Travel: Loyalty Reset: Gen Z, Millennials, and Zillennials Demand Flexibility and Experiences, Forcing Travel Programs to Adapt by 2030

Why it is the topic trending:

• Generational Shift in Travel Power: Gen Z and Millennials are poised to dominate travel demand by 2030, making their preferences crucial for loyalty programs.

• Emergence of the "Zillennial" Micro-Generation: This influential group between Millennials and Gen Z presents unique loyalty opportunities and challenges.

• Outdated Traditional Perks: Traditional loyalty perks like points for flights and hotels are no longer sufficient to retain younger travelers.

• Demand for Flexibility and Bundling: Younger generations prioritize bundled trips, flexible payment options, and varied accommodation types.

• Experiences Over Points for Millennials: Millennials are seeking richer experiences rather than just accumulating loyalty points.

• Urgency for Loyalty Program Evolution: Arrivia's report signals a "red alert" for loyalty professionals, emphasizing the need for immediate adaptation.

• Low Current Usage of Loyalty Channels: Despite high interest in using loyalty programs if pricing and personalization improve, current usage remains low.

• Emphasis on Personalization by Generation: Different generations have distinct preferences for loyalty rewards, requiring tailored approaches.

• Importance of Mobile and Digital Integration: While not explicitly stated as a trend in the article's "Why," it is implied that younger generations expect seamless digital experiences with loyalty programs.

• High Spending Potential of Zillennials: This micro-generation, despite many still living at home, has significant disposable income and adventurous travel habits.

Overview:

An Arrivia study of over 1,000 U.S. travelers reveals a significant generational shift in travel loyalty, with Gen Z, Millennials, and the emerging "Zillennial" micro-generation (born 1992-2002) demanding a radical rethink of traditional loyalty programs. By 2030, these younger travelers will comprise half of all U.S. leisure travel, and their preferences differ significantly from those of Baby Boomers and Gen X. The report highlights that traditional perks are no longer enough; younger travelers prioritize flexibility, bundled packages (including flights, cars, hotels, and cruises), varied accommodation options like vacation rentals, and flexible payment tools. Millennials, in particular, crave experiences over points. While cost remains a top priority across all generations, the way value is perceived and sought differs. The study emphasizes the urgency for loyalty program leaders to adapt to these evolving demands to retain these influential and high-spending traveler segments or risk being left behind.

Detailed Findings:

• Generational Travel Dominance by 2030: Gen Z and Millennials will make up half of all U.S. leisure travel.

• Fragmented Traveler Behavior: Generations book, pay, and spend on travel very differently.

• Younger Travelers (Gen Z & Zillennials) Prioritize: Bundled trips, flexible pay, vacation rentals, and cruises.

• Older Travelers (Boomers & Gen X) Prioritize: Hotels, consistent loyalty benefits, and ease of booking.

• Zillennials' Influence: High income (>$100k), nearly twice as likely to travel internationally, prefer rental cars, strong demand for bundled trips.

• Cruises Appeal to Younger Adults: 27% of Zillennials identify as cruise travelers (vs. 18% of Boomers).

• Vacation Rentals Popular with Millennials: Especially families, due to flexibility, space, and cost.

• Low Loyalty Channel Booking: Only 18% currently book via loyalty channels, but 55% would if pricing improved or deals felt tailored.

• Gen Z Loyalty Drivers: Broader destination options (45%), bundled booking (46%).

• Zillennials' Payment Preference: Flexible payment is crucial for nearly 50% (vs. 14% of Boomers).

• Loyalty Program Adaptation Needs: Personalize by generation, add trip bundles, embed flexible pay, expand lodging types, cater to Zillennial adventure.

Key success factors of product (trend):

• Flexibility and Choice: Offering a variety of travel options and booking methods.

• Bundled Value: Combining different travel components into attractive packages.

• Personalized Rewards: Tailoring perks and offers to the specific preferences of each generation.

• Seamless Digital Experience: Easy booking and redemption through user-friendly platforms.

• Experiential Offerings: Providing unique and memorable travel experiences beyond just basic accommodations and flights.

• Recognition and Status: Tiered loyalty programs that offer increasing benefits for frequent travelers.

• Clear Communication of Value: Making it easy for travelers to understand the benefits of the loyalty program.

• Adaptability to Emerging Trends: Continuously evolving the program to meet changing traveler demands.

Key Takeaway:

Travel loyalty programs face a critical need to evolve by 2030 to cater to the distinct preferences of Gen Z, Millennials, and Zillennials, who prioritize flexibility, bundled options, diverse lodging types, and personalized experiences over traditional perks, or risk losing relevance with these dominant future travelers.

Main trend:

The main trend is the Generational Divergence in Travel Loyalty Preferences, where younger generations (Gen Z, Millennials, Zillennials) are demanding more flexible, experiential, and bundled travel rewards compared to the traditional hotel and flight-focused perks favored by older generations (Boomers, Gen X).

