How do we perceive and categorize travelers within the hospitality industry? Most industry veterans would argue that there are three segments.

First is the typical business/corporate traveler who stays one to two nights during the week; this may include government or contract demand.

Second is meeting and group demand, which typically books in advance and reserves a block of over ten rooms; such demand is often related to corporate meetings, SMERFE (social, military, ethnic, religious, fraternal, and educational) events, and local youth sporting groups.

Third is the leisure segment. According to industry experts, leisure travelers typically book accommodations for the weekend or holiday periods. Motivated to visit a market based on locational attributes, such as beaches, amusement parks, museums, and activities including golf, leisure demand is more often than not perceived as families vacationing together.

However, there is a noteworthy subcategory of the leisure segment that comprises travelers who don't exactly fit the above description: youth travelers. Contrary to family vacationers, youth travelers journey with the intent of exploration. Due to the evolution of telecommunications, social media, and travel infrastructure, destinations abroad have become more accessible and affordable, creating opportunities for today's youth that didn't exist for their parents at a similar age.

According to the United Nations World Tourism Organization (UNWTO),¹ this niche market represents approximately 20% of international tourist arrivals and approximately 18% of worldwide international tourism receipts. As a result of this segment's growing importance, an increasing number of government campaigns and national tourism administrations are targeting youth travelers.

In their 2008 Youth Travel Matters report,² the UNTWO stated that governments "are now taking a more active role in developing youth travel policies, products, and marketing campaigns" as opposed to 2005 when the UNWTO found that only 33% of the 151 countries and territories they surveyed collected statistics on youth/student travel.

Governments from countries such as Australia and South Africa have targeted this segment since the early part of this decade, whereas France and the UK launched more recent online youth travel campaigns in 2008/2009.

In an effort to further explore this niche market, we will examine who youth travelers are (their age, intent, and preferences) and quantify their significance. Due to limited reliable data on the youth travel segment, much of this article will focus on the summary findings of the "Youth Travel Matters" study published by the UNWTO.

CUSTOMER PROFILE

Call them tourists, backpackers, or youth travelers, these individuals "travel with a purpose – to explore and to engage with cultures, and to mix their travel ambitions with study, work, volunteer placements and adventure," wrote David Jones, the Director General of the World Youth Student and Educational (WYSE) Travel Confederation,³ and Francesco Frangialli, Secretary General of the UNWTO, in the "Youth Travel Matters" publication.

They go on to explain how these travelers "tend to stay much longer and therefore spend more than the average tourist, interacting more closely with the communities that they visit and making a direct contribution to local businesses." This report also highlights findings that as a proportion of total income, this segment spends more than any other group on international travel, indicating the high importance placed on global experience for these individuals.

Currently, the industry lacks a clear definition of who falls under the category of youth travelers. However, the WYSE Travel Confederation has come up with its definition, which includes travelers ages 16 to 29, although an argument can be made to extend this range to include those in their low 30's. The extension of this range can be supported by the increased tendency to postpone marriage and starting a family and the consequent levels of disposable income in conjunction with individuals' increased propensities to further themselves through sociocultural experiences.

As previously mentioned, the youth travel segment comprises individuals who desire to broaden their horizons by learning about new cultures and gaining international experience. Such travelers have also been categorized as independents with an open-minded attitude and a strong sense of adventure. International experience is believed to be beneficial to their personal development and their future employers.

This point is further emphasized by a study⁴ conducted by Contiki Holidays,⁵ which found that 97% of the 18- to 35-year-old Australians who were surveyed believe travel (which may subject them to learning a new language, understanding other cultures, problem-solving, and budgeting among other things) can help them with their career or life in general. Youth travelers tend to gain such experience by taking longer trips than your typical tourist – whether during a gap year, between periods of employment, during a sabbatical from work, or just on holiday.

According to New Horizons II – The Young Independent Traveller,⁶ published by WYSE Travel Confederation in 2007, the average length of a trip is just over 53 days. Figure 1 displays an estimated breakdown of the percentage of trips by length of total trips.⁷

Figure 1  Proportion of Total Trips by Trip Length (in days)

Attributable to the extensive length of many of their travels, youth travelers are often price sensitive and choose their accommodations accordingly.

Influenced by their travel style, youth travelers may frequent a variety of accommodations. According to the New Horizons II report, hostels are the most popular form of accommodation among this group, consistent with results found in its 2002 study. 

The 2007 study found that over 60% of youth travelers chose to stay in some form of a hostel during their last trip; hostels typically offer both dormitory-style shared rooms and private rooms. Youth travelers also stayed in hotels, with family or friends, in guesthouses, at bed & breakfasts, in tents, in campervans, and other accommodations.

Individuals booking a hostel often reserve online on sites such as hostelworld.com or hostelbookers.com. They may also utilize travel guide books such as The Lonely Planet, Frommer's, The Rough Guides, and Fodor's for guidance on choosing accommodation.

MARKET OVERVIEW

There is sentiment that the youth travel market is not a lucrative one. Whether that's true or not for a particular owner or operator is debatable. Less controversial is the fact that from a macro perspective, this segment represents a sizeable portion of global travel and spending.

