millennial Travel report by Expedia and Future Foundation

An Expedia survey, focusing on millennial travellers from Germany, the UK and France, found the following. Out of all generations, millennials tend to take the most trips (personal and business combined) per year (4.3 trips). They also take the shortest trips, averaging 8.5 days per trip. Millennials are most likely to take relaxing holidays (57%), followed by sightseeing (45%), visiting relatives (38%), family play (35%) and a romantic getaway (33%). When booking a holiday, millennials are most likely to use online travel agents (50%), followed by various search engines (39%). Some 65% of the interviewed millennials are likely to travel outside their home countries; however, 73% of them consider the costs as an important element. They are budget-conscious. However, when asked to prioritise, activities in general as well as once-in-a-lifetime and cultural experiences ranked the highest.

Table 6: Statistics about the travel behaviour of German, British and French millennials

Italy

In Southern Europe, Italy has the largest potential market for millennial tourism. In 2020, Italy will have a population of 60 million residents, among which 13 million millennials.

The Italian outbound tourism market is expected to increase to 35.8 million trips abroad with at least one overnight stay until 2021. Italians’ expenses for travelling abroad have been increasing continually and are expected to continue to grow in the next few years. Travelling abroad is most popular among people living in the northern regions of Italy, and they are also those who spend the most on it. Most Italian travellers come from urban areas and have a medium to high social and cultural profile. The average Italian traveller is between 25 and 44 years old. Most Italians go on a holiday in August.

The strongest growth in the Italian travel market is in active and cultural trips, while the most popular sun and sea category is becoming less attractive. Italian travellers are increasingly looking for travel focusing on experiences and emotions. Asia maintains it popularity in figures, whereas Africa also seems to become more attractive. Hotels, villas and rented houses are that most popular types of accommodation for Italian travellers. Destinations such as Egypt, Turkey and Tunisia have shown a decrease in visits from Italy. Security, quality of accommodation and food, and gastronomy are important consideration for Italian holidaymakers.

The Italian tourism market continues to be dominated by the steady increase of e-commerce and mobile sales: 39% of holidays are booked online. Tour operators still play a key role in the Italian market, while online bookings are done mostly for simpler trips. The Italian traveller is typically a last-minute booker.

Italian millennials are very active online. According to an Ipsos survey, 60% of the participating millennials agreed that social media is an efficient and essential way to communicate. However, the majority of them are also concerned about information security. When it comes to social media channels, Facebook seems to be by far the most popular (79%), followed by Instagram (29%), Twitter (17%) and Snapchat (8%). Older millennials also appear to prefer to use Facebook, while Snapchat, Twitter and Instagram are more popular with younger millennials.

Spain

Spain also has good potential for Millennial tourism with an expected 10 million millennials in a population of 47 million by 2020.

In 2017, a share of 9% of Spaniards’ trips were international trips, the majority (89%) for holiday purposes. Most trips lasted between 1 and 7 days, while longer trips had an average duration of 18.3 days. The Spanish holiday market accounts for 29 million trips abroad with at least one overnight stay.

The Spanish international travel market is growing faster than the domestic travel market. International tourism expenditure in Spain is more than €18 billion having increased exponentially from 2017 to 2019 — one of the highest growth rates in Europe — and it is expected to grow further till 2022. This growth is associated with the recovery from the economic crisis and consequentially an increase in disposable income for travelling abroad. Plus, low-cost carriers now allow a growing number of people to afford foreign travel. For example, low-cost carrier Vueling has made Latin America a more attractive destination by setting up new routes and destinations.

Expenditures, number of trips and lengths of holidays are all on the rise in Spain both in domestic and in international travel. This growth is mainly caused by an increase in sightseeing and entertainment activities, fuelled by social media and the millennial market segment. Interest in the Asia-Pacific region has grown fast, mostly among under-25 travellers. Morocco remains popular among Spanish tourists. Hotels are the preferred kind of accommodation. Online bookings are on the rise (growth of 8% in 2017), especially the share of mobile bookings in online bookings, which increased 22% in 2017 and is expected to increase to 31% in 2021. Over half of the population is active on social media. WhatsApp, YouTube and Facebook are the most frequently used social media channels, followed by Instagram and Twitter.

Spanish travellers like to spend time on searching for the best deals. When it comes to longer trips, the booking period is shorter than in the case of other European markets. August used to be a popular period to travel. While August remains a main holiday period, the season has been expanding in recent years and now tends to last from June to September. Spanish travellers favour thematic experiences and enjoy authentic trips. Arts and culture are main motivational factors, as well as gastronomy and local cuisine.

