The elimination of Global Hotels by Boutique Hotels in the Generation Z segmentation

  5th December 2023

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Boutique hotels and global hotels are always two inconclusive choices for young people, especially Generation Z today when choosing a place to travel. Each individual will have reasons for their choice and each type of hotel will have its own characteristics to suit today’s Generation Z.

Generation Z – The potential segmentation of the hotel industry.

Generation Z or Gen Z (the generation born in the late 1990s or the early 21st century) today chooses to travel whenever feasible for various reasons. They are, first and foremost, adventurers who are curious about new cultures and ways of life that diverge from their own. Also, today’s youth seek out stress-relieving and self-healing locations due to various pressures, including those related to education, exams, pay, and other obligations. 

Making up nearly a third of the global population, Generation Z has become the world’s largest generation. Mr. Elliot Padfield identifies the Generation Z segment as one of the potential customer groups for the hotel industry in the future. Additionally, Generation Z is predicted by Ms. Marie-Josée Legault to be the largest generation in history, meaning that marketing to their unique needs is becoming increasingly important. Thus, focusing on research and surveys on the consumption behavior of Gen Z is an essential thing that hotels should do to capture this potential customer file.

“Willing to Pay” or “Willing to Stay”-The priority of Gen Z in accommodation.

The YouGov Travel & Tourism Report 2022 focused on the travel preferences of Gen Z travelers. The report revealed that 37% of Gen Z travelers consider travel prices to be a hindrance, with the cost of lodging being a major concern. Due to budget sensitivity, 35% of Gen Z travelers opt for a 3-star or lower standard hotel or motel. Despite health concerns, Gen Z travelers are willing to compromise on accommodations for unique experiences while saving money, such as campgrounds, dorms, renting a room in a neighbor’s house, or renting a campervan. This suggests that Gen Z values unique experiences but is still cost-conscious. 

Gen Z still choose to stay at luxury hotels and resorts from 4 to 5 stars when looking at the top 3 places to stay for Gen Z. As a result, even though some Gen Z are looking for budget-friendly alternatives, they are willing to pay a little extra for an upscale and comfortable experience.

In other words, a boutique hotel provides a unique local experience, is affordable, and provides acceptable service quality in comparison with a luxury hotel or a global hotel with excellent service a luxury experience, and high accommodation costs. In terms of Gen Z’s choice, are boutique hotels able to eliminate global hotels when they travel?

What is a Boutique Hotel and a Global Hotel?

A boutique hotel is a small, independent hotel that is not part of a chain. These hotels are known for their unique character and style, which sets them apart from international hotel chains. They are usually located in urban or rural areas and reflect the local identity and pride. Boutique hotels offer personalized service, unique design, local flavor, intimate atmosphere, and exceptional dining. 

On the other hand, a global hotel is a hotel chain or brand that operates across multiple countries or continents. They offer consistent services, amenities, and standards worldwide and cater to a wide range of traveler preferences and needs. Global hotels typically have a recognizable brand image and strive to maintain a consistent level of quality and guest service across all their properties, ensuring a familiar experience for guests regardless of their location. They often leverage their widespread presence to provide loyalty programs and benefits that encourage repeat stays from their guests.

The Battle of Boutique Hotel and Global Hotel-survival Strategy in Generation Z Segmentation.

On our Facebook page, we have a hotel decision survey. Almost 500 people participated in the survey, of whom more than 300 are of Gen Z age and most of them travel for leisure and recreation. Over 72% of Gen Z participants in the survey chose to stay at Boutique Hotel. Additionally, more than 27% of them choose to stay at the Global Hotel.

As well as collecting their opinions in the same post, we also collected their reasons for choosing a Boutique Hotel or a Global Hotel. Boutique Hotel meets all of the above requirements of Generation Z in Asia through our small survey on Facebook with the question “If you had $100, would you choose to stay at a global or boutique hotel? 

Most  Generation Z people tend to choose the Boutique hotel. Typically, These are comments as “For me, it’s all about the personalized experience! I’d choose a Boutique Hotel any day. The charm and uniqueness make it worth every penny. #BoutiqueLover” and “I would choose Boutique hotels for the cheaper rates and I can spend the rest of 100$ on other traveling purposes.” It can be seen that Gen Z people really like this type of hotel.

Based on our survey and collection of opinions, Gen Z is strongly in favor of this hotel model. Meanwhile, global hotels have many long-established boutique brands as well. Nevertheless, it is still subject to some restrictions imposed by the general rules of international corporations. Thus, the price of these boutique hotels remains higher than that of local boutique hotels. Not only that the local experience of Boutique Hotel is more special than that in Global Hotel.

Analyzing the long-term vision, Designing unique local experiences, and marketing strategies at global hotels like Accor, IHG, Marriott, Hyatt, etc. It’s just a matter of time to change and attract Gen Z guests. Because of the strong cash flow and the power of human resources, all these obstacles will be solved in the future.

Moreover, Gen Z in many years to come will have higher needs because they already have strong enough economic resources. More than just local experiences, they will expect excellent services tailored specifically to that local.

So the question is, between the boutique hotel and global, which hotel is the race winner to reach and attract Generation Z segmentation? Let’s see…