As previously mentioned, the youth travel market represents approximately 20% of international tourist arrivals a year and approximately 18% of international tourism receipts, according to the UNWTO's findings over the period from 2002 to 2007. This equates to an estimated average of 160 million arrivals and US$136 billion spent per year, respectively.

According to the UNWTO, the youth travel market is growing faster than most other travel segments, with volume growth of 2-5% per year and expenditures recording average growth levels of 8% per year for the same 2002 to 2007 period. Overall international tourist arrivals trended similarly, recording a compounded increase of 4.8% over the same period.

Applying the 20% approximation back to 2000, Figure 2 displays youth travel arrivals as an estimated proportion of the overall year-over-year total international tourist arrivals from 2000 to 2008, giving us a rough historical guide of the year-to-year magnitude of the youth travel sub-segment.

Figure 2  International Tourist Arrivals (in millions)
                                       
Although the data published by the UNWTO in its 2007 report is not indicative of what has been going on in the global market over the past two years, the data still provides a frame of reference for comparison. 2009 figures were not included in Figure 2's historical comparison, due to indications that the youth travel market remained fairly resilient in the wake of the economic downturn in comparison to the overall leisure market.

Figures published by WYSETC in its September 2009 issue of the Youth Travel Industry Monitor⁸ approximate youth travel down a marginal 0.3% in 2009 compared to a 4.0% decrease in the overall tourism industry, indicating a 0.2% proportional increase in youth travel to overall international tourism in this year.

Figure 3 estimates 2009 international arrivals by applying the Youth Travel Industry Monitor percentage change estimates to the recorded 2008 international tourist arrivals figure and the 2008 youth travel tourist arrivals estimate.

Figure 3  2008 vs. 2009 International Tourist Arrivals (in millions)

On a per-trip basis, the UNWTO estimates youth travelers spend approximately $2,600, $1,550 of which is spent at the destination (indicating that the $1,050 remainder is used toward transportation expenditures). Over the five-year period the study was conducted, youth travelers averaged 7.3 trips, equating to $18,980 spent on international travel per individual over five years, or an average of $3,796 per year.

CONCLUSION

Thanks to research conducted by the UNWTO and the WYSE Travel Confederation over the past decade, our understanding of the youth travel industry is becoming increasingly clear. Trends indicate that the youth travel market is growing steadily and may be less sensitive to trying economic times than other segments of the industry.

Whether this segment is a worthwhile one for investors looking to make high profit margins is uncertain at this time. However, the reality that this segment represents a sizeable portion of the travel industry is not something to ignore.

As the future drivers of change in our industry, today's youth will ultimately influence tomorrow's travel trends and the look and feel of the hospitality industry.

Notes:

1 The World Tourism Organization (UNWTO) is a specialized agency of the United ‎Nations and "the leading international organization in the field of tourism." Members include over 161 countries and territories and more than 390 Affiliate ‎Members representing the private sector, educational institutions, tourism associations ‎and local tourism authorities.‎
2 "Youth Travel Matters – Understanding the Global Phenomenon of Youth Travel" was published in 2008 based on data collected by the UNWTO and WYSE Travel Confederation from 2002 to 2007. The aim of the report is to consolidate the various studies carried out by each organization in the youth travel field "to provide a comprehensive overview of the characteristics and trends in this segment."
3 The WYSE Travel Confederation is a not-for-profit organization created in 2006 by "the world's leading youth and student travel organizations, the International Student Travel Confederation (ISTC) and the Federation of Youth Travel Organizations (FIYTO)." The organization comprises over 550 members whose mission is "to increase international understanding through the promotion of travel and educational opportunities for students and youth."
4 The Skilled Set Survey was commissioned by Contiki Holidays and conducted by Galaxy Research. The survey is a compilation of results from 509 respondents, Australians ages 18-35, who have aspirations for travel in the next three to four years. Participants were either single or double-income adults with no children at the time of the survey.
5 Contiki Holidays is a tour operator targeting individuals 18 to 35 years of age. The company "creates hassle-free vacations with an unbeatable mix of sightseeing, culture, people your own age & free time" in over 40 countries around the world.
6 The New Horizons II study was conducted in 2002 with the support of the Association for Tourism and Leisure Education (ATLAS) and then repeated in late 2006 and early 2007. The report draws on data from over 8,500 respondents and provides insight into "various dimensions and characteristics of international youth and student travel from the point of view of those who participate in it."
7 Estimation is visual based on Figure 28 bar chart from the New Horizons II Study, which is labeled in 5% increments.
8"The Youth Travel Industry Monitor – September 2009" is WYSE Travel Confederation's fifth issue of the Youth Travel Industry Monitor series, which reviews "the latest trends and business prospects in the youth travel industry." This issue is based on a survey of "39 experts within the WYSE Travel Confederation community, representing a cross-section of sectors and geographic regions. Respondents were surveyed in September 2009; each answered questions regarding current market conditions for their core business area during July and August 2009."

About the Author
 
Shira Amrany is an analyst at HVS Consulting & Valuation in New York. She joined the company in 2009 after graduating from Cornell University's School of Hotel Administration, having previously interned at HVS in both Consulting & Valuation and Executive Search. Since joining HVS, Shira has worked on over 20 appraisals of various hotel types across the United States.

www.hvs.com