Poland

With a total population of almost 38 million and 8.4 million millennials, Poland completes our top 6. Because Poland has seen a high economic growth rate, the Polish millennials are really different from the previous generations.

The Polish holiday market accounts for 19.9 million trips abroad with at least one overnight stay. International tourism expenditure is over €7 billion. Revenue in the travel and tourism market in Poland was almost €4 million in 2019 and is expected to grow on average 3% annually until 2023, when 75% of these revenues are expected to be generated via online sales. Package holidays are the most popular among the Polish.

4. What trends offer opportunities or pose threats to the European market for millennial travel?

The millennial market is a significant segment in Europe. With their attitude and behaviour, millennials are at the forefront of several other trends in the European market, including ‘bleisure’, the increasing demand for sustainable holidays, multi-country trips, ‘philantourism’ and transformational travel.

Bleisure

Bleisure is the emerging trend of combining business with leisure. According to Booking.com, more than 78% of millennials (Generation Y) spent time on leisure during a business trip, while Expedia says 60% of business trips convert to leisure. These rates are much higher than previous generations, and there are reasons to believe that in the next generation (Generation Z), they will be even higher. The ultimate form of bleisure are digital nomads, who work remotely, often in roles facilitated by the gig economy.

The bleisure trend is driven by workers who extend their business trips to decrease the overall costs of taking a holiday, while flexible corporate travel policies become more accepted. Digital platforms that provide shared workspaces, such as WeWork and technology developments facilitate travellers mixing leisure and business travel. Beacons, wearables, augmented reality, virtual reality, artificial intelligence, conversational interfaces, mobile applications, blockchain technology, and biometric data are some of the examples of these technology developments. For more information on how technology is affecting travel, see this article on Start-up-Insights. The top destinations in the bleisure trend are big cities.

Most bleisure travellers spend less time on research then they would on a regular leisure trip. Destinations are the first research topic and lead decisions, with sightseeing, local attractions and the restaurant scene being key influences. Bleisure travellers may not book everything on their entire trips in advance, which offers opportunities to offer ancillary products and services, such as dining, tours and activities, entertainment and transportation. Tips:

• Define potential Bleisure travellers and analyse their profile, booking and travel behaviour. Focus on countries with generous paid annual leave.
• Offer bleisure deals, such as a discounted programmes for extended stays, or for bringing family members along on work-related trips.
• Integrate tours, attractions, and table booking APIs (application programming interface) for targeted recommendations. Give business travellers ideas on how to spend their leisure time, for example by means of notifications in mobile applications or emails. API software, such as Expedia Things To Do and Viator, provides instant access to services of third-party vendors.
• Collaborating with other travel companies may also create opportunities. Partnerships with online travel agencies (OTAs) offer the opportunity of reaching a larger audience of business travellers. Collaborating with travel management gives the opportunity to include travel management solutions in bleisure packages. Partnering with accommodation providers and local transport companies could also be used to attract bleisure travellers who want to collect travel rewards. These collaborations are facilitated by global distribution systems (GDS), which more than 600,000 travel agents use to book accommodation for businesses and multinationals, creating opportunities for your business in the global market of business travel.

Increasing demand for sustainable holidays

Generation Y travellers are increasingly aware of and concerned with sustainability. When they choose a holiday destination, it is increasingly influenced by ethics, moral values, concerns about the environment, including flora and animal protection and a desire to positively impact local communities. In addition, millennials intend to have more meaningful trips during 2022. Rather than seeing multiple places, they are likely to focus more on truly immersing themselves in the culture, lifestyle and history of their destinations. This is likely to influence the length of stay, as Generation Y travellers will probably increase the average length of their trips from 3.8 nights (2020/2021) to 5–7 nights in 2022.

In addition, these travellers demand affordability and availability of environmentally friendly, sustainable and socially responsible tourism services and products. They want to reduce their holiday carbon footprint, but often want to improve the destination as well. That is why ‘do-good, feel-good’ holidays and ecological tours are growing in popularity. Once again, there is an opportunity for local businesses to offer products to the millennial market. Examples could include the creation of more authentic and appealing itineraries or packages. In addition, providers of accommodations could offer packages that tie into other local entities.