Description of the trend:

Redefining Travel Rewards: This trend describes how the expectations and behaviors of different generations are forcing a fundamental shift in the design and execution of travel loyalty programs. Younger travelers, who will soon represent the majority of the market, are seeking rewards that align with their preferences for diverse trip types (including cruises and vacation rentals), bundled packages offering comprehensive value, and flexible payment options. They also prioritize experiences over simply accumulating points. This contrasts with older generations who often value consistent benefits tied to traditional hotel and flight bookings and prefer ease of use. This divergence necessitates a more nuanced and adaptable approach to loyalty programs to effectively engage and retain travelers across all age groups.

What is consumer motivation:

• Younger Travelers: Value flexibility to accommodate varied travel styles, desire comprehensive value through bundling, and seek experiences that create lasting memories.

• Older Travelers: Value predictability and consistent benefits they are familiar with, prioritize convenience and ease of booking.

• All Travelers: Appreciate cost savings and comfortable travel experiences.

What is driving trend:

• Generational Differences in Travel Habits: Younger generations are more likely to take diverse types of trips and value flexibility.

• Technological Advancements: Expectation for seamless digital booking and redemption processes.

• Rise of Alternative Accommodations and Experiences: Popularity of vacation rentals and experiential travel options.

• Economic Factors: Desire for value and flexible payment options, especially among younger travelers with potentially varying income levels.

What is motivation beyond the trend:

• Seeking Memorable and Meaningful Travel Experiences: All generations ultimately want enjoyable and fulfilling trips.

• Desire for Recognition and Rewards for Loyalty: Travelers expect to be valued for their continued business.

Description of consumers article is referring to:

Based on the article, the consumers this trend refers to are:

• Gen Z (Born after 2002): Seek freedom, value broader destination options and bundled booking.

• Millennials (Born 1981-1996): Want family-friendly options and prioritize experiences over points.

• Zillennials (Born 1992-2002): Adventurous, high income, travel internationally, prefer rental cars, strongest demand for bundles and flexible payments.

• Gen X (Born 1965-1980): Not detailed in terms of preferences in this article.

• Baby Boomers (Born 1946-1964): Prefer hotels, consistent perks, and ease of booking; less interested in flexible payments.

• Travel Loyalty Program Leaders: The target audience of the Arrivia report who need to understand these generational shifts.

• What is their age? Ranges from teenagers and young adults (Gen Z) to older adults (Baby Boomers), with a focus on the distinct preferences of the younger generations.

• What is their gender? Not specified in the article.

• What is their income? Zillennials are noted for their high income, suggesting income can influence travel preferences and loyalty program needs.

• What is their lifestyle: Varies by generation, from the adventurous travel habits of Zillennials to the potentially more family-oriented trips of Millennials and the established preferences of Baby Boomers.

• What are their shopping preferences in the category article is referring to? Younger generations are open to a wider range of travel options and value bundled deals. Older generations have more established preferences for traditional flights and hotels.

• Are they low, occasional or frequent category shoppers? The Arrivia report surveyed travelers, implying they are at least occasional shoppers in the travel category. Loyalty programs are designed to target frequent travelers.

• What are their general shopping preferences-how they shop products, shopping motivations? Younger generations are likely more digitally savvy and seek value and flexibility. Older generations might prioritize ease and familiarity.

• What kind of products they like: Flights, hotels, vacation rentals, cruises, rental cars – the full spectrum of travel products.

Conclusion: Younger generations are reshaping travel loyalty, demanding more flexible, bundled, and experiential rewards, requiring programs to adapt significantly by 2030 to remain relevant.

Conclusions:

Arrivia's report clearly indicates a pivotal moment for travel loyalty programs. The dominance of Gen Z, Millennials, and the influential Zillennial micro-generation by 2030 necessitates a fundamental shift away from traditional, one-size-fits-all loyalty models. These younger travelers demand programs that offer flexibility, bundled value across various travel components, diverse lodging options, and personalized experiences. Loyalty leaders who fail to adapt to these generational preferences risk alienating a significant and growing portion of the market, while those who embrace these changes have the opportunity to cultivate lasting loyalty with high-spending future travelers.

Implications for brands:

• Must Adapt Loyalty Programs Urgently: The time to evolve is now to capture the loyalty of future travel leaders.

• Embrace Generational Personalization: Tailor rewards and communication strategies to the specific preferences of each generation.

• Prioritize Bundled Offerings: Develop attractive packages that combine flights, accommodations, transportation, and activities.

• Integrate Flexible Payment Options: Cater to the financial needs and preferences of younger travelers.

• Expand Beyond Traditional Hotels: Include vacation rentals, cruises, and other non-hotel lodging options in loyalty programs.

