.svg)
Latest Business News
Understanding the Travel Habits of Millennials and Gen Z Amid Inflation
Traveling with Insurance: A Trend Among Younger Generations
Despite the current economic climate, Gen Z and millennials are showing a strong desire to travel, even if it means paying a little extra. According to a recent Bank of America report, a significant proportion of these younger generations are willing to pay additional fees for travel insurance or refundable booking options. The report, which surveyed 2,003 consumers in June, found that 87% of Gen Z and 83% of millennials were more likely to pay for travel protections compared to other age groups.
Mary Hines Droesch, head of consumer and small business products at Bank of America, suggests that this trend is largely influenced by the lifestyles and travel destinations of these younger generations. The bank's previous survey in March 2022, which focused on consumer savings and spending behaviors, indicated a similar trend. Of those planning to travel, 54% said they would purchase trip protection, with 73% of Gen Z and 65% of millennial travelers opting for this additional security.
The Impact of Work and Lifestyle Constraints on Travel Choices
Younger generations often face tighter restrictions, from limited free time to financial constraints. As a result, they tend to avoid risks to ensure their travel plans go smoothly. This is in contrast to many baby boomers, who, being retired, enjoy more flexibility when it comes to travel. The Bank of America report found that baby boomers are more likely to travel on nonpeak days (60%) or drive instead of fly (54%) to their destinations.
For Gen Z, their travel plans are often determined by their work schedules, especially with the current trend of returning to the office. Therefore, by opting to buy travel insurance, they can ensure their travel plans are more secure.
Embracing Travel Protection Products
Travel protection products are becoming increasingly popular among younger travelers. Roughly 20% of customers on Hopper, a travel app predominantly used by Gen Z and millennial users, are adding the app's flight disruption guarantee product to protect their trips. This trend reflects the growing concern among travelers about potential disruptions, particularly in light of recent news events.
The Covid-19 pandemic led to numerous travel plans being canceled, and many travelers were left without refunds, even if they had travel insurance. This experience has left a lasting impression on younger generations. As countries reopen for tourism with relaxed or eliminated Covid restrictions, younger U.S. travelers are eager to experience new destinations. However, they are also insuring their trips to ensure they can travel at a later date if unexpected events occur.
The Future of Travel for Millennials and Gen Z
The travel sector is still experiencing higher service disruption rates compared to pre-pandemic times. This, coupled with a stubborn, albeit falling, inflation rate, has led many families to tighten their belts. However, millennials and Gen Z are no longer just the "young ones." As they enter their 40s and start their careers, they are building economic power and establishing themselves as adults.
The increased interest in travel protection products is not a passing trend. Users who have previously applied travel protection products on Hopper are two to four times more likely to purchase the product for future trips, adding about 10% or $40 more per booking.
Making Informed Decisions About Travel Insurance
While travel insurance seems like a good idea, travelers should be aware of the different types of travel insurance available and ensure they choose the right type. For instance, Cancel for Any Reason (CFAR) plans allow you to cancel a flight for any reason and get a full refund. However, such coverage can add up to 50% or more on top of actual costs.
Traveling during a destination's "shoulder seasons," or the transition period between times most popular with travelers, can help reduce costs. January, September, and October are typically the cheapest months to travel and stay in hotels worldwide. Considering off-peak days for travel and hotel stays can also help reduce the overall cost of a trip.
Conclusion: The Impact on New Businesses
The shifting travel habits of Gen Z and millennials, as they navigate inflation and other economic factors, present both challenges and opportunities for new businesses in the travel industry. The increased willingness of these younger generations to pay for travel insurance and refundable booking options indicates a strong desire for risk mitigation. This trend could potentially open up new avenues for businesses offering innovative travel protection products and services.
However, the challenge lies in understanding and catering to the specific needs and constraints of these demographic groups. Their travel decisions are often influenced by work schedules and financial constraints, making flexibility and affordability key factors. New businesses need to consider these factors when developing their offerings.
Furthermore, the ongoing disruptions in the travel sector due to the Covid-19 pandemic and other factors have led to heightened concerns among travelers. This presents an opportunity for businesses to offer solutions that address these concerns, such as comprehensive travel insurance and flexible booking options.
In conclusion, the evolving travel habits of Gen Z and millennials amid inflation present a dynamic landscape for new businesses in the travel industry. By understanding these trends and adapting accordingly, these businesses can position themselves for success in this changing market.
Article First Published at:
Brought to you by ChatGPT for
