Most news and
media outlets have spent thousands of words breaking down the millennial
generation - the group aged 21 to 35 - and for good reason. As the fastest
growing consumer demographic, and one that is spending at a breathtaking pace,
businesses in every industry are coveting this high-potential market. Already,
the demographic spends nearly $600 billion a year,
equivalent to almost a third of all daily-per-person expenditures.
The trend has spread to almost every major consumer-facing industry,
including the luxury goods market, real estate, technology and retail.
Millennials are also
travelling more, even matching retirees as one of the largest demographics
spending money on trips and bookings. Some experts have noted the importance of
this generation to the travel industry, but it seems that the rest of the
sector has been slower to modify their offerings to fit this burgeoning
consumer group’s demands.
The travel industry has
become defined by a few major names at the top of the tree, and a strong
centralization of power and processes, which results in disadvantageous prices
and deals for consumers alongside fewer choices.
In the case of TripAdvisor,
its website ranking algorithm is easily rigged by companies looking
for a boost in foot traffic, something that detracts from millennial searches
for a more personalized recommendation and experiential travel. Moreover, it is
far from the only provider with such issues.
Booking sites like Expedia
and Kayak assess fees at every point of their supply chain, charging disproportionately high rates and
transferring most of the costs to consumers. This increasingly runs counter to
the preferences of millennials, which include more personalized services,
experiences over products and added flexibility.
Changing
The Millennial Paradigm
While these travel
companies tighten their stranglehold on the industry, they also open the door
for upstarts to disrupt the market with solutions that are aimed more directly
at millennials.
The move may seem pointless
at first, but if one considers that the current market for millennial travel is
valued at more $200 billion annually, new companies are
speaking more directly to generations Y and Z in the hope of taking a larger
piece of this rapidly expanding pie.
For many entrepreneurs and
potential disruptors in this space, the answer to cracking the millennial
travel market rests in blockchain technology. The decentralized network and
immutable ledger system make the technology an ideal partner for the experience
and personalized travel millennials seek, some have posited.
Indeed, more young people
are turning back to travel agents - 34% of them in 2016 according to
reports - and blockchain fills the most important checkbox: a human touch to
the booking process.
Thanks to their focus on
this critical aspect, blockchain-based travel companies are taking advantage of
shifting demographics and demand, especially as younger generations shy away from bigger companies they
believe are too corporatized or profit-driven to care about consumers.
More importantly,
blockchain-based solutions match with trends noticed by observers. For
instance, most younger adults share their travel
experiences on social media, and demonstrate stronger loyalty to companies that
offer rewards.
Blockchain and related IT
of the Distributed Ledged Technology (DLT) is argued to be perfectly positioned
to harness these tendencies thanks to increased Peer-to-Peer (P2P)
communication and better customer incentivizing methods via tokenization. The
technology has already made important progress penetrating the market, with
some companies already making a significant splash.
Improving
Travel, One Part At A Time
Since travel encompasses
more than simply booking flights, blockchain-based start-ups have found success
attacking parts of the process, as opposed to offering vertically integrated
solutions that centralize all aspects.
For instance,
recommendation platform Cool Cousin seeks to turn users into
de facto travel agents in their cities. Visitors can ask for recommendations
and “Cousins” are incentivized to participate thanks to the platform’s CUZ
tokens, letting customers earn rewards for helping others and offering good
advice.
For millennials who report
scrolling through several websites before making any travel decision, this
unbiased and personal interaction is touted as delivering a more holistic
solution.
“Millennials are a time
penchant generation that demands quality and this is what we enable in the travel
world,” remarked Itai Nagler, CEO of Cool Cousin. “What we’ve learned from
amazing services like Netflix and Spotify, is that when you give both -
millennials are the first to adopt and look at it as a dollar well spent”
He added: “Information
overload and biased content in the centralized travel market, makes it
impossible for travelers to find relevant info. No matter how hard they try to
avoid dubious recommendations, much of their vacation time - and dime - is
wasted on mediocre places that don’t fit their vibe.”
The executive further
noted: “Our cousins are local, they’re in the know, they’re just like you and
their main incentive is for you to have a fantastic time in their particular
city.”
Similarly, US-based Loyyal claims to
offer companies enhanced ways to incentivize millennial travelers by creating
“gamified” loyalty platforms (i.e. making things into a kind of game for
greater interaction and engagement), as well as expanding the restricted
redemption system.
Instead of being forced to
spend points with a specific service provider, this blockchain enterprise
allows for interoperability and more expansive rewards plans that improve retention, and
thus profits.
French blockchain start-up
Fizzy meanwhile is aiming to give millennials who are quickly ditching travel
insurance a better method to protect themselves using transparent
Ethereum-based smart contracts.
By solving these ancillary
problems, millennials are more likely to participate, and continue spending on
travel, it is argued. The goal of blockchain-based companies entering the
market is not necessarily to replace existing structures, but rather to fill
gaps in services that many of the larger corporations cannot - or simply won’t
fix.
CryptoCribs, by way of
example, is forcing competition with rental giant AirBnB with
its P2P home-sharing platform, is accompanied by no commissions, fees or
gatekeepers.
And, by tackling such
issues, the nascent industry is staking its claim and is creating financial
opportunities - not just for the companies creating the services - but for
millennial stakeholders who are willing participants in their ecosystems.
Flash
In The Pan Or Emerging Trend?
Like much of the blockchain
and crypto industry, there remain skeptics who are unsure whether the
technology will really help capture a piece of the millennial market. Moreover,
many believe the generational impact is blown out of proportion.
Nevertheless, generations Y and Z represent a massive consumer base, and their
purchasing power has already been widely established.
For the travel industry to
enhance its services aimed at this growing audience, it would seem logical that
is must take bigger steps to adapt to their ways of life and preferences. And,
for an industry that earns billions annually from millennials, better retention
rates will ultimately depend on embracing innovative new solutions that solve
perceived pain points for this burgeoning generation.
Source: Forbes