2025, Digital Travel. KEYNOTE PRESENTATION: Tapping Into Gen Z: Capturing the Next Generation of Traveler

Announcer: Please help me welcome up our next speaker, MTO from Hopper, who will be talking about tapping into Gen Z, capturing the next generation of travelers who doesn't love a nice Gen Z presentation. Give it up a round of applause, please.

Makoto Rheault-Kihara, VP of Growth, Hopper: Hey everyone, thanks for having me. I'm gonna be talking to you about Hopper. Our new B2B division as well and how we're thinking about Gen Z in general. And just to quickly introduce myself, my name is Makoto. I'm an SVP here at Hopper. I work on product for our consumer business as well as our new B2B advertising solutions.

So a lot of you here might know Hopper, the travel app. We've been around for a while, flights, hotels, car rentals, what have you. But Hopper, the company has actually gotten much larger than that. Over the last couple of years, so what used to be like a primarily consumer business has now become a hybrid of B2B and B2C, where we, it all started with a partnership with Capital One, where we developed their travel booking experience for Capital One Travel, which eventually opened our eyes to the potential of partnering with blue chip brands that wanted to sell travel and using that in order to grow our transaction volume.

So today, hopper Technology Solutions, which is our B2B business, is now a very large part of Hopper. So what we've developed over time is commerce products where we help travel brands sell flights and hotels, loyalty, where we help banks like Capital One the largest bank in Australia, CommBank the largest in Japan, SMCC, and about a dozen banks around the world run their loyalty programs.

We've built FinTech products for airlines like Air Canada and Frontier Airlines Media is what I work on quite a bit, which is our advertising solutions, and we're building a lot in the AI space as well as you'd expect.

So what Harper's kind of become is that our data and our technology powers global travel. So we work with brands like TripAdvisor, capital One, Uber, all kinds of airlines in order to help. Power their travel business and increase their revenue. And now B2B has actually grown so fast that we've reached multiple nine figures in run rates and it's now 85% of our total revenue.

So with that in mind, I wanted to talk about how we're thinking about Gen Z. And just to frame it, first, I wanna talk about who Gen Z actually is. So a lot of us think of Gen Z as like very young. Maybe your kids teenagers. The facts of the matter is Gen Z actually represents now the majority of adults under 30.

The oldest Gen Zs are actually 28 years old, so they're not really like a, as young as they used to be. They're actually like a very active purchasing demographic today.

And what's interesting with Gen Z is that a lot of their preference start to align quite a bit with younger millennials as well. And if you look at the share of population that they represent, we're talking like 40% of Americans. So it's no longer that Gen Z and especially millennials are this new generation that you have to start thinking about soon.

They're in market today and they already represent like a very large segment of the buying population.

And one of the things that's really interesting with Gen Z is obviously they're at the age where their income is about to increase quite a bit. So thi spending power is gonna increase 48% over the next few years. So as a demographic, it's one of the most valuable to capture.

And what's really interesting about Gen Z especially is that they're not loyal yet to any travel brands. So we work with a lot of Gen Z customers and what's most interesting to us is that they still shop around a lot. Most of them still aren't part of any loyalty programs. And they're a lot more influenceable than past generations were.

So essentially what you have here with Gen Z is that you have a very malleable influenceable audience that is just reaching the age where their income is about to skyrocket. That is already like a very large percentage of the population. So for travel brands, it's a really critical demographic to be actively thinking about.

So we've thought a lot about how to activate the Gen Z traveler, and obviously the Hopper app was where we started as a company and where we got a lot of experience. The first really obvious one is that smartphones today are for booking travel as well. So United Airlines actually posted this on their Instagram story recently, and I thought it was really interesting where they asked.Makoto Rheault-Kihara, VP of Growth, Hopper: How do you book flights to their customers? And over half of them actually responded on their phone. And what we see in the research is actually that's a pretty representative survey of how people are booking travel today. So a lot of us here probably think about smartphones as a planning tool, as a day of trip tool, but that desktop is really where most of your purchases happen.

For Gen Z and millennials, the majority of their travel purchases are now happening on smartphones. The corollary of that is that if your company thinks about smartphones and apps as a nice to have or an extension of your desktop booking process, or like a cool tech feature that you have your innovation team working on, you're missing out on quite literally half of the bookings that are happening for 40% of the population.

So this was like our bread and butter and how we started Hopper. The company really just took the position really early on, probably before it even made sense that we were just gonna be an app. So everything was designed mobile first, and that's really what allowed us to succeed. So today on the Hopper app itself, not the B2B side, but the consumer side, 94% of our bookers are Exogen Z or millennial.

And what's cool about that audience is because they have a travel app. It's not like an OTA on the web, or once you close the tab, it's gone forever. An app stays on your phone, right? It'll send you notifications next time you're ready for a trip. So half of our bookings are actually made by customers who purchased with us before, and we do no paid marketing to reengage those customers.

So we have this huge base of bookings that have just been building over time that has allowed us to continue to monetize this audience. Thanks to the fact that it's a mobile app. So think of it not only as if you want to reach Gen Z and millennial, you need to put a lot of effort into your mobile experience, but it'll also allow you to unlock this like very loyal cohort that doesn't require you to just play the Google game every time you want to convert a customer.

The other thing that's allowed us to do is that a Gen Z millennial audience is actually very valuable to a lot of other travel. So we've been able to pivot this into our advertising product, HCS Media, which allows DMO and suppliers to reach these mobile first travelers. So there's a lot of value in just building this audience in itself alongside all of the travel bookings that they'll generate for you.

Another thing that you're probably aware of in general is just how online Gen Z is. So you have to think about the fact that a lot of Gen Z were actually born after the iPhone. Ubiquitous wifi is just something they've always had 62% of Gen Z claim to be constantly online, and they're spending an average of nine and a half hours a day online.

If you just think of the other eight that are dedicated to sleep, it's like a very significant portion of their day is spent on their phone. And they're not reading the news, right? They're on TikTok, they're on Instagram, and it shows in how they search for things and how they discover products that they want to purchase.

So this is a quote that I found really interesting from Google's SVP of Knowledge, who I'm sure is very aware of this trend. Especially 40% of young people don't go to Google Maps or search. They go to TikTok or Instagram where they're looking for something to eat. And we're starting to see that a lot in travel as well.

So we commissioned a survey of a lot of users and different demographics and Gen Z millennials are 50% more likely than even Gen X to use social media as their primary travel research tool. This isn't IU social media at some point is social media was the main way I discovered where to travel Baby boomers.

In comparison, it's 4%. So social media has become the central place where a lot of consumers today decide where they want to travel. And anecdotally, I was speaking to one of my friend's, younger brothers, and when he mentioned where he wanted to go on vacation, not only did he say I went to Bali because it looks really cool on TikTok, but once he got to Bali, he searched on TikTok for things to do in Bali.

The concept of Googling that to him seemed like looking up businesses in a phone book level of archaic, essentially.

So we