Gen Z is increasingly seeking international adventure travels, while baby boomers are prioritising domestic, high-spend trips, underscoring the need for tailored travel offerings, said Charles Habak, Partner at McKinsey & Company, delivering a presentation on global tourism trends at ITB Asia 2024 in Singapore.

 

According to Habak, the traveller landscape is evolving, with distinct generational preferences emerging.

 

Habak noted that global tourism has nearly recovered to pre-COVID levels, with Asia and Europe close to reaching 2019 figures. Domestic tourism, especially in major markets like the US and China, now accounts for 75% of total travel spending, he said.

 

Southeast Asia and India are rapidly emerging as significant source markets, with outbound tourism from these regions projected to grow by 50% by 2030. Destinations such as Thailand are adapting well to cater to diverse regional markets, further underscoring the evolving traveller profile, he said.

He emphasised the importance of understanding fundamental shifts in the tourism industry, including changes in source markets, destinations, and traveller profiles. He also highlighted the significant role of domestic tourists, who account for 75% of all tourism spend, with the US and China being major contributors.

Habak said five key considerations are crucial for the tourism industry: understanding visitor segments, leveraging off-the-beaten-path offerings, enhancing loyalty programmes, embracing innovation, and focusing on memorable experiences.

 

Habak noted some other findings and recommendations for the industry:

• Have a clear understanding of the target audience and their preferences when designing offerings.

• Explore using off-the-beaten-path destinations as a way to address overcrowding and cater to different traveller segments.

• Invest in technology to better understand and personalise the visitor experience, especially for loyalty programs.

• Focus on providing memorable experiences that align with the needs and expectations of different traveller groups, including luxury and generational segments.

• The 50% propensity for travellers to stay within the same region rather than traveling inter-regionally.

 

He also highlighed evolving source markets and destinations:

• Southeast Asia and India are rapidly evolving source markets, with a 50% increase in outbound spend expected by 2030.

• Concentration of tourism spend in 10 global destinations, which account for 45% of all spend which includes France, Italy, Spain Germany, US and UK and include China and Thailand 

• Observes shifts in destination popularity, with some lesser-known destinations gaining traction.

• Opportunity for destinations to manage overcrowding through policy and technology, complementing major landmarks with lesser-known sites.

Understanding Traveler Profiles

• The importance of understanding different traveller archetypes, such as sun and sea seekers, trend-conscious jet setters, and premium travellers.

• The varying needs and behaviours of these different types of travellers, emphasising the need for tailored offerings.

• Discusses the growing gap between younger and older travellers, with Gen Z seeking adventurous experiences and baby boomers prioritizing domestic, wholesome experiences.

• The higher willingness of Gen Z and Millennials to spend on distinctive experiences, despite having smaller wallets compared to baby boomers.

 

He noted the role of digital channels and travel agents, including:

• The importance of digital channels for younger generations, but also highlights the continued relevance of travel agents for baby boomers.

• The need for a balanced approach, considering both digital efficiency and personalized service for different segments.

• The importance of the journey in planning trips, with 70% of travellers preferring to plan their own trips for value and the experience of discovery.

 

Habak debunked common myths about luxury travel, such as the assumption that all luxury travellers are very wealthy and that luxury travellers are older. He reveled that 70% of luxury spend comes from high net worths and aspirational segments, which are significant contributors.

 

Luxury travellers are concentrated between the ages of 40 and 60, with a higher propensity for traditional tourism activities, he said.

 

He also emphasized the importance of simplicity and connecting with people in luxury travel, with a preference for leaving technology behind. -TradeArabia News Service