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Gen Zs are spending big to travel this summer — even if it means going into debt

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7 months ago

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Gen Zs are spending big to travel this summer — even if it means going into debt

Move over family travelers.

Gen Zs are set to make the biggest splash this summer, with surveys showing they are upping their vacation plans and spending more than older travelers.

No longer satisfied with road trips to their parents’ homes, Gens Z are planning international trips at higher rates than other generations, according to a report released by Bank of America on May 20.

The survey of more than 2,000 Americans showed Gen Zs are planning to travel for longer periods and to take more expensive vacations at higher rates too.

Ready to spend

Gen Zs, together with millennials, are at the helm of a surge in travel spending this year, according to an April report published by the market services firm PMG.

That report, which surveyed 1,800 adults in the Unites States, United Kingdom, India, Germany and China, shows 65% of Gen Zs and 72% of millennials said they plan on spending more on leisure travel this year, well ahead of the 54% of Gen Xers and 40% of baby boomers who said the same.

But how Gen Zs — often defined as those born between 1997 and 2012 — plan to fund their travels differs from other age groups too.

The number of Gen Zs who said they’re traveling because they have the savings to do so has fallen since August 2023, according to a new report from the research company Morning Consult.

But that’s not stopping them, said Lindsey Roeschke, Morning Consult’s travel and hospitality analyst and the author of the report.

“Gen Zers have come of age during an incredibly turbulent time,” Roeschke said. “This is deeply impacting their travel behaviors.”

“Why would they put off going where they really want to go for the sake of saving, when there may be another pandemic, financial crisis, war or other major event that may keep them from ever getting there?” she told CNBC.

Roeschke also noted that Gen Zs will spend time finding ways to trim travel costs, rather than canceling or postponing their trips.

“They’re looking for ways to trade off and save money. That could involve traveling in the shoulder season, using apps and other tech to price-compare, cashing in credit card points, trading off in other spending areas, or picking up a side hustle to fund their travels,” she told CNBC.

Using debt to finance summer trips

Still, 42% of Gen Zs and 47% of millennials say they plan to use debt to finance their summer trips, according to a survey by the financial services company Bankrate.

The report showed that the most popular methods of financing summer holiday trips include:

  • credit cards paid over multiple months – 26%
  • “buy now, pay later” services – 8%
  • borrowing from family and friends – 6%
  • personal loans – 5%

This debt-be-damned mentality worries older generations, who tended to travel less ambitiously in their 20s, if at all, and raises eyebrows among financial specialists, like Ted Rossman, senior analyst at Bankrate.

“I don’t want to tell people they can’t have any fun, but I do worry about taking on debt for discretionary purchases such as vacations, especially with credit card balances and rates at record highs,” Rossman said in the report.

Europe hoteliers say the frenzied 'revenge travel' of 2023 is leveling off this year

Roeschke noted that travel-happy Gen Zs don’t necessarily feel optimistic about their finances. Nearly a quarter (24%) said they felt pressured by friends to take trips they can’t afford, according to a study published in May by the financial services company Empower.

Compared with other adults, Gen Zs are more likely to say that their own finances, the broader economy and climate change negatively affect their willingness to travel, according to Morning Consult.

“However .. they’re still doing it!” Roeschke said.

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