Table 7: Examples of initiatives contributing to local communities’ quality of life

Source: ETFI

Multi-country trips are on the rise

According to WYSE Travel Confederation, young travellers are eager to make the most of their time and money. This means that multi-country trips are very popular. The survey conducted by WYSE Travel Confederation shows that 60% of young travellers visited multiple countries during their international trips in 2017. This trend is facilitated by the increased accessibility of more remote destinations.

This unique group of travellers have a large potential for SMEs, since they tend to travel longer and spend more. By offering combined itineraries, it is possible to attract long-distance travellers to destinations that they might not consider visiting in a single-country trip.

Although Europe is still the most attractive destination for multi-country trips, European regions are followed by Southeast Asia and Oceania. The highest percentage of European travellers interested in multi-country trips can be found in northern Europe, followed by southern Europe, western Europe, and finally Central and Eastern Europe.

When looking at the travel profile of young travellers taking multi-country trips, according to the study of WYSE Travel Confederation, they tend to be more experienced travellers than others, although they are also slightly younger. The main purpose of their trip is usually holidaying and/or language learning. These travellers are very interested in the local culture and customs. They are often purposeful travellers. They are eager to create meaningful bonds with the local community. They enjoy ‘living like a local’. They look for meaningful experiences and tend to engage in more activities than a single-country traveller. These trips tend to take longer, 32 days on average. During their trips they tend to visit major hubs and do not go off the beaten track that much.

Considering their information search behaviour, multi-country travellers tend to spend more time on collecting information and making travel arrangements. They use social media as one of their main sources of information and inspiration. Most flights and accommodations are booked on a computer, or via a travel agency (online or offline, especially flight tickets). However, a significant percentage of multi-country travellers tend to book accommodation on their smartphones, suggesting they often make last-minute decisions on where they are going to spend the night.

Those opting for multi-country trips tend to be environmentally conscious. Travellers visiting multiple destinations in a trip often take ground transportation, which is usually more sustainable then flying. They are also interested in helping local communities and participating in sustainable local initiatives.

Transformational travel becoming more important to millennial travellers

Millennials tend to have the urge to feel and act more than other tourists. They see themselves as travellers who want to live the local life for a short period of time. They are interested in authenticity and are eager to explore the hidden gems, whether this is local food, the culture and music scene or craftmanship. They believe that local insights create more meaningful experiences. While millennials have realised the value of authentic experiences, many of them are interested in using these experiences to transform their own lives. They are motivated by personal development and self-reflection instead of creating content for their social media.

Millennials who engage in transformational travel tend to visit distant, faraway places to learn from the local communities. The newly learnt skills, wisdom and lifestyle is then incorporated into their daily lives.

According to the Transformational Travel Council (TTC), transformational travel means “intentionally travelling to stretch, learn and grow into new ways of being and engaging with the world”. TTC suggests five ways to travel with the intention to transform one’s life and the society.

Many travel companies and tour operators who realised this emerging trend are now adjusting their offers to cater for this group of curious and conscious travellers. These experiences normally offer ways to transform the body and/or the mind. These holidays tend to be technology-free, unplugged experiences. Sustainability and environmental awareness are important elements of transformational holidays. The use of sustainable, locally sourced products, energy-efficient solutions as well as the support of the local community are often integrated.

Transformational travel can take various forms, such as spiritual travel including meditation camps, wellness, yoga and detox retreats, travelling for religious purposes, holidays based on astrological constellations, or travelling to find one’s family roots.

Philantourism is emerging

Although it is not yet a well-acknowledged term, philantourism is taking its place amongst the newest trends and terms in tourism. Derived from philanthropy, philantourism refers to the act of volunteering at a destination that is in need of tourism. Instead of focussing on creating an itinerary that covers a variety of self-enjoyment activities, visitors focus on supporting local communities and visiting the underserved. Moreover, philantourists are attached to their privacy, prioritize small destinations, expect clean and healthy surroundings and have a preference for self-customization of products.

The new activities focus on tourism as a way to do good, rather than as an activity that inflicts damage on the destination and its local population. It can be seen as an extension of voluntourism. In philantourism, however, there is less of a commitment to become involved in volunteering activities. It centres on experiencing the local culture in a sustainable way, whilst buying locally and spending their budget in the local tourism economy. Many philantourists are looking for companies that can bring them into contact with specific causes or volunteering. At the same time, however, they also like to reserve space in their schedules and leave time to experience other things in and around the destination.  

This study was carried out on behalf of CBI by Molgo and ETFI.

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