How cruise lines can win Gen Z and the travelers of tomorrow

As the consumers of tomorrow, Gen Z and millennials will drive expectations for what successful travel experiences will look like, providing a roadmap for how the future travel provider can remain competitive and grow.

Millennials and Gen Z both prioritize experiences (36%) above all other factors, as well as affordability, which baby boomers and Gen X cite as No. 1 (37% and 23%, respectively). But appealing to the sensibilities of one group does not conflict with the others: 95% of respondents overall prefer to spend some time on their trip on new and unique experiences, ideally averaging 3 hours a day, and 81% agree they want to travel to places where they can immerse themselves into the local culture.

Reflecting how affordability has become less of a concern, 77% say they are willing to pay more for a brand that connects with a location on a deeper level, providing a sense of understanding and appreciation for the culture, people and history of a destination. Among those who booked a cruise in the last five years, 51% and 60% of Gen Z and millennials, respectively, have also purchased a vacation package, highlighting the shift from single vacations to full experiences.

Travelers also expect brands to be involved with their communities and engage with an authentic voice, particularly when it comes to environmental sustainability, the No. 2 preference of Gen Z and millennials. This presents an opportunity for cruise brands to appeal to the market through transparency around environmental, social and governance (ESG) factors in every part of the business — from supply chain, ethical labor, diversity and inclusion, and investments (including in destinations and in shipboard experiences). Some of the new ships being delivered in the coming years have a greater focus on environmental sustainability and might help turn the tide on the industry’s reputation. Case in point, 82% of consumers surveyed want the values of brands to align with their own.

When it comes to add-ons, Gen Z travelers are significantly less enamored with shore excursions than their peers, with 30% saying that they have purchased one compared with 44% of millennials and 52% overall across age generations. Such a gap strongly hints that the type of excursion isn’t in demand or that it is difficult to book one (for instance, if it’s not available on an app beforehand).

Building off the influence of social media, and coupled with their desire for new and authentic experiences, Gen Z and millennials gravitate toward add-ons that enable those experiences to be highlighted and shared among their peers. Relative to other generations, the most popular cruise add-ons for them include Wi-Fi access and vacation photos or videos to share, as well as spa treatments. Cruise lines have an opportunity to start fresh with these younger generations and fulfill their expectations at a premium price point, driving incremental revenue without the sticker shock that more established cruise travelers could experience.

In terms of destinations, Gen Z is looking further afield for places to travel beyond the typical hot spots, showing the appeal of greater variety. Their most popular destination is not a surprise: at 38%, it is the Caribbean, which offers a combination of the most destinations, a growing number of private island and beach club experiences with more amenities, and some cultural variety on itineraries lasting three, five and seven-plus days. They are also more likely to look toward central and western Mediterranean, although recent anti-tourism measures have prompted cruise lines to get more creative in where — and how — they can market some of the more culturally important markets (e.g., Spain and Italy). Overall, as the Caribbean market becomes somewhat saturated in the mid to long term with berthing capacity on key dates, cruises can get creative and explore destinations such as Bermuda and the Pacific coast of Mexico, and deliver new forms of community engagement aligned to their values.

Gen Z answered that they were aware of brands in the market just 31% on average — about half the rate of older generations — and the most popular brand reaches just 55% awareness.

Furthermore, only 8% of Gen Z and 16% of millennial cruise participants surveyed expressed that they ended up booking a cruise each time they considered booking one, compared with 53% for Gen X and 38% overall, indicating some form of disconnect either with the product, process or both.

Those who have been on a cruise said they found the experience highly satisfying. In fact, among all consumer groups, over 90% of consumers who opted for this mode of vacation indicated that they are likely to continue purchasing these trips. However, Gen Z and millennials typically opt for alternative travel options, highlighting the need for consumer education on the value proposition of the cruise experience — which can improve decision-making and secure brand loyalty.

Especially in the wake of the pandemic, social media is the key conduit through which younger generations are exposed to travel inspiration and information, such as through peer-to-peer content posted by influencers, our survey confirms. Cruise brands can seize opportunities to create momentum and drive cruise followership with Gen Z through viral trends, as other communities and brands have done.

Such education and marketing campaigns on social media should emphasize peer-to-peer voices and content and be responsive to destination travel influenced by pop culture. This is also an opportunity to double down on other priorities expressed by Gen Z, building on partnerships and accessibility to local businesses and individuals for authentic experiences.

Digital enablement offers the potential to improve customer booking experiences online and drive a greater percentage of demand to book directly with the cruise line while also enabling the trade and travel agent segment to provide more options initially. Our survey showed that over 50% of cruise participants overall book through direct channels or directly through the websites of brands. However, as a disruptor to both the direct booking and trade industry channels, online travel agents (OTAs) are gaining influence in shaping which brands that Gen Z selects, and cruise lines should engage them accordingly. These trends also impact the broader trade industry, including in-person and third-party booking platforms, which have proven to be successful and remain relevant.

Possible pain points from booking directly online should be alleviated as a way to improve the online experience for all customers. Nimble and easy-to-use reservation systems can drive more direct bookings and increase margin, and opportunities include improving reservation systems so that it’s easier to book cabins together, for example. Also, online sites can better enable demand for flexibility, which will continue to dominate company pricing models as customers pay premiums for contingencies.