Growing Hotel Brand Aims for Millennial & Gen Z Travelers – Does it Hit the Target?
In this customer segmentation example, Hilton shows an impressive grasp of the Millennial and Gen Z traveler with its Tru by Hilton brand. Recently, my family of five stayed overnight at the brand’s Orangeburg, SC property, and I was impressed by the attention to detail. Every aspect of the hotel seemed carefully designed to appeal to the under 40 crowd.
The guest experience starts with an app-driven check-in process. There’s no need to visit the front desk, and your phone is your key. The lobby is filled with engaging communal spaces and recommendations for enjoying the local area. A late noon checkout time comes standard. Efficiencies in other areas mean that the nightly rate is lower than for other Hilton properties, but the experience doesn’t feel like a budget hotel.
A Truly Spot-On Customer Segmentation Example
Further investigation shows that the Hilton team really did do their research on this customer segmentation example, and none of the guest experience is accidental. The brand’s lofty goal is to completely disrupt the midscale hotel category. Hilton released a 2023 travel trends report that shows how travelers are evolving (and younger travelers even more so):
“2023 trends report reveals focus on frictionless travel, more engaging experiences, a sense of caring and enhanced wellness offerings”
The Tru by Hilton team has been tracking these trends for the last several years, and stated in a 2019 development guide:
“Say hello to a brand-new hotel experience from Hilton that’s vibrant, affordable and young-at-heart. It’s energetic, yet relaxing and comfortable. It’s familiar, and it’s also unexpected. It’s completely unprecedented, it’s uniquely Tru.”
Complementing this positioning strategy are three brand pillars:
- Grounded in Value
I’ll organize my observations about the Tru by Hilton customer segmentation example by these brand pillars. Any leader can be inspired with better ways to appeal to Millennial and Gen Z consumers.
Customer Segmentation Example:
Simplified Brand Pillar
“We stand up for the love of simplicity for the guest, owner and operator. Intuitive and effortless. Nimble and efficient. All beautifully balanced.”
A simplified hotel guest experience correlates with the trend towards frictionless travel. Here’s how I witnessed Tru by Hilton uphold this brand pillar:
- Contactless check-in. A text message told us our rooms were ready, and we used the Hilton app on our phone to enter them. After a long day of travel, it was a relief to skip standing in line at the front desk.
- The in-room TV is setup for guests to login to their personal streaming subscriptions (i.e., Netflix). Although this seemed strange at first, it’s a great idea to be able to bring your favorite shows with you.
- Pets are welcome, which definitely simplifies travel for many. In the US, Millennials are the largest segment of pet owners, and 64% of them have skipped traveling because they don’t want to leave their pets home without them.
Customer Segmentation Example:
Spirited Brand Pillar
“We embrace the human spirit. We cultivate connections with a vibe that is playful, energetic, and engaging. A sense of place unlike anything in our space.”
The spirited brand pillar is where this Millennial and Gen Z customer segmentation example truly shines. When I first walked into Tru by Hilton, I immediately understood its target guest segment.
- The lobby is the heart of this hotel concept, with communal spaces for meals, work, lounge and play. One area contained a pool table and other games. Another had semi-private work stations.
- Breakfast can be fun with Tru’s “Flippin’ Fantastic Pancakes” machine (which my kids loved). Coffee and tea are served all day in the lobby.
- The hotel helps guests get a feel for local flavor. An Orangeburg mural showed the nearest attractions, and a whiteboard by the elevators gave employees space to recommend local restaurants.
- While you don’t need to check-in at the front desk, guests are attracted to its double function as a marketplace. Guilty-pleasure snacks of all kinds abound—from shelf-stable to frozen that can be heated up in the nearby microwave (I’m looking at you, Red Baron pizza).
Customer Segmentation Example:
Grounded in Value Brand Pillar
“We champion value for the traveler and hotelier. We understand what matters most—better basics served up in a fresh, consistent and surprisingly affordable way. Minimal yet meaningful.”
Tru by Hilton is able to offer lower rates by streamlining several standard hotel practices. Here are some things I noticed:
- Rooms are designed to be easy to clean. There’s no closet or carpet. The furniture is elevated and easy to sweep under (That also makes the rooms faster to clean, allowing a luxurious noon checkout time).
- Rooms are also easy to stock. There’s no in-room coffeemaker. Also, shampoo, body wash and soap dispense from squeezable containers mounted to the walls. There are no little bottles to be restocked after each guest leaves. (Additionally, this feature wastes less plastic, which appeals to environmentally conscious Millennials and Gen-Zers)
- Rooms are smaller but thoughtfully-designed. My family stayed in connecting rooms, so we got to experience both guestroom concepts: king and double queen. These guest rooms are 231 sq. ft. or 280 sq. ft., respectively. Hilton claims the rooms feel larger than they are, and they’re right.
- Some in-room amenities are self-serve. For instance, there’s a stack of individually-wrapped cups near the elevators.
- During your stay, all housekeeping is by request only.
Market Performance for the Tru by Hilton Customer Segmentation Example
So, does appealing to Millennial and Gen Z travelers translate to business success? Let’s take a look at three key measures for hotel performance:
- Occupancy Rate: Percentage of rooms sold in any given time period
- Average Daily Rate (ADR): Total room revenue divided by number of rooms sold
- Revenue Per Available Room (RevPAR): ADR multiplied by occupancy rate
Tru by Hilton outperformed the occupancy rate of most other Hilton brands in 2022:
|Hilton Brand||2022 Occupancy Rate||Increase over 2021|
|Waldorf Astoria Hotels & Resorts||55.3%||14.3%|
|Conrad Hotels & Resorts||57.7%||14.7%|
|Canopy by Hilton||62.9%||15.0%|
|Hilton Hotels & Resorts||62.2%||17.9%|
|Curio Collection by Hilton||63.2%||14.0%|
|DoubleTree by Hilton||63.3%||13.1%|
|Tapestry Collection by Hilton||64.5%||12.8%|
|Embassy Suites by Hilton||68.7%||12.1%|
|Hilton Garden Inn||68.0%||9.7%|
|Hampton by Hilton||69.2%||6.0%|
|Tru by Hilton||70.0%||6.4%|
|Homewood Suites by Hilton||78.5%||4.8%|
|Home2 Suites by Hilton||77.9%||3.5%|
Also in 2022:
- ADR (Average Daily Rate) grew 15.5% over 2021
- RevPAR (Revenue Per Available Room) grew 27.2% over 2021
By the end of 2022, there were 235 Tru by Hilton properties, representing 23,022 rooms. All of them are franchised properties.
As of July 2023, Tru by Hilton now has 259 properties in the US, Canada and Mexico, an increase of 24 hotels for this growing brand.
It was a pleasure to witness this hotel customer segmentation example firsthand. I appreciate the deep understanding Tru by Hilton’s team have for Millennial and Gen Z travelers. It’s a hotel experience that may not be appreciated by Boomers or luxury travelers (what, no fresh towels or mint on my pillow?), but I think it’s going to be a successful concept for years to come.