The grand dames of the hotel industry—Marriott, Hilton, and Hyatt—built their reputations on creating a consistent, high-quality product that would ensure a guest had a perfectly predictable experience anywhere in the world. This approach worked like a charm with baby boomers, who liked their premium hotel stays—much like their Starbucks macchiatos—to follow a neat formula. But millennials, it turns out, are different beasts altogether. Big hotel chains don’t interest them.
Older millennials, now in their late twenties and early thirties, travel frequently. They take an average of five business trips a year, which is twice as many as their peers over 35, and they are 23% more interested in traveling abroad than older generations. But millennials are also driven by a desire to have a rich, meaningful experience when they travel, get an authentic taste of the local culture, and gather unique stories to share upon their return. They are often choosing to stay in hostels, AirBnBs or non-name boutique hotels instead of big-brand hotel chains.
These trends haven’t escaped the notice of the global hotel chains, who are thinking hard about what it will take to win over the prized millennial demographic that already constitutes 80 million people in the United States—and is predicted to spend $1.4 trillion annually by 2020.
Over the last few years, Marriott has been carefully observing the generational shifts in travel preferences. "The trademark of the boomer was that they wanted familiarity, safety, and comfort," says Wolfgang Lindlbauer, chief discipline leader, global operations at Marriott International. "As an international hotel company, Marriott has leveraged its scale as a competitive advantage for many years, but what we’re finding is that the next-generation consumer wants the exact opposite of what we’re delivering."
Lindlbauer is leading a charge to transform Marriott into a hip, sexy brand that will appeal to its next generation of guests. To do this, his team has hired Fahrenheit 212, a consulting firm that specializes in reaching millennials. Together, the two companies have delved into the psyche of the typical millennial hotel guest.
Over the years, Fahrenheit 212 has developed a proprietary list of "Rules of Engagement" for working with millennials. For instance, the firm believes that millennials need to be convinced of the value of a product or an organization through storytelling. Millennials value companies that have a powerful vision and a distinct point of view on the world. They also appreciate it when companies have strong connections to the local community—and they are more impressed by raw entrepreneurial talent than in the mighty displays of wealth and power by big corporations.
These ideas fired up the the Marriott team, but the question of how to incorporate these ideas into the unique context of the hotel industry was another matter altogether. "We know that millennials want local and unique," explains Pete Maulik, managing partner and chief growth officer of Fahrenheit 212. "They want to spend time in places that have a sense of community, and that feel a bit imperfect or yet-to-be-finished. The question is, How does a company like Marriott that has relied on scale for so many years compete in a market that is very chaotic and disruptive? How can they turn their size from a liability to an asset?"
Given Marriott’s size, developing a strategy for change is no small feat. In order for any transformation to happen, many different divisions of the company across continents need to be on board. This also means changing existing protocols and processes, the very things that have allowed Marriott to become the successful company it is today. The stakes are very high. Lindlbauer tells Fast Company that Marriott expects millennials could make up half of its guests by 2020—but that is only if Marriott is able to entice these young people into its grand, porter-manned doors.
With the help of Fahrenheit 212, Lindlbauer decided to start small, introducing change to a few key locations rather than trying to institute change from the top. "It was very clear that we needed to create an environment where we could carve out incubator labs," Lindlbauer says. "We wanted to try something from the bottom up, asking entrepreneurially minded individuals who had worked in our hotels or who were part of the local community to come up with new ways to do things." Lindlbauer convinced the top brass at Marriott to choose 14 hotel locations around the world—from Shanghai to Budapest to Dubai to London—where small teams could experiment with new concepts for their hotels. With this strategy, Lindlbauer was trying to introduce the thinking and outlook of a lean startup within a mammoth organization.
In this experimental phase, Lindlbauer invited teams of hotel employees and local entrepreneurs to focus on ideas for their particular hotel’s food and beverage services. Teams that came up with winning concepts would get up to $50,000 and six months to turn their vision into a reality. The idea was to develop new concepts for fun hotel restaurants and bars that guests, and perhaps even locals, would actually want to spend time at—in many ways, a radical concept in its own right. There’s a stereotype that hotel food at big chains is not known for being tasty or worth seeking out. But Lindlbauer, who began his career in hotel kitchens, felt that transforming millennial perceptions of food could spark a broader change in how Marriott hotels were perceived.
Given that these test hotels were spread out around the world, the ideas that emerged ended up being very different. In London, a Marriott restaurant manager had the idea of using the hotel’s rooftop, which had never been used before, as a pop-up bar and dinner joint called RoofNic, a play off the words "roof" and "picnic". The event was a roaring success, with eight-hour lines to get in and stellar reviews in Time Out, The Independent, and business traveler publications. The manager’s dog became the unofficial mascot for the event, and the staff pretended the pooch was the one live-tweeting the party. "There wasn’t a Marriott logo anywhere," Lindlbauer says. "The whole project was inspired and executed by Ashley, the restaurant manager."
In Phoenix, Arizona, the winning idea was a cheese-and-charcuterie restaurant called Craft+Culture. At that location, staff are currently creating a place that will focus on artisan cheesemakers, charcuterie producers, and local craft beer and wine makers—while also emphasizing sustainability and community. "We talk about appealing to millennials, but in many ways, millennials are tastemakers for the broader culture," Lindlbauer says. "Everybody wants to contribute to sustainability and local artisans, but the millennials are the ones driving this change."
In Dubai, given the preferences of the community, the winning idea was quite the opposite of what emerged in Arizona. The team created a nightclub called Square, where top international DJs can perform and crowds of young people can dance the night away.
In Hungary, the local team is still in the brainstorming phase. The staff at the Budapest Marriott noticed that there was a large empty space in the hotel with an excellent view of the Danube River—and that the room had been unused for 12 years. The regional Marriott team is currently soliciting ideas from the community about creative ways to use the space; hundreds of concepts are flowing in. Even before a single event has been thrown, this particular hotel location has amassed 117,000 followers on Facebook, showing how excited the community is about the project. "Our big penny-drop moment came when we realized that big did not have to mean monolithic, but instead, big could be the kind of experience we could empower," Maulik says. "As a big company, we have the resources to empower hundreds of local entrepreneurs to live out their dreams."
Lindlbauer hopes that this elaborate experiment has ripple effects throughout the company. By starting small and introducing change organically, he believes that Marriott International has a chance at achieving the kind of metamorphosis necessary to attract millennials. Eventually, the plan is to transform more Marriott locations around the world into incubator labs and eventually to go beyond the hotel’s food and beverage services. "The hotel’s restaurants and bars are just a start," Lindlbauer says. "This is a great way to introduce millennials to who we are as a company and begin to change their impression. But in the end, we hope that these changes penetrate the very core of the Marriott brand and begin to transform every aspect of the hotel experience."