• Focus on Experiences: Offer unique and memorable travel experiences that resonate with Millennials and adventurous Zillennials.

Implication for society:

• Shifting Landscape of Travel Rewards: Consumers can expect more diverse and flexible loyalty program offerings in the future.

Implications for consumers:

• More Tailored Loyalty Programs: Travelers may see programs that better align with their individual preferences and travel habits.

• Increased Value and Flexibility in Rewards: Opportunities for more comprehensive and adaptable travel benefits.

Implication for Future:

• Loyalty Programs Will Become More Dynamic: Expect continuous evolution and personalization in the travel rewards space.

• Technology Will Play a Key Role: Digital platforms and data analytics will be crucial for delivering personalized and flexible loyalty experiences.

Consumer Trend:

Generational Customization of Loyalty: Consumers, particularly in younger generations, expect loyalty programs to be highly personalized and tailored to their specific needs and preferences.

Consumer Sub Trend:

Bundled Rewards and Flexible Options: Younger travelers prioritize loyalty programs that offer the ability to bundle various travel components and provide flexible redemption options.

Big Social Trend:

Personalization as a Standard Expectation: Consumers across industries increasingly expect personalized experiences and rewards from brands.

Worldwide Social Trend:

Global Demand for Value and Flexibility in Loyalty Programs: This trend is likely not limited to the US, with travelers worldwide seeking more relevant and adaptable loyalty benefits.

Social Drive:

Seeking Recognition, Value, and Convenience from Loyalty Programs: Travelers want to feel valued for their loyalty and easily access rewards that meet their specific needs.

Learnings for brands to use in 2025:

• Invest in Understanding Generational Preferences: Conduct research to gain deep insights into what different age groups value in travel loyalty.

• Begin Testing Flexible and Bundled Offers: Experiment with new loyalty program structures that cater to younger travelers.

• Enhance Data Analytics Capabilities: Leverage data to personalize loyalty rewards and communications.

Strategy Recommendations for brands to follow in 2025:

• Pilot Bundled Travel Packages for Loyalty Members: Offer exclusive deals combining flights, accommodation, and activities.

• Implement Flexible Payment Options for Reward Redemption: Allow members to use points and cash in various combinations.

• Segment Loyalty Programs by Generation: Offer different reward structures and benefits that appeal to specific age groups.

Final sentence (key concept) describing main trend from article (which is a summary of all trends specified), and what brands & companies should do in 2025 to benefit from trend and how to do it:

The consumer trend of generational customization of loyalty, with younger travelers demanding bundled, flexible, and experiential rewards, necessitates that travel brands in 2025 prioritize understanding and adapting their loyalty programs to cater to the distinct preferences of Gen Z, Millennials, and Zillennials by offering personalized value and booking ease to secure their future loyalty.

Final Note:

• Core Trend: Generational Customization of Loyalty: Expectation for personalized and tailored loyalty programs.

• Core Strategy: Personalize Loyalty Programs by Generation: Offer different rewards and structures to appeal to specific age groups.

• Core Industry Trend: Demand for Flexible and Bundled Travel Options: Travelers seek comprehensive value and adaptable booking.

• Core Consumer Motivation: Seeking Recognition, Value, and Convenience from Loyalty Programs that Align with Their Travel Habits.

Final Conclusion:

The Arrivia report serves as a crucial wake-up call for the travel industry, highlighting the urgent need for loyalty programs to evolve and align with the changing expectations of younger generations who will soon dominate the market. By embracing personalization, flexibility, and a broader definition of travel rewards, brands can transform their loyalty programs from outdated point systems into powerful tools for attracting and retaining the travelers of the future. Failure to adapt risks losing ground to competitors who are quicker to recognize and respond to these significant generational shifts.

Core Trend Detailed:

The core trend of Generational Divergence in Travel Loyalty Preferences underscores the reality that different age groups have distinct expectations and motivations when it comes to engaging with travel loyalty programs. This is particularly evident when comparing the preferences of younger generations like Gen Z, Millennials, and Zillennials with those of older generations like Baby Boomers and Gen X. Younger travelers, often characterized by their tech-savviness, desire for flexibility, and interest in diverse travel experiences beyond traditional hotel stays and flights (such as vacation rentals and cruises), seek loyalty programs that reflect these preferences. They value the ability to bundle various travel components for better value, desire flexible payment options for rewards, and are often more motivated by unique experiences rather than simply accumulating points. In contrast, older generations tend to favor the established and consistent perks associated with traditional loyalty programs, such as hotel upgrades, airline miles, and straightforward booking processes. This divergence necessitates a departure from a universal loyalty strategy towards more segmented and personalized approaches that cater to the specific needs and desires of each generational cohort.

Key Characteristics of the Core trend:

• Younger Generations Favor Flexibility: Desire adaptable booking and redemption options.

