Ask Skift: Why Are Travel Brands Investing in Experiences?

Skift Take

Travelers are increasingly eager to spend money on experiences than possessions, but that’s far from the only reason why travel brands are eager to invest in the sector. They see an industry that’s showing no signs of slowing down.

Rashaad Jorden

A growing number of travelers have shown a preference for spending more money on experiences than possessions, and the travel industry has paid close attention to that shift. Skift Research’s Venture Investment Trends in Travel 2024 report revealed the experiences sector was one of the few in travel to see an increase in venture capital investment.

So why are travel brands investing heavily in experiences?

We posed the question to Ask Skift, our artificial intelligence chatbot. Ask Skift used information that appeared in our past news coverage and research. We also did further reporting on the subject.

What Ask Skift said:

Travel brands are increasingly investing in experiences for several key reasons:

Rising Consumer Demand: There is a growing demand from consumers for more authentic and engaging travel experiences. As travelers prioritize creating memorable experiences over material possessions, travel brands are responding by offering unique and immersive activities.

Emotional Connection: Experiences create stronger emotional connections with customers compared to traditional travel products. This emotional engagement is crucial as it influences purchasing decisions and fosters brand loyalty.

Market Differentiation: By focusing on delivering high-quality, unique experiences, travel companies can differentiate themselves from competitors. This approach is increasingly important in a market where consumers are looking for more personalized and emotionally meaningful experiences.

Social Media Influence: Unique travel experiences are highly shareable on social media, allowing consumers to showcase their personal brand. This trend has encouraged travel companies to design experiences that are not only enjoyable but also visually appealing and shareable.

Economic Opportunity: The tours, activities, and experiences segment is vastly under-served, representing a significant economic opportunity for travel brands. By investing in this area, companies can tap into new revenue streams and cater to a growing segment of the travel industry.

Overall, the investment in experiences aligns with broader cultural shifts and consumer preferences, making it a strategic move for travel brands.

What else you need to know:

Skift Research Senior Analyst Pranavi Agarwal called experiences one of the most opportunistic and untapped markets in the travel industry.  

Travel brands are investing heavily in experiences to make inroads among younger travelers in particular. A January 2024 Skift Research report found 64% of both millennials and members of Gen Z set aside more than $200 on adventure activities during their previous trip.

Research and events company Arival reported that younger travelers — in particular, millennials and Gen Z members — are twice as likely to go on food tours, adventure and wellness trips and special interest tours as older travelers. And a GetYourGuide survey published this June revealed 40% of Gen Z members and 42% of millennials surveyed booked a guided tour in the past year.

Reaching New Audiences: Airbnb views a category of experiences and stays called Icons, which it unveiled this May, as a way to reach travelers who may not have considered the short-term rental giant. The company’s 11 Icons includes the opportunity to stay in Prince’s Purple Rain House in Minneapolis and at the Ferrari Museum in Maranello, Italy.

“This is the best way to reach specific audiences,” CEO Brian Chesky said. “If you want to reach Ferrari fans, or X-Men fans. We have a huge Bollywood actress. It’s a great way to reach people in India. So this is a good way to target.”

Airbnb announced plans in August to relaunch its experiences business next year as part of its strategy to expand beyond just offering short-term rentals. Chesky acknowledged that its experiences would need to be cheaper to attract Gen Z travelers and must be more exclusive to Airbnb.

“We still think we can have even more unique inventory that you can only find at Airbnb, that’s not on another platform,” Chesky said.