How younger generations are reshaping luxury travel.
As millennials and Gen-Z are driving a boom in luxury travel, they are also giving critical insights into how they may wield their purchasing power in other industries.
As I recently shared, luxury travel is back in a big way. And while there are a number of factors for this boom, I want to focus on one that may surprise you: the influence of millennials and Gen-Z.
As consumers, these generations are often seen as more conscious and informed than those that came before them, making it difficult to predict how they would wield their eventual buying power.
But they are now making themselves abundantly clear: 79 percent agree that travel is an important budget priority. Let’s dig into why.
During the pandemic, many young people took the opportunity to pay down debts and save on rent by living with family members. At the same time, while previous generations were more likely to become homeowners in their 20s and 30s, a number of economic factors are keeping many millennials and Gen-Zers out of the housing market. This group is also marrying and having children later, if at all.
In short: they have money to burn and less financial responsibilities to hold them back.
And, after years of staying close to home, they are looking to use their financial freedom to make up for lost time–whether it be paying for travel upgrades, choosing hotels with higher-end amenities, or crossing dream destinations off their bucket lists.
Influencing and being influenced.
It is a lucrative time to be a travel social media influencer. With more than half of Gen-Zers spending at least four hours a day on social media, transport companies, hotels, tour groups, and even local governments are allocating serious dollars to get their names and offerings in front of younger tourists.
However, you don’t need to be a professional influencer to think like one. In a recent survey, 61 percent of these younger travelers have chosen a destination because it looks great in a photo and on videos.
The combination of these paid and organic forces is paying off. 75 percent of respondents have been inspired by social media to travel to a specific destination.
Not on social media to be influenced? Not a problem. 70 percent of Gen-Z and Millennials have been inspired to visit a destination after seeing it featured in a TV show, news source, or movie.
Traveling consciously and authentically.
Social media also highlights (and, in part, drives) the younger demographic’s desire for authenticity in all facets of their lives. When it comes to travel, in particular, two-thirds of millennials worry about whether they are getting an authentic experience. As such, they are less interested in mass-produced tours and tourist traps and would rather experience a locale like a local.
At the same time, years of emphasis on the importance of small and local businesses has likely had a permanent impact on where millennials and Gen-Zers want to spend their money. When it comes to vacations, these travelers want their trip to benefit the local people and economy and are willing to pay a premium to do so.
While it is too soon to tell whether these motivators are permanent or passing, they do give us critical insights into the overall purchasing behaviors of millennials and Gen-Z.
It is also important to note the ways that these groups differ from older generations and make the necessary investments to capitalize on the benefits. For example, a tour company in Italy may need to reallocate resources from touristic Rome to help visitors explore Perugia like a native.
Even beyond travel, millennials and Gen-Zers are finding new frontiers–and doing it in style. I encourage all entrepreneurs to study and innovate for this audience, whose purchasing power is only getting stronger.
Danilo Diazgranados is an independent investor in the global food and wine, financial services, real estate, and the hospitality sectors.