Why traditional travel loyalty programs are losing Gen Z – and how to win them back – SmartBrief

With estimates putting Gen Z’s spending power at $12 trillion by 2030, brands are rushing to attract the loyalty of this lucrative generation. But while the group already makes up 40% of the global consumer market and shares some traits with the better-known millennials, traditional engagement strategies often miss the mark for these digital natives.   

Travel loyalty programs in particular struggle to connect with Gen Z. A 2024 study from global travel data provider OAG found that 65% of Gen Z and 70% of millennials belong to an airline loyalty program compared to 89% of Baby Boomers and 80% of Gen X. Main reasons include inconsistent travel with one airline and slow reward redemption. In other words, programs emphasizing delayed gratification don’t resonate with a generation that values immediacy and authenticity, nor do travel loyalty programs that define loyalty with points and perks. A recent report from consulting firm McKinsey concluded that today’s emerging travelers expect brands to go beyond transactions, generating seamless and meaningful experiences at every touchpoint.   

This expectation shift creates an opportunity for the travel industry, especially for a sector like cruise, which has historically drawn an older audience. By realigning programs to focus on personalized, value-driven experiential rewards, brands can earn Gen Z’s long-term loyalty. Below, we dig deeper into why traditional travel loyalty programs are losing market share with Gen Z, suggest ways to win them back and highlight why travel loyalty providers looking to reach younger generations shouldn’t ignore cruise.    

Flexible rewards matter 

Gen Z lives in a world of instant results—from streaming content to same-day delivery. Airline loyalty programs focusing on building miles over time fail to connect with younger travelers who may not travel frequently enough to feel rewarded. The post-pandemic trend to devalue points and miles adds to this frustration.   

To combat this, loyalty programs must offer their Gen Z members a variety of flexible earning and redemption opportunities aligned with their lifestyles and priorities. Programs allowing members to earn points across various transactions—not just travel—help Gen Z accumulate points faster and derive more value. On the burn front, enabling them to book vacation rentals with their points, which 50% of Gen Z want, or offering add-ons like free Wi-Fi access on a cruise so that they can share photos and video of their trip in real-time, is fundamental to building value for this cohort.  

 While loyalty providers are increasingly diversifying their rewards, it remains a top challenge. According to an arrivia survey published earlier this year, 14% of loyalty programs struggle with introducing new redemption options, up from 9% in 2021. Loyalty technology platforms that leverage their deep relationships across travel suppliers can successfully engage Gen Z seeking flexible redemption opportunities.  

Mastering personalization with AI-driven insights  

It’s no secret that Gen Z values experience over even affordability, but many traditional loyalty programs prioritize point accumulation and discounts. Gen Z are seeking something more meaningful; they want one-of-a-kind adventures — not “one size fits all” perks.   

As a generation raised on platforms like Netflix and Spotify, which deliver curated recommendations, personalization is critical to a loyalty program’s engagement strategy. Brands that leverage vast historical and real-time user data to build AI models predicting users’ needs can capture Gen Z’s attention by making them feel truly understood. Loyalty technology platforms that enable a hyper-segmentation of members and deliver personalized perks such as individualized offers, travel itineraries and highly-targeted promotions give travelers the flexibility to choose experiences that matter most to them, whether that’s a cabin upgrade or access to an eco-tour.   

Aligning with Gen Z values 

Gen Z cares deeply about brand authenticity and transparency; environmental sustainability, ethical practices and social impact are issues that consistently rank high in consumer preference surveys of this demographic.  

 Travel loyalty providers that offer rewards or redemptions that align with those values have a greater chance of building lasting relationships with this group. Cruise lines, for instance, can include sustainability initiatives in their loyalty programs, such as eco-friendly excursions, community-based tourism, or options to support conservation efforts at popular destinations. These values-driven experiences allow Gen Z travelers to contribute positively to the world around them while they travel, leading to deeper, more meaningful bonds with the loyalty brand.  

Delivering an omnichannel experience 

As digital natives, Gen Z expects a frictionless, consistent experience across all touchpoints. Travel loyalty programs that offer clunky online interfaces, third-party booking and limited access to account features on mobile devices risk being left behind by this generation.   

The key to providing these delightful digital experiences is loyalty tech that allows providers to integrate their different platforms and leverage the data from those platforms to create the bespoke content Gen Z wants. Enabling convenience through mobile-friendly interfaces, real-time updates and notifications, flexible booking options that can accommodate quick changes, gamified experiences and 24/7 customer support can boost brand affinity and remove the barriers to engagement by aligning with Gen Z’s “always-on” mentality.   

Gen Z: The cruise industry’s unique opportunity  

The cruise industry, once perceived as a vacation choice for older generations, is seeing an uptick in interest from younger travelers. The Cruise Lines International Association (CLIA) reports that 36% of current cruise travelers are under 40, and amongst the Gen Z portion of that cohort, 74% say they would cruise again. With cruises currently making up only 2% of the global travel and tourism market, the sector is primed for growth if it can adapt to meet Gen Z’s evolving loyalty expectations around experiential rewards and values-based initiatives at a premium price point.   

However, the cruise opportunity is not without its challenges: Just 8% of Gen Z cruise participants end up booking a cruise each time they considered booking one compared to 16% of millennials and 53% of Gen X, highlighting the need for better education around the cruise value proposition.   

Securing Gen Z’s loyalty is more than a short-term strategy. This generation’s purchasing power and influence will only increase in the coming years and brands that prioritize them now will benefit in the long run. Travel loyalty programs emphasizing immediacy, personalization and values will be well-positioned to capture Gen Z’s interest and hold their loyalty for years to come.