Gen Z, those born between 1997 and 2012, are the emerging consumer demographic and the most recent addition to the workplace. With considerable disposable income and forecasts predicting that Gen Z will be the second largest cohort comprising the workplace (30-35%) in 2030, there is a need for the industry to shift its focus towards engaging with these individuals.
?Unique experiences, including navigating the pandemic during critical developmental stages of their lives and being the first technology native generation, has meant that the complexities of satisfying such individuals is arguably more challenging than their predecessors. This being said, despite the common negative narrative surrounding Gen Z, there are ample opportunities to evolve services in order to meet their expectations and capitalise on a generation which will continue to hold a prominent power in the industry, for the foreseeable future.
Our goal is to understand Gen Z and to be able to advise clients on potential innovation and service developments which engage and improve margins. A review of current literature and 2023/24 UK and US industry reports has been compiled to identify the key Gen Z trends emerging, as well as to recognise the areas in which the industry still must develop in order to accommodate younger consumers.
An overview of Gen Z’s common attributes:
- Coined the “lonely generation”, Gen Z report much higher rates of loneliness than other generations with 53%-73% of Gen Z reporting feeling lonely sometimes or a considerable proportion of time (Cinga, 2022) (Redbox Rx, 2024).?
- As a result, Gen Z express a want for in-person experiences, socialisation and community. 83% of Gen Z report wanting in-person?experiences over digital connectivity (PosterScope, 2024).
- Socially conscious and informed consumers, Gen Z are taking an interest in the effect of their consumer choices. Not only do individuals choose to buy from brands matching their values but they are aware of their consumer power to boycott brands who do not uphold their social values. This extends to sustainability, working conditions and whom companies associate with.
- Gen Z’s affinity with technology has them in search of ease and efficiency in the workplace but also searching for the inclusion of seamless technology integration within products or experiences (Badge free, 2023).
- Social media plays a significant role in Gen Z’s exposure and perception of the industry. Now Gen Z is driven by reviews of restaurants and products on Tiktok or Instagram reels. Whilst a great benefit when utilised effectively, the danger of negative brand exposure is also increased and should be recognised by companies. These online communities facilitate knowledge sharing at a rate far above anything else and this means consumer perception can be heavily influenced by a singular experience and video (WeAreBrain, 2024).
- Gen Z have a reduced desire to save for the future than those of older generations and are spending more as a result. 3 out of 4 young consumers state they would rather feel fulfilled now than focus on saving and 46% of Gen Z report feeling wealthy (Intuit, 2023) (Charles Schwab, 2023).
- This being said, affordability remains an important determinant across all areas of the industry for Gen Z. Gen Z, whilst willing to spend at a luxury price point, displays greater expectations regarding customer service and experience. This generation no longer is content with sub-standard levels of hospitality due to their exposure to quality through globalisation and social media.
Tourism, Hotels and Travel:
- Gen Z has a strong interest in travel with 54% of Gen Z hoping to go on at least 3 holidays annually (American Express travel, 2023)
- Gen Z is taking a far more adventurous approach to travel. No longer content with close by beach holidays, individuals are looking for adventurous trips and experiences. 55% of Gen Z (61% of Gen Z aged between 13-17) express a strong urge to travel internationally in the foreseeable future (College Group, 2022).
- This desire for adventure is further apparent in Gen Z’s reasons for travel. 57% of Gen Z express travel is an opportunity for excitement but comparatively 57% of the total population express holidays are centred around relaxation (Collage Group, 2022)
- This presents the opportunity for hotels to turn their attention towards the possible experiences and amenities to include on site in order to entice Gen Z.
- In regard to domestic travel, hybrid working, the introduction of corporate tourism and the popularity of digital nomad lifestyles, is also seeing Gen Z opt for shorter more frequent holidays closer to home. In 2023, 38% of Gen Z reported going on a “staycation” (American express travel, 2023)
- Whilst, a large proportion of Gen Z still wish to digitally disconnect, the rise of individuals working from holiday locations requires hotels to accommodate co-working environments.
- Additionally, 69% of Gen Z report feeling strongly towards sustainable travel (comparatively, older generations only report a 48% interest). Gen Z expect hotels and travel to mirror these morals and are willing to spend more to ensure as such (Globetrender 2021).
- Globalisation has increase Gen Z’s interest in cultural and international foods. Many of Gen Z are more interested in food experimentation and experiencing foreign cuisine over the “health” or “clean” foods which previously were popular.
- Furthermore, Gen Z is making the transition to plant-based eating with 19% opting to be plant-based and eating vegan or vegetarian at least part of the time. This choice is compounded by a third of Gen Z saying that they are looking for sustainable options (Food insights, 2022).
- Snacking is a significant trend amongst the eating habits of younger consumers with many opting for lighter options than older generations. This is in part due to their increasingly fast paced lifestyles, as well as the ease of snacking over longer sit-down meals.
- 94% of Gen Z report that they have one or more snacks a day, and a further 68% said they have at least two (Food Navigator, 2024).
- The main difference between Gen Z and their predecessors is their relationship with alcohol. The “sober curious” movement is seeing many individuals reducing their alcohol consumption or giving up drinking in its entirety. This is meaning young people are looking for non-alcoholic options which provide them the social experience of drinking.
- 21% of under 25's avoided drinking entirely in 2023. This is much higher than in 2017 when this rate was only 14% (Mintel, 2024).
- Gen Z’s choice to reduce drinking is likely due to the increased cost of living, meaning young people wish for more affordable ways to socialise, as well as their increased health consciousness. Social perception of drinking amongst Gen Z has largely changed to be something for special occasions, rather than that of regular occurrence like older generations (Mintel, 2024).
- The misconception that Gen Z, having grown up and entered the workforce during the pandemic, solely wishes for remote working opposed industry evidence.
- Only 11% of Gen Z report wanting to work from home unlike 34% of older generations. Comparatively, 74% of Gen Z want hybrid working compared to 52% of non-Gen Z-ers. Such evidence dispels the fears of the M&E industry regarding a generation rebuffing in person work or meetings, and alternatively indicates that individuals are looking to be engaged within businesses and have active, in-person roles (Seramount,?2024).
- 47% of Gen Z report wanting work life balance. This is compounded by the increase in the number of young people actively socialising outside of the workplace through clubs, societies and hobbies. During the pandemic, 72% of Gen Z reported having taken up a hobby and many have seen the mental health and social benefit in continuing to prioritise these interested alongside their occupations (Deloitte, 2024).
- Furthermore, 72% of Gen Z have a side hustle outside their 9 to 5 jobs, earning them on average?over ￡1000?monthly. In part, this contributes to the generation’s larger disposable incomes and ability to afford luxury purchases (Mintel, 2024).
- Gen Z are heavily aware of the benefits of wellness and exercising on both their physical and mental health. Social media and the demographic’s access to information is largely responsible for this knowledge. Subsequently, it is evident that Gen Z are prioritising and investing in their health.
- 87% of Gen Z are exercising three or more times per week. This rate is far higher than older generations (Les Mills, 2024).
- 77% of Gen Z are more likely to ‘splurge’ on fitness than their parents and those who do spend a median of ￡75 a month on fitness memberships.
- Gen Z are also far more loyal to the fitness clubs and gyms they attend, which is evident through lower attrition rates and increased average membership times.
- The generation is also heavily interested in fitness classes over traditional gym memberships. 81% of Gen Z are opting for classes and group training. Largely, this is due to the facilitation of meaningful community and the expert guidance of fitness instructors (Les Mills, 2024).
- In regard to wellness, Gen Z is taking a far more holistic approach than that of previous generations. Having grown up witnessing toxic diet culture and with greater access to information, this generation is increasingly opposing products and treatments with sweeping statements of health, without scientific backing (Les Mills, 2024).
Questions for consideration
This review of literature indicates promising opportunity to accommodate the preferences of Gen Z and suggests that this generation will push the industry to evolve in diverse and innovative directions. Arguably, results present a nuanced view of younger consumers. Despite the narrative of a maverick generation, led by technology, disengaged and focused on themselves, the data indicates individuals in need of connectivity and experiences, pushing for a level of customer service which has been lost to history.
The complexities of Gen Z still present many questions for the industry:
- Individualism has created a plethora of niches within the cohort. Subsequently, identifying target audiences and consumers within the demographic is increasingly difficult for businesses. How should this be navigated?
- The fast pace of micro-trends made popular by Gen Z calls for constant innovation and evolution in order for business to stay relevant. How should companies aim for longevity in such a fast-moving market of attention capitalism?
- Such niches also present a number of juxtaposed trends. Businesses are required to find the balance between previously opposing attributes. How should the industry integrate technology and meaningful connectivity or affordability and luxury?
- Globalisation and social media have made Gen Z highly informed and as a result given them greater insight into their expectations of hospitality. With this knowledge, what is the best method for businesses to utilise such knowledge to their benefit?
- Have businesses progressed digitally enough to engage Gen Z?
- Furthermore, Is the industry in danger of losing revenue due to the slow adaptation of digitalisation?
Such complexities require further study of Gen Z. It is important to note that a significant proportion of Gen Z are still underage and yet to be fully engaging with the industry. As a result, larger trends are likely to further evolve and the industry will be required to match such evolution.
?Despite such challenges Gen Z offers a range of opportunities for hospitality and understandably demands the attention of the industry. Understanding the power of Gen Z will take time, however, those who are able to recognise such power will likely be most successful in capitalising on meeting the needs of this generation.
Recommendations for review
In light of the results of this review, businesses must take a nuanced approach when adjusting offerings to accommodate Gen Z. EP’s recommendations include:
- Prioritising company values and improving the communication of these values to younger consumers.
- Investing in further understanding of Gen Z through monitoring the evolution of trends as Gen Z enters the workforce and takes on a larger proportion of the consumer audience.
- Improve customer service and personalisation techniques to ensure individuals enjoy the offerings of Hospitality.
- Explore the avenues businesses can take to provide experiences to Gen Z, which enrich community and connectivity.
- Expand the diversity of offerings to give young consumers a variety of choice regarding food and drinks.
- It is vital the industry pushes to develop itself digitally, in order to attract Gen Z
Report by Lexie Cook, EP Business in Hospitality.
If you would like to contact EP Business in Hospitality in regard to this report, please email [email protected]
Thank you for the mention ??