Generation Z in Travel and Tourism – Thematic Intelligence

Gen Z in Travel and Tourism Thematic Report Overview

In 2023, Generation Z accounts for people aged between 11 and 26. Asia has the largest Gen Z population at 1.2 billion, followed by the Middle East and Africa with 470 million. This generation uses social media before, during, and after a trip, making it a key component throughout the travel journey. It is increasingly important that destination marketing organizations (DMOs) and travel companies harness this tool as a result. ‘Instagrammable’ travel trends now largely influence the perception of a destination and the inspiration of a tourist pre-trip. The photo-sharing-based app has rapidly developed from being simply a platform to share photos of a vacation to peers; now DMOs, tour operators, airlines, travel agents, and companies have embraced Instagram, acknowledging that it is a key factor within the booking process among Generation Z.

The Gen Z in Travel and Tourism thematic intelligence report takes an in-depth look at the theme of Generation Z and the impact it has on the travel and tourism industry. This report analyzes the players impacted by this theme alongside the contributing trends, negative destination trends, unintended opportunities, and trends that have emerged as a result of Gen Z. It then dives deep into an industry analysis, presenting several real-life case studies looking at how destinations and companies have responded to the impact of this theme on their operations. Recommendations are then offered for the travel sector, alongside a description of companies mentioned throughout.

Gen Z – Key Trends

Gen Z is not a homogenous generation, but it holds shared characteristics as digital natives raised on the internet and social media. The key trends the generation exhibits are demand for frictionless, gamified, and personalized experiences, heavy dependence on travel apps, and ESG-conscious lifestyles among others.

Travel apps: Younger generations are influenced by digitally smart products, with purchasing decisions being driven by the digitally advanced or ‘smart’ features of a product or service. Concurrently, travel apps are an area of investment for travel and tourism companies. Technology advancements have empowered the development of travel apps. According to YouGov America, the top five most famous travel apps for American consumers are Google Maps, Expedia, TripAdvisor, Airbnb, and Travelocity (fame is defined by the % of people who have heard of a travel app). As consumers increasingly seek the most convenient way to interact with travel brands, development and investment in travel apps are expected to increase. This is particularly true for Gen Z, who are mobile-centric and rely on their smartphone throughout the holiday journey, from researching to booking and beyond.

Gen Z in Travel and Tourism– Business Impact

The travel and tourism industry is highly fragmented, with a range of players supplying individual parts of holidays as well as packaged holidays. Three main types of suppliers are relevant to Gen Z travelers: travel intermediaries, lodging providers, and transport. Travel intermediaries are third-party suppliers that usually refer to both offline and OTAs, whereas lodging providers and airlines are direct suppliers. Other direct suppliers include travel guides and tour and cruise operators. These all offer travelers the option to book tourism services online through the firm’s website, chat platform, or social media platform.

The rise of e-commerce and smartphones have considerably benefitted travel players in the theme of Gen Z, as online has become the primary shopping destination for this generation of travelers. Without an online booking platform, it would be impossible for a traveler to carry out a transaction online, which is detrimental to the success and future resilience of a travel intermediary, lodging provider, or airline. This is particularly true as more members of Gen Z join the workforce and the overall purchasing power of this cohort increases. The importance of social media is a relatively new development. Companies are catering to the rising popularity of online platforms that are often looked at when a traveler is deciding where to visit.

The Travel & Tourism Sector in Relation to Gen Z

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Leading Public Travel and Tourism Companies in Gen Z Theme

Some of the leading Gen Z adopters in the travel and tourism sector are:

• Airbnb
• Booking Holdings
• EasyJet

Leading Private Travel and Tourism Companies in Gen Z Theme

Some of the private companies in the travel and tourism sector focusing on Gen Z theme are:

• Intrepid Travel Pty Ltd
• OYO Rooms
• Sawday’s Canopy & Stars

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Travel Intermediaries Sector Scorecard

At GlobalData, we use a scorecard approach to predict tomorrow’s leading companies within each sector. Our sector scorecard has three screens: a thematic screen, a valuation screen, and a risk screen.

The thematic screen ranks companies based on overall leadership in the 10 themes that matter most to their industry, generating a leading indicator of future performance.

The valuation screen ranks our universe of companies within a sector based on selected valuation metrics.

The risk screen ranks companies within a particular sector based on overall investment risk.

Travel Intermediaries Sector Scorecard – Thematic Screen

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Scope

• This thematic report provides an overview of the impact Generation Z has on the travel sector and seeks to understand some of the contributory factors.
• Several case studies are included to analyze the multiple ways countries and companies have responded to this generation’s growth and what they are doing to grow with this theme.

Key Highlights

In 2023, Generation Z accounts for people aged between 11 and 26. Asia has the largest Gen Z population at xx billion, followed by the Middle East and Africa with xx million. However, the Middle East and Africa region has the highest share of Gen Z-ers out of its total population at xx%. According to the World Economic Forum (WEF), Generation Z will account for over xx% of the global workforce by 2025. At the same time, the cohort is gaining financial power. It has been called the most disruptive generation ever by Bank of America, and its influence is on the rise at a time of great uncertainty. Today’s world faces simultaneous and severe geopolitical, economic, social, environmental, and demographic stresses and strains, and Gen Z will shape and disrupt every sector in this changing global economy, with the travel & tourism sector being no different.

Gen Z uses social media before, during, and after a trip, making it a key component throughout the travel journey. It is increasingly important that destination marketing organizations (DMOs) and travel companies harness this tool as a result. ‘Instagrammable’ travel trends now largely influence the perception of a destination and the inspiration of a tourist pre-trip. The photo-sharing-based app has rapidly developed from being simply a platform to share photos of a vacation to peers; now DMOs, tour operators, airlines, travel agents, and companies have embraced Instagram, acknowledging that it is a key factor within the booking process among Generation Z.

Gen Z is already characterized by having particular expectations and needs from the businesses they engage with. For example, the increased need for sustainability from Gen Z has forced companies to face up to their environmental impact, which many avoided doing before the buying power of this market segment became too big to ignore. Tourism is well-placed to capitalize on a new wave of demands from Gen Z, given its experiential and personable nature. That being said, sustained effort is still needed to fully engage with this highly nuanced cohort. A key underlying theme in the graphic below is that most of the leading players have incorporated online platforms. From ‘communicating’ to ‘social media’ to the more travel-specific shift of ‘experiences’ to ‘personalization’, the shift in these consumer preferences is driven by internet usage.

Reasons to Buy

• Understand the current trends surrounding Generation Z within the travel landscape today and how these will escalate in the near future.
• Assess how travel and tourism companies such as tour operators, OTAs, and DMOs are connecting with Generation Z to drive revenues.
• Acknowledge the necessity of appealing to Generation Z by understanding the social, cultural, and environmental effects on the destination.
• GlobalData’s thematic research ecosystem is a single, integrated global research platform that provides an easy-to-use framework for tracking all themes across all companies in all sectors. It has a proven track record of identifying important themes early, enabling companies to make the right investments ahead of the competition and secure that all-important competitive advantage.
• All across the travel and tourism supply chain, now have an opportunity to capitalize on Generation Z, and there are notable examples of this. Therefore, all should buy this report to fully understand how this theme will continue to be a key theme in the future travel landscape.