Examining the spending habits of millennials throughout the course of this pandemic provides insight into how this generation can contribute to the resurgence of the economy. In this article, I will discuss the financial realities of this maturing generation and explore their spending patterns as they relate and impact the hospitality and tourism industries.
Currently 24- to 39-years old, millennials have cut spending more than any other generation due to their financial strains resulting from this pandemic. These burdens will be felt now and well into the future. For me personally, grocery shopping has become my leading expenditure by a significant margin, to the point I recently had a heated internal debate with myself over whether to buy more face moisturizer. Additionally, rather than going towards discretionary spending, my “stimulus check” went to big-dollar necessities like rent and student loan payments. As I am not currently earning as consistently as in the past, and am unsure when steady income will return, I am budgeting differently than ever before.
Let’s also consider the myriad of financial obstacles that millennials have endured in their fledgling lifetime:
- The oldest millennials (currently 35 to 39 years old) were 22 to 27 years old and just beginning their professional careers when the Great Recession of 2008 hit. The recession hurt their incomes, caused staggering debts, and delayed home ownership for so many. The current pandemic is creating a second recession, even worse than the first they experienced only twelve years ago. All this has happened before they reach their 40’s.
- The youngest and middle millennials are currently 24 to 34 years old and are in the nascent phases of their careers. This is the first financial and economic crisis that this segment of the generation has experienced as working professionals.
- Millennials are the first generation to enter the workforce with overwhelming student debt, which has resulted in delaying significant life events, including marriage, having children, and buying homes. In Q1 of this fiscal year, there were 13.8 million federal student loan borrowers aged 25 to 34 with a combined $463.5 billion in outstanding debt. That is an average of $33,590 per borrower. In comparison, Generation X averaged approximately $18,600* in student loan debt in 2004 when they were 24 years old.
So, what does all of this mean for my generation? Simply put, it reduces our ability to build wealth and establish a solid financial foundation for our future as previous generations have. As a result, it has forced us to adopt an entirely different way of thinking about personal assets. Rather than focusing on material goods, millennials are instead choosing to invest in and acquire experiences. We lead an economy fueled by the consumption of experiences including concerts, theater performances, sports competitions, cultural and culinary experiences, and events of all sizes. We are continually embracing new ways of spending based on our evolving reality so that we can fulfill our strong desire for meaningful experiences.
Throughout this pandemic, millennialscontinue to support the beloved local restaurants that for so long decorated their Instagram pages and fulfilledtheir desire to share experienceswith their closest friends. It is the comfort within our social isolation, as we long for some semblance of normalcy. We are currently spending more on restaurant-related (take-out) spending and groceries than we did in 2019. Due to these harsh economic realities, we are also creating the dining experiences we crave inside of our apartments by concocting cocktails and cooking from scratch alongside our favorite chefs and restaurateurs. No matter the physical distancing, our phone always eats first.
Though nothing can ever fully replace in-person experiences, as a Chicago-based study conducted in April demonstrates, 55% of millennials intend to go to restaurants as soon as isolation ends. This represents the first step of millennials re-activating the experiences they so value. Restaurant openings will fill a gap in the short-term as local experiences hopefully continue to expand. Millennials will be the largest generation to initiate travel in every phase of statewide re-opening(s), first with regional journeys and drivable destinations. Looking forward and in anticipation of the inevitable surge of broader destination travel as the crisis dissipates, millennials will fuel jet engines. In fact, many millennials in my network chose to purchase inexpensive domestic flights at the onset of this pandemic for trips planned six to twelve months down the line. This provided an avenue for them to cope with lost travel experiences while taking advantage of destinations they would not otherwise have been able to afford. Many will continue to take advantage of cheaper airline prices now to fulfill their strong desire to travel (later).
This behavior exemplifies how millennials, a generation who spent $200 billion on travel in 2018, have shifted their experienced-based spending patterns throughout this pandemic. In fact, millennials command an estimated $2.5 trillion in annual spending power. Both pre- and post-pandemic, their buying preferences can undeniably make or break industries. The restaurants, airlines, hotels and resorts that have evolved in response to this pandemic and have improved their experiences will benefit from the generation who is eager to activate their adventure funds and start exploring again.
*Adjusted for inflation, $18,600 in 2004 dollars equates to approximately $25,000 in 2020.