• Demand for Bundled Packages: Want rewards that cover multiple aspects of a trip.

• Experiential Focus for Millennials: Prioritize unique and memorable travel experiences.

• Traditional Preferences of Older Generations: Value consistent perks related to flights and hotels.

• Importance of Digital Experience for All: Expect seamless and easy-to-use online platforms.

Market and Cultural Signals Supporting the Trend:

• The Arrivia report specifically highlights the different preferences of each generation based on survey data.

• The increasing popularity of alternative accommodations like Airbnb and Vrbo among younger travelers.

• The growth of the cruise industry appealing to a broader demographic.

• The rise of travel influencers showcasing diverse and experiential travel.

How the Trend Is Changing Consumer Behavior:

• Younger travelers may choose travel providers whose loyalty programs offer more flexible and bundled options.

• Older travelers may remain loyal to programs that consistently deliver familiar benefits.

• There might be a lower engagement with traditional loyalty programs among younger demographics if their preferences are not met.

Implications Across the Ecosystem:

• Travel providers need to rethink their loyalty program structures to cater to a wider range of preferences.

• Technology platforms need to support more dynamic and personalized loyalty experiences.

• Consumers may benefit from more tailored and relevant travel rewards.

Strategic Forecast:

Travel loyalty programs will likely become increasingly personalized and segmented by generation, with a greater emphasis on flexibility, experiences, and bundled value to attract and retain younger travelers.

Areas of innovation:

• AI-Powered Personalized Loyalty Portals: Developing intelligent digital platforms that adapt the display of rewards, offers, and communication based on the identified generation and individual preferences of the loyalty program member.

  • Detail: For Gen Z, this might emphasize flexible redemption options like partial point usage for unique experiences or bundled deals with alternative accommodations. For Millennials, the portal could highlight family-friendly benefits, curated experience packages, and sustainability-focused travel options. For Boomers, it might prioritize ease of navigation, clear information on traditional hotel and flight benefits, and dedicated customer service access.

• Dynamic Reward Bundling Engines: Implementing technology that allows members, especially Zillennials and Gen Z, to create their own customized travel packages using loyalty points and cash, with the system suggesting optimal combinations and offering bonus value for bundling airfare, accommodation (including vacation rentals and cruises), and activities in a single transaction.

  • Detail: This goes beyond pre-set packages, giving younger travelers the freedom to design trips that fit their adventurous booking habits and desire for comprehensive travel solutions. The system could also factor in flexible payment options, allowing for points plus installments.

• Experiential Reward Marketplaces Tailored by Life Stage: Creating digital storefronts within loyalty programs that offer a diverse range of experiences beyond traditional travel, curated to appeal to different life stages and generational interests.

  • Detail: For Millennials, this could include family-oriented excursions, wellness retreats, or culinary experiences. For Zillennials, adventure activities, cultural immersion tours, or access to exclusive events might be featured. For Boomers, options like guided historical tours or relaxing resort stays could be highlighted. These marketplaces would allow for point redemption or discounted access.

• Gamified Loyalty Challenges with Generation-Specific Incentives: Introducing interactive challenges within the loyalty program that cater to the competitive spirit and digital engagement of younger generations, offering rewards aligned with their preferences.

  • Detail: Gen Z might be motivated by social sharing badges, bonus points for trying new travel types (like cruises or vacation rentals), or entry into prize draws for unique experiences. Millennials could be incentivized with family-focused rewards or points multipliers for sustainable travel choices.

• Flexible Point Redemption Across Diverse Partners: Expanding the ways loyalty points can be used beyond traditional travel, offering partnerships with lifestyle brands, e-commerce platforms, and local experiences that resonate with the varied interests of different generations.

  • Detail: This could include allowing Gen Z to redeem points for merchandise, streaming subscriptions, or ride-sharing credits. Millennials might value redemption options for family entertainment or home goods. Boomers might appreciate partnerships with dining establishments or retail stores they frequent.

• Micro-Loyalty Programs for Specific Traveler Behaviors: Designing targeted loyalty initiatives for niche travel habits prevalent among certain generations, such as cruise-specific rewards for Zillennials or vacation rental benefits for Millennial families.

  • Detail: These focused programs can offer more relevant and valuable perks for travelers who consistently engage in these specific types of travel, fostering stronger loyalty within those segments.

Final Thought:

The evolving expectations of Gen Z, Millennials, and Zillennials are driving a significant transformation in the travel loyalty landscape. By understanding and responding to these generational preferences, travel brands can create programs that resonate with the travelers of today and tomorrow, fostering long-term loyalty in an increasingly competitive market.

Source: https://www.travelandtourworld.com/news/article/gen-z-millennials-and-zillennials-redefine-loyalty-arrivia-reveals-travel-trends-that-loyalty-programs-must-crack-by-2030/