Luxury travel

Gen Z redefines ‘luxury’ but still wants to book through travel agents

German travel agents are profiting from rising bookings of luxury trips and can expect this trend to continue with Gen Z customers in the future, according to two very different surveys.

November 02, 2017
Gen Z sees unusual trips and time with friends as luxury
Photo: Getty Images

How do 16-22 year-olds of the so-called ‘Gen Z’ see luxury and what do their views mean for the travel industry? Those were among the key questions of a new multi-generation survey of 678 German consumers with high affinity to luxury products, and the results contain several surprises.

Although these young adults are not yet luxury customers, they are expected to represent more than 30% of German incomes by 2025. Moreover, they have growing influence over their parents’ generations, and especially baby boomers aged 51-70, according to the survey by market researcher Jörg Meurer and Munich-based luxury ‘think-tank’ Inlux.

One key finding is that Gen Z defines luxury differently to older generations. Rather than expensive cars or other status symbols, 77% see luxury as meaning “more time for friends and family” and 75% as “more time for myself” and “self-improvement”.

A high 71% also defines “unusual trips” as being part of luxury. Similarly, 63% say that special experiences and diversity are an important part of a trip, while 67% also stress the importance of relaxation while travelling. As many as 47%, for example, can imagine going on a luxury cruise holiday compared to just 40% for the baby boomer generation.

Meurer says this seeming contradiction has a simple explanation. “Gen Z lives under a high stress level,” he explained. Many have already done international work placements while virtually all of them are permanently online in social media where experiences are constantly shared and compared.

In one area, however, this generation remains traditional, the survey showed. Even though they are digital natives and intensive smartphone users, a significant 43% of them still prefer to book high-value holidays through a specialist tour operator or a trusted travel agent. “We certainly didn’t expect such a high percentage,” Meurer admitted. Relationships, personal advice, quality and service apparently remain key for young well-off consumers, too.

This good news for travel agents has been reinforced by the results of a separate analysis of international luxury travel trends from the World Travel Monitor, conducted by IPK International and commissioned by ITB Berlin, which also highlighted the importance of German both as a source market and destination for premium travel.

This analysis found that 51% of all luxury travellers worldwide use travel agencies to plan their trips and 40% of all international luxury trips are booked through a travel agency. In comparison, travel agents are only used to plan 33% and to book 27% of all international outbound trips on average.

Overall, luxury travel is booming around the world with an 18% rise in luxury trips since 2014, which is about twice the overall growth rate for international travel, according to the World Travel Monitor. (The analysis defined international luxury trips as all outbound short trips of up to three nights with a spending of more than €750 per night as well as all outbound long trips of four nights and more and spending of more than €500 per night.)

In 2016, the world population undertook about 54 million international luxury trips, increasing the segment’s market share to around 7% per cent of the international travel. City trips, tours and sun & beach holidays were the main types of international luxury travel for leisure.

According to the World Travel Monitor, the largest source markets for luxury travel are the USA, with 13.7 million foreign luxury trips, and China, with 10 million. In Europe, most luxury trips are undertaken by the British with 3.6 million trips, ahead of the French and the Germans.

The most popular luxury travel destination by far was the USA, with 8.1 million trips, ahead of Canada and Germany. In Europe, Germany received nearly 4 million luxury travel visitors in 2016, followed by France, Italy and Great Britain.

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