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Capturing loyalty from new generations of travelers

Baby boomers, a key travel market, are expected to reduce leisure travel as they age, shifting the focus to millennials and Gen Z. Deloitte predicts that by summer 2030, these younger generations will make up over half of US leisure trips, a significant increase from a third in 2023.

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The travel industry appears to be witnessing a passing of the baton.

Baby boomers have long been a lucrative market for the travel industry and will likely account for a big share of travel spend in retirement. But they are likely to soon begin to age out of more frequent leisure travel.

Meanwhile, millennials and Gen Z appear to be starting to take off as a key travel demographic.

Travel spend for these younger generations is likely to see a steep incline over the next several years. In Deloitte’s recent report on the future of travel, we projected that Gen Z and millennials will account for more than half of US leisure trips in summer 2030, up from about a third in 2023.

These big demographic changes, along with emerging consumer technologies, will likely cause travel companies to look at a new approach to the traveler experience.

What sets millennial and Gen Z travelers apart from the baby boomer generation when it comes to planning trips?

One of the most noticeable differences is their close relationship with technology and reliance on social media. Even search engines have become outdated for this population, with 42% of Gen Z travelers reporting that they’ve used social media to plan trips, compared to 7% of Gen X and older travelers. The growing traction of social media videos, paired with the rise of AI tools, will likely have a significant impact on how consumers find travel inspiration and make purchases.

According to our report, in addition to their embrace of technology, millennials and Gen Z value a sense of purpose and increasingly align their purchases and brand affinity with their values.

A third key difference between baby boomers and these younger generations is that millennials and Gen Z seem to be delaying marriage, home ownership, and parenthood — which could prove lucrative for the travel industry. These shifts in household formation could mean more consumers are redirecting their
dollars to experiences like travel.

What does loyalty look like for millennial and Gen Z travelers?

While these shifts could bring a lot of opportunity to the travel industry, companies will likely need to redefine what consumer loyalty means for these younger generations and develop new strategies to connect with millennials and Gen Z.

Brand loyalty generally tends to build with age, but travel companies shouldn’t assume that pattern will continue for millennials and Gen Z, who seem to be less motivated by loyalty program memberships, according to the report.

As corporate travel continues to trail pre-pandemic levels, fewer consumers are likely earning points on trips that can be used for personal benefit. Millennials and Gen Z also embrace travel platforms and products that don’t have longstanding loyalty programs — or any loyalty programs at all — like online
travel agencies and short-term rentals.

To evolve with millennial and Gen Z travelers, a new generation of loyalty programs should offer quick ways to earn smaller rewards, create partnership opportunities that connect to behavior beyond travel, and leverage data to offer irresistible personalized perks.

Here are five ways companies can connect with the millennial and GenZ generations of traveler:

  • Be real: As consumers try to become more educated about the brands they associate with, companies should be transparent about their mission and corporate values.
  • Create conversation: Travel providers should keep in mind the social currency of travel in our  society and how travelers may want to share their experiences with others.
  • Enable community: Travel providers should explore ways to create more of a sense of community before, during, and after trips –especially for millennial and Gen Z travelers.
  • Tweak and test trends: Companies should adapt and test trends across broader groups, not just the early adopters and trendsetters.
  • Extend engagement: Brands should explore partnership opportunities to help create deeper connections with travelers that doesn’t end just because a trip does.

When building these more dynamic programs, travel brands should also consider their broader conversation with millennial and Gen Z travelers. Branding that engages Gen Z authentically in the spaces where they spend time could help build initial affinity that can lead to loyalty.

As these generational shifts and emerging technologies evolve, travel companies may need to continue to adjust their paths forward. Regardless of how these trends play out, focusing on the digital savviness and value-driven behavior of millennial and Gen Z consumers could be key to building loyalty with these generations of travelers.

Opinions expressed by SmartBrief contributors are their own.

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