Why Gen Z holds the key to future travel spending growth
Is Gen Z’s heightened interest in travel a short-term spike or a lasting shift? The answer will matter for brands and businesses across a range of industries, says Michael Nevski, director of global insights at Visa.
“Revenge travel” to make up for trips shelved in the pandemic continues, even as parts of the world are seeking revenge against the influx of tourists in their towns. The blurring of business and leisure, or bleisure travel, is still a thing, too. But when Visa’s Michael Nevski thinks about the future, he wonders whether the travel patterns we see emerging among Gen Zers are more of a life stage (they’re young, untethered and many have disposable income to spend on travel) or are these trends they will carry with them as they age.
Matt Carmichael: When it comes to travel spending, what are you seeing these days?
Michael Nevski: People are pulling back because of inflation, because of geopolitical events, because people are constantly bombarded and distracted. But while they would pull back in terms of the spending in certain areas of their life, they would still spend on travel because even if they don't have any specific reason to go, they just have an urge to go and to take a vacation.
Carmichael: Will that continue as the economy shifts?
Nevski: It's not going to be huge growth. It’s going to be very moderate. On one hand, there is an opportunity. You’ve heard the term “bleisure” where people take more opportunities when they travel on business and take a few extra days to just enjoy the area. But at the same time, companies are trying to pull back on spending on business travel, whether it's domestic or international.
Carmichael: Business travel has always helped float the travel industry. Can leisure and bleisure make up for lost business revenue?
Nevski: I would be lying to you if I said it will. Any major spending growth is going to have to come from Gen Z.
Carmichael: How do demographics play into the trends?
Nevski: Almost 30% of all households in the United States are single-person households. That will continue to rise. It influences how people interact with the world, interact with businesses and interact with each other. Because they’re living in isolation in a sense, it's very important for them to leave their homes and interact with people and businesses.
This way, single people can socialize and see the world. And when they take those travel vacations, they want to stay active. They want to do something, whether it's kayaking or some kind of group activities, so not just being relaxed and laying down on the beach. People also want to be spontaneous. That means sometimes booking at the last minute.
Carmichael: There are two main types of single-person households at opposite ends of the age spectrum. How are they spending differently?
Nevski: It changes the activities, but also the destinations. Older Baby Boomer singles would prefer to go on a cruise with very well-planned activities or go to a resort. It's like a 55-plus community where it's all catered to them.
Younger people would be open to some cross-sell or upsell of excursions or hiking or doing something intense and active, and doing it in a group. Older households focus more on accommodations. That means more premium cabins or seats on a plane.
“Any major spending growth is going to have to come from Gen Z.”
Carmichael: How do travel trends apply to non-travel brands?
Nevski: There are co-brand and partnership opportunities with restaurants or quick-service restaurants or hotels. Where brands can cross paths with their targets is while they are in a social mood or purchasing products and services at the grocery store, to which they make more frequent trips. Because, again, for the customer, shopping is a way of leaving the house and socializing with friends and family.
Carmichael: What else are you looking at?
Nevski: There is a demand from the market for a trade-off of efficiency versus time. As one of the cruise companies says: “Less time to get there and more time being there.” That's the aspect of leisure that needs to evolve.
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