Generation Z. Who Are They, and Why Do They Have So Much Money?
Latest posts by Mary Grace Cooney (see all)
- Generation Z. Who Are They, and Why Do They Have So Much Money? - August 10, 2017
Mary Grace Cooney was one of two MDS 2017 summer interns. During her time with us, we challenged her to write a blog post about content that she learned while working with our team.
Look alive – Generation Z is here. Spanning ages 7-20, these technology masterminds are revolutionizing the way businesses need to advertise, which constantly keeps the travel industry on its toes. Gen Zers are generally seen as globally conscious individuals who have a major impact on what money is spent on, and how it is done. The mindset of the Gen Zer is everchanging, making it challenging for the travel industry to stay ahead of the game and create lifelong loyalty members from a young age. Let’s take a look at how the industry can keep up with the superpower known as Generation Z.
Who exactly is Generation Z and what is the group’s purchasing power? Let’s break it down. According to Uniquely Generation Z, a study by the IBM Institute for Business Value, a Gen Zer is, “someone who was born in the mid-1990s or beyond, and estimated to be between 2 billion and 2.52 billion strong. Self-reliant digital natives, they socialize, learn, and have fun living in a fluid digital world – one in which the boundaries between their online and offline lives are nearly indistinguishable.”¹ To put it simply, purchasing power is the ability to buy goods and services with money. Purchasing power can also be seen in the form of influencing purchases, which Gen Zers do a great deal of.
(Image Source: IBM)
As shown above, Gen Zers spend a lot of time online, but they also spend a great deal of time hanging out with friends and family, actually stepping away from their screens for a bit. Socializing is at the forefront of their daily thoughts, so it is important for companies to design products that give Gen Zers something to talk about. According to the CMO of Home and Lifestyle, “They [Generation Z] are ‘always on’ and expect everything to be available ‘on-demand’ because they are used to having everything at their fingertips 24/7.”¹
(Image Source: IBM)
It is crucial for companies to conceptualize the chart above. Yes, Gen Zers have this purchasing power, but will they spend it on your goods and services? As shown, almost half of the surveyed individuals care about what their peers think, as well as trying to stay as eco-friendly as possible when purchasing. Take Amazon, for example, who does a fantastic job of appealing to Generation Z. Their business model is one of the best at capitalizing on efficiency. It is rare for Amazon to sell out of an item or delay shipping, even on their ever-popular Prime Day. In fact, they are so efficient, they now can get items to your doorstep within one or two hours. If that doesn’t scream the instant gratification that Gen Zers long for, then what does? Hotels can capitalize on this speed and use it to their advantage when assisting Gen Zers. Marriott is beginning to incorporate “speedy technology” that greatly appeals to Gen Zers, such as mobile check-in and digital room keys. This is a great start, and will only improve from here on out.
Although some Gen Zers have limited monetary spending power, they usually have an enormous influence over purchases made by their families. In 2015, Gen Zers spent a mountainous $829.5 billion USD.2 A lot of this can be contributed to the age difference seen in households. Gen Zers grew up in the digital age, unlike their parents and grandparents. According to a press release put out by MarketWired, “Gen Z, tweens/teens carry significant influence on household purchases than previous generations. Ninety-three percent say their children have at least some influence on their family’s spending and household purchases.”3 The teens and tweens of this generation influence the buying of everything from food and beverage, to bigger-ticket items such as travel, and everything in between. According to VisionCritical, 86% of Gen Z’ers prefer to stay in hotels. Staying relevant in the eyes of a Gen Zer by appealing to their likes and interests is a great way to make sure you become their go-to hotel. These individuals have a vital influence on their families’ decision to travel, and have ever-changing preferences. It has been said that Gen Zers growing up in the digital age want a good story and are won over by video. It is crucial to “sell” Gen Zers the experience that your hotel can offer them, assuring them that you are worth their time. The chart below illustrates what Gen Zers spend their money on and how they influence the spending of money by their families.
(Image Source: IBM)
According to IBM’s study, over 75% of Gen Zers spend at least half, if not more, of their monthly income on clothes, food and technology, among other things. Where does this money come from? Although a lot of it stems from allowances and gifts, a quarter of Gen Zers seek out jobs and ways to make money online. They are a forward-thinking generation and use this to their benefit. Being able to use and create innovative technologies propel these teens into entrepreneurial masterminds with endless possibilities at their fingertips. The hotel digital experience must be nothing short of consistent eye-opening interactions to ultimately hook Gen Zers and reel them in. Some examples of this can be seen in recent efforts done in Marriott’s Innovation Lab Hotel.
As Generation Z matures, so will their lifestyle and behavioral decisions. Marriage, entering the workforce and purchasing a home are only a few of the factors that are bound to increase the purchasing power that Generation Z holds. As far as businesses are concerned, Gen Z is a spending force to be reckoned that has no plans of stopping anytime soon. Generation Z loves to feel appreciated and special, and it’s up to hotels to make them feel that way. They have nothing but options to exercise, and the ability to make decisions that not only affect them, but those around them.