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07/26/2022

Gen-Z Leads Comeback of Travel Spending: Here is What They Want When It Comes to Hotels

Attracted to unique experiences, flexibility, and convenience, the super tech-savvy Gen Z market could be the strongest potential growth opportunity for hotels.
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Just a decade ago, the idea of a store that was entirely self-service – devoid of the smiling faces of staff we’ve grown so accustomed to – may have seemed far-fetched. Not impossible, of course, but at the time, this was a reality reserved for TV shows and movies rather than our everyday life.

Today, however, the era of self-service is not only upon us – it’s already begun. As the COVID-19 pandemic upended our world as we knew it, the demand for touchless self-service (which was already alive and well) accelerated at an undeniably rapid pace. Where hands-on, in-person service was once the standard, self-service functionality began to take over, encouraging consumers to interact with brands and touch points on their own terms. During this time, we’ve witnessed the undeniable rise of mobile e-commerce and digital interactions and the emergence of staffless stores.

In this new landscape, consumers have more autonomy over their experience than they’ve ever had before, and convenience remains an utmost priority. The shift to a more digitally-driven experience is especially prevalent in service industries, such as hospitality. Hotels now find themselves next in line to champion this digital transition for their guests.


Amazon GO is Paving the Way for Staffless Hotels

By now, most of us have heard mention of (or perhaps already experienced) the Amazon Go convenience stores opening across the US and London. Unlike the grocery or convenience stores we are accustomed to, these ‘Amazon Fresh’ locations do not have any registers or cashiers. Customers simply walk in, select the items they want to purchase, and walk out – this is, in fact, what Amazon calls the “just walk out” shopping experience. Rather than processing in-store purchases, Amazon Fresh simply works with an Amazon Go app for iOS or Android and links any products selected to your Amazon account for billing. While these stores remain in the experimental stage, they are undeniably appealing in their promise to eliminate lines and other convenience barriers presented by traditional stores – especially to young consumers who are exceptionally accustomed to (and proficient with) digital tools and technology.

 

Now, this begs the question – does hospitality currently offer a “just walk out” experience to guests? To answer this, look no further than Airbnb. The popular online marketplace for homestays, vacation rentals, and tourism activities was an early champion of the sharing economy. As of September 2020, the platform had 5.6 million listings in 220 countries and regions, which is no small feat considering the company was founded in 2008. So, what exactly is Airbnb’s blueprint to success? While the platform’s appeal may differ on a person-by-person basis, some undeniable takeaways are associated with their model – namely, their focus on the user experience. From its inception, Airbnb has made travelers the main characters of its platform and has been disruptive and innovative in its pursuit of a truly streamlined and convenient, digital-first experience.

Similar to Amazon Fresh, Airbnb allows travelers a great deal of autonomy and independence throughout their user experience. Guests can browse, book, communicate with their host, make changes to their booking, and check-in/out all via their mobile phone. In fact, almost everything is handled on the platform. With the ease of a digital exchange, Airbnb rentals eliminate the need for a traditional front desk check-in experience while also offering travelers a more ‘boutique’ or otherwise unique and memorable experience. Moreover, guests are treated to a more personalized experience with credit to a direct line of communication with the host. Unlike a large hotel, there are little to no degrees of separation between a guest and the host of the property they rent, which opens up a wealth of possibilities regarding personalized communications, travel tips, and local insights from the host.

Perhaps most notable is the popularity of Airbnb amongst Gen Z travelers. Although research indicates that U.S. adults (on average) have higher trust in the top 5 hotels and the top 5 airlines than they do in Airbnb, with Gen Z, we see the opposite response. This is especially important when we consider that Gen-Zers plan to spend more on travel in 2022 than any other generation, with
72% saying they intend to spend more, or at least the same amount, this year than in pre-pandemic times. Moreover, 71% of Gen-Zers and 71% of Millennials say they are making plans to travel more, or the same amount, in 2022 than they did in the pre-COVID-19 era. Finally, 51% of Gen Z travelers are planning international trips. In comparison, 37% of them have plans for domestic vacations (Hotelmize), and 65% of Gen Zers ranked ’travel and seeing the world’ as the most important way to spend their money (Telus International).


Aligning with Gen Z Preferences in 2022

It’s important to note that hospitality is, at its core, a hands-on service exchange. There are some aspects of the travel experience that will indeed remain rooted in tradition, and a guest experience will never be entirely devoid of the human touch. At the same time, however, hotels cannot afford to ignore the digital transition happening across the world while competitors like Airbnb are so quick to innovate and adapt.

If we take a page out of Amazon and Airbnb’s book, we can predict the continued emergence of more boutique hotel offerings that emphasize digitally-empowered convenience. From mobile check-in and room entry to ‘smart’ hotel rooms and in-app reservation customization, mobile concierge, contactless payments, and so much more, the hotels of today (and tomorrow) should be able to effectively run themselves. This isn’t to say that hotel staff will no longer play an integral role in the guest experience; rather, with the help of new-age hotel management technology, hotel staff will be effectively freed from the administrative tasks and operational duties which once consumed their attention. With more bandwidth to focus on the guest experience – especially at meaningful touch-points – hotels can strike a balance between the digital experience and traditional hospitality, which will consistently impress and delight guests. As Salesforce India recently shared, “Companies must digitize their relationship with the customer — scaling it, modernizing it, and meeting them where they are, all with an empathetic approach to the person behind the screen, app, channel, or device.”


Now, more than ever, frictionless and flexible experiences delivered via digital tools should become the hospitality industry’s standard as hotels look to cater to the preferences and expectations of younger travelers.

Fortunately, this should be great news for hospitality, especially as the industry confronts a significant staffing shortage across its ranks. In the post-pandemic landscape, hotels don’t only need to cater to newly evolved guest expectations – they also have to find ways to do more with fewer hands on deck. In this regard, transitioning to an all-in-one property management system that automates virtually every aspect of a hotel while driving ancillary revenue via upsells and unsold rooms and amenities is a hotel’s best tool for current and future success.

 

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headshot of Venkat Sakamuri

About the Author

Venkat Sakamuri is the CEO, Co-Founder of San Francisco-based Stayflexi Inc, a Y Combinator backed company. As a visionary tech entrepreneur, he has revolutionized the legacy hotel tech stack by developing the most innovative, intuitive and modern operating system for Independent hotels. Prior to Stayflexi, Venkat was a senior member of the technical team at Oracle, where he was an R & D engineer for seven years. He is a computer science major with a masters degree from Carnegie Mellon, holds several patents and has served as a judge in IEEE conferences. With a passion for coffee, Venkat has mastered the art of making the perfect java from the scratch, from grinding fresh beans to the ultimate foaming latte (sometimes latte art) - he does things this way.