Travel brands eager to engage with young consumers have for years focused on one key segment: millennials.
Cut to 2021, and many of those consumers – now climbing in age between 25 and 40 – are balancing the costs of families and mortgages on top of extracurricular spending.
And while millennials still hold significant spending power, their young-adult status has been eclipsed by a new generation, one that doesn’t know a world without internet and will be critical to the travel industry’s recovery from the coronavirus pandemic.
To capture the attention – and dollars – of Generation Z, travel providers need to understand how the generation’s distinct preferences and attitudes influence their travel planning and spending habits.
The OTA effect
According to Expedia Group, nearly two-thirds of Gen Z travelers, defined as those born between 1997 and 2021, are planning “revenge travel” to make up for lost trips amid the COVID-19 crisis.
To plan their travel, Expedia Group finds that Gen Z consumers are turning to online travel sources, specifically online travel agencies, 31% more than they were prior to the pandemic.
“This very much aligns with Gen Z’s position as the first digitally native generation,” says Monya Mandich, vice president of Expedia Group Media Solutions Marketing.
“They are frequent mobile users and digital content consumers, so turning to online resources for trip inspiration and planning makes sense with their overall behaviors and preferences, and we expect this reliance on digital will continue in the years ahead.”
Similarly, the Phocuswright Research report Gen Z Travelers: A Breed of Their Own reveals that when it comes to planning travel online, Gen Z travelers prefer OTAs for their dynamic packages and loyalty programs.
According to the report, more Gen Z travelers booked air, hotel and car via an OTA than any other online channel like direct websites, metasearch or retail travel agent websites. In fact, more than one in three Gen Z travelers booked a dynamic package in 2020, the highest occurrence of any generation.
Although Gen Z travelers are the least likely to be loyalty members overall (according to Phocuswright, 28% have no travel loyalty memberships), OTA loyalty enrollment is higher among the segment than nearly all other generations: 28% of Gen Z travelers are OTA loyalty members, trailing closely behind an OTA membership rate of 33% among millennials.
Gen Z travelers are also more likely to reach the upper echelons of status in OTA loyalty membership programs compared to their status tiers in frequent flier or hotel loyalty programs.
“Our research has long shown that younger travelers have a stronger affinity to OTAs in general for planning and booking, since they tend to be more price-sensitive and brand-agnostic. Thus in line with that, they would use the OTAs more to book multiple trips than a single supplier brand,” says Phocuswright research director Alice Jong.
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