Single, Independent, and Eager to Travel the World

A review of the international youth traveler and that

travel segment’s magnitude

SHIRA AMRANY, Consulting and Valuation Analyst

HVS NEW YORK

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.

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 associaĕons and local tourism authoriĕes.

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.”

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

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.

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.

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.

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.

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,

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 recent Figure’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. Recent Figure also 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.

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.

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.”

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.

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About candlewoodste

Director of Sales for the Candlewood Suites located in Secaucus, NJ.
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