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January 7, 2019

Travel, hospitality businesses will be guided by Gen Z, WEX report says

Courtesy / WEX Inc.
Courtesy / WEX Inc.
Jay Dearborn, president of WEX's corporate payments division, announced the findings today of the 2019 Travel Trends and Expectations report it completed in partnership with Mastercard.

An increasing focus on technology and the preferences of Generation Z — those age 20 and under — will drive travel trends in the future, according to the 2019 Travel Trends and Expectations report from South Portland-based WEX.

Travel trends in 2018 broke down along generational lines, with younger travelers more likely to use online travel agencies, travel with a purpose and pay for it with a debit card rather than a credit card, the report said.

But more focus on technology as a resource crosses all generational lines, according to the report, on which WEX, a payment and business solutions company that will soon be moving into new global headquarters in Portland, partnered with Mastercard, which conducted the primary research.

In its second year, the study looks at how U.S. travelers viewed the travel landscape in 2018, and how that will impact travel behavior in 2019. The findings were released by WEX on Monday.

The data is intended to help inform travel companies of shifts in the travel market as business planning for the new year solidifies, according to the report.

"Millennials (ages 21-34) represent the next wave of travelers, but it's the attitudes and preferences of Gen Z that will give shape to the longer-term future of the travel industry," the report said. "And while younger people are likely new to travel and therefore not yet guided by old habits, they're already making their preferences known."

The youngest generation of travelers "presents a huge opportunity for online travel companies, that can gain the next generation's attention while they're experiencing the world of travel for the first time..

"If businesses act accordingly, they can start fostering a sense of brand loyalty in this group at the very start of their customer journey. And because they are young, this group is impressionable," the report said. "When picking a destination or activity, both Gen Z and Millennials report being more easily swayed by online advertisements, Facebook, Instagram and word-of-mouth than their elders."

‘Technology is the thread’

"Technology is the thread connecting many of our travel findings and predictions for 2019," said Jay Dearborn, president of WEX Corporate Payments. "The influence of technology on the travel industry, and on both the imagination and preparedness of today's travelers, simply cannot be overstated. It is our hope that this report provides travel industry professionals with the insights they need to reach today's self-directed travelers where they're most likely to be: online."

"Disruptive" new services and technologies have made it an exciting time to be both a consumer and provider of travel services, said Ed Glassman, executive vice president North American markets at Mastercard.

"Now that we're in our second year of working with WEX to develop this report, we've been able to compare and track changes from the previous year, giving us great insight into exactly where the shifts in Americans' travel habits and expectations are occurring," he said.

What the survey found

The findings were gathered through self-administered surveys by 1,502 respondents between Oct. 3 and Oct. 22 who had taken three or more non business-related trips in the previous 12 months.

Key findings include:

  • Some 21% of those surveyed said they would be comfortable using a travel bot, which allows travel booking by voice through Alexa or Google Home or another device. Generation Z (24%) — those aged 18 to 20 in the survey — and Millenials (22%) booked trips through a chatbot. But nearly a quarter of those surveyed — 23% — said a digital assistant would probably improve the booking experience.
  • Younger travelers "are driving the shift" to travel with a specific adventure as the goal. "From yoga retreats to international hiking trips, cycling adventures, volunteering or 'foodie' tours, all signs point to travelers being more adventurous in 2019," the release said. The two youngest age groups are also more likely than Gen X — and particularly Boomers — to combine leisure travel with a purpose, such as volunteering, and to travel to take a class or learn a new skill.
  • Older travelers still prefer to book directly with an airline or hotel, while online travel agencies are more popular with Millennials and those younger. Older travelers are more likely to use their credit cards to pay for travel expenses — 93% of Boomers, and 85% of Gen X (35 to 54-year-olds), 80% of Millenials. Of the youngest generation of travelers, however, 56% used a credit card, while the rest used a debit card or cash.
  • Sharing economy services like Airbnb and Uber are preferred by Gen Z (62%) and Millennials (56%). Millennials in particular (53%) say sharing economy services make travel affordable for them. Many respondents also reported that they use the services because they make them feel like a local.

"We predict that (online travel agencies) and (peer to peer) businesses and hotels will respond, not by digging in their heels but by adapting their offerings," the report said.

That's because "the desire for pampered, comfortable accommodations outweighs the thirst for accommodations that offer an authentic, live-like-a-local experience" and hotels are still the preferred accommodation. Of those who like hotels, 74% said staying in one makes them feel as though everything is taken care of for them and 64% said they like it because it makes them feel like a tourist.

Younger users are more engaged with new travel technologies and report being more open to receiving personalized suggestions digitally. Almost one-quarter of all respondents (24%) would allow a computer to plan a trip based on data from their previous travel history; however, Gen Z and Millennials are almost three times as willing to consider it than Boomers.

The 1,502 total respondents included 90 from Gen Z (18-20 years old), 436 Millennials (21-34), 556 Gen X (35-54) and 421 Boomers (55-70).

Travel abroad more and business-leisure trips

In the 2017, 36% of travelers surveyed said they anticipated taking more trips the following year, but the number of trips taken in 2018 remained on par with 2017, the report said.

Responders in the 2018 also said they play to travel more the following year, "likely due to the aspirational nature of travel."

One notable change from 2017 is that travel abroad is anticipated to increase, in particular travel to Europe . Travel to Asia/Pacific has become particularly popular among younger travelers, the survey said.

The survey also tracks the "bleisure" trend — the combination of business and leisure travel — and it found that 55% of those who have traveled for business in the past year said they tend to extend their business trips to explore the city.

More than a quarter of the U.S. travelers surveyed take business trips, and like leisure travelers, they generally book directly with hotels and airlines, more often using a personal credit card (65%) than a company credit card (37%).

"The use of a personal credit card may reflect a desire to rack up loyalty rewards that they can be redeemed for personal travel, as 62% of frequent flyer program members claim to be very likely to redeem their loyalty points for travel in 2019," the report said. Some 82% of those responding are a frequent flyer program member.

The report also said that "while 'travel agent' is a title that is largely going extinct," corporate travel may keep the industry alive. The study shows that 45% of respondents in the business and corporate market use their company's travel agent, either online or by phone, to book business trips, while an additional 7% rely on an in-house travel planner.

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