Are Travelers from Silicon Valley an Opportunity for the California Hospitality Industry?

San Francisco has a much larger share of 25-44 year-olds – the core working age group – than Silicon Valley, the state of California, or the United States in general (Silicon Valley Index 2016)

In March 1848, there were roughly 157,000 people living in California. Just 20 months later, following the massive influx of settlers, the non-native population had soared to more than 100,000. The large influx of “49ers,” as the gold prospectors were known, caused California’s population to increase dramatically. By the mid-1850s there were more than 300,000 new arrivals, most of them young men.

Hundreds of houses, banks, saloons and other structures were needed for all of these people, and many were built out of abandoned ships. And, believe it or not, San Francisco’s first big hotel was a ship. An entire infrastructure suddenly sprang up to meet the needs all of these new travelers. In more recent years, the Bay Area has experienced rapid growth similar to the Gold Rush. The region’s economy is thriving. Employment levels have not only reached pre-recession totals but have far exceeded them (Silicon Valley Index 2016). With more money in their pockets, people are willing to go to and experience new destinations.

Who is moving to the Silicon Valley?

According to the Silicon Valley Index 2016, “the region has an extraordinarily large share of residents who are foreign-born (37.4%, compared to greater California at 27.1% and 13.3% for the United States). This is a major opportunity for hotels to expand their customer base by bringing these new residents to their properties.

Most of the newcomers are young people, the so-called Millennials, “those born in 1982 and approximately the 20 years thereafter.” For example, San Francisco has a young, well-educated workforce with 47% of the population between ages 18 and 44.

How can hotels leverage this boom?

The simplest answer: For Millennials, a trendy, $500-per-night hotel that has been discounted to $250 is a better value than a $225 room at full price. Millennials prioritize value and experiences, and they bring this mentality to business travel as well. Hotel companies have expanded their portfolios by adding brands that are designed to appeal to millennial travelers and those who want less service and more connectivity — both technologically and with shared space.

Hotels aren’t just places to sleep. They’re places to experience. According to CNN, that’s how the newest generation of travelers are viewing hospitality and—in the face of stiff competition from the likes of Airbnb and HomeAway—big hotel brands are having to adjust to meet the expectations of their discerning new clientele.

Millennial travelers travel on both high and low budgets, but their generational taste for technology and sharing is the same. Hotels need to understand this trend in order to adapt their offers and personalize experiences.

Where to start?

Optimize your website for search engines. A  study by Google revealed that 65% of leisure travelers and 69% of business travelers begin their travel experience on Google. Search engines rate consistently higher than online travel agencies and travel review sites for the most popular online planning sources for travelers. There is an opportunity for even small hotels to benefit from organic search.

Hotels should keep a spotless online reputation on review sites like TripAdvisor. After deciding what location they will visit, travelers search for other travelers’ opinions on hotels in the area.  A higher ranking on the popularity index increases visibility and the chance to get new bookings.

Email marketing is the direct channel with which hotels can communicate their message, so getting guests’ email addresses is crucial. Personalized email messages improve click-through rates by an average of 14% and conversions by 10%.  (Aberdeen). Additionally, 60% of Millennials are willing to share personal information in order to get personalized experiences and services.

Millennials are curious to explore their surroundings and are pretty open to coming back if their experience was worthy. They are very loyal to brands that deliver authentic and quality experiences, so why not invite them to explore more of Santa Cruz, Big Surf, San Francisco, Napa Valley or Los Angeles with a special offer?

Millennials also love sharing their experiences on social media, and can be an ally to hotels when it comes to marketing. A CrowdTwist study says, “43.5 percent of Millennials said they use social media to spread the word about products or services”, meaning that they may inspire their families and friends to visit California too.