Revolutionizing travel experiences: Gen Z and millennials embrace loyalty programs

Some prognosticators say loyalty is dead with younger generations, but the data tells a different story. Results from a recent eMarketer survey demonstrate the opposite with millennials (and higher earners) as the most likely to belong to travel loyalty or rewards programs. And with continued concern around an economic downturn, more savvy travelers continue to cash in on points and rewards to help cover the cost of trips—particularly Gen Z adults and millennials.

“Revenge travel” shows no signs of slowing down as 55% of U.S. consumers plan to prioritize leisure travel spending this year, per the U.S. Travel Association. To put a finer point on why this matters, Morning Consult found that more than half of Gen Z adults are already frequent leisure travelers, logging more than three trips per year.

Generational differences cannot be ignored by travel brands, particularly when considering changes to a loyalty program. Brands must offer the “right” rewards and a seamless experience to attract, engage, and retain young travelers. The future of travel loyalty is bright, but you can’t just wear shades.

An omni-channel experience is table stakes

A frictionless experience across all interactions with a brand is an expectation of digital-native millennials and Gen Z—not just a nice-to-have. Regardless of what customer experience transformation (CXT) stage a travel brand is in, it is critical to invest in an easy-to-navigate booking experience that supports a smooth transition from inspiration to conversion. Poor user experience has a direct impact on customer loyalty.

Younger members want digital platforms that provide convenience, simplicity, and personalization at their fingertips. Along with an inefficient or incomplete tech stack, a bad customer relationship management (CRM) strategy is a big reason why many programs fail. It’s not just the marketing department that needs to deliver the right message at the right time through the right channel. Brands need to continuously invest in training, incentivizing, and rewarding frontline employees to enable them to live out the loyalty value proposition in real life.

Flexibility and choice are key to success

Yes, experiences are at the heart of any successful loyalty program—but there are generational differences to consider when it comes to travel benefits and functionality. For example, features like points pooling are especially appealing to millennials and Gen Z because they lean into a community mindset relevant to generations all about the sharing economy. Points programs that are not increasing point utility and those with poor communication may not get a second chance to win back young travelers who don’t see the value in participating.

On the other hand, innovative loyalty programs that have flexibility and choice woven into payment options, such as enabling a digital wallet, providing the ability to pay with points (for more than just a free night, flight or car rental), making peer-to-peer payments available (e.g., Venmo, Cash App), or offering a Buy Now Pay Later (BNPL) tool have never been more relevant for young consumers.

Leverage values and beliefs to establish an emotional connection

According to our new proprietary research, having shared values with a company when “booking a service like a hotel stay or flight” is two times more important to Gen Z than it is to Baby Boomers. Shared values and beliefs are key considerations for consumers across generations—impacting thoughts and behaviors differently from one generation to another and influencing consumer engagement with different types of products and services.

For example, younger travelers are more likely to seek alignment between their values and the share of wallet they devote to a given brand. For some brands, this means that sustainability rewards are an option to consider. This could be in the form of bonuses for members who book sustainable options or a commitment from travel brands to make an ongoing charitable contribution to aligned causes and organizations.

3 best practices for travel and hospitality brands

Brands looking to create loyalty programs and experiences that appeal more to younger generations while not pushing away Gen X or Baby Boomers should leverage the following strategies:

1. Give your members a voice via surveys to find out which loyalty program features and benefits matter most with enhancements that demonstrate that they’ve been heard.
2. Build more impactful personas by shifting the focus to understand underlying customer motivations and psychographics. Layer in behavioral data points to better discern both customer beliefs and more deeply seated values.
3. Contextualize the customer journey for each persona to understand key interactions, pain points, and moments that matter across channels to build more customer-centric experiences. For example, emphasizing redemption opportunities for travelers looking to cash in for being loyal.

It is critical for brands to consider the evolving values of younger consumers and how they impact expectations, purchase behaviors, and brand loyalty. Download the full report to learn more about how shared values and beliefs drive deeper connections and spark Participation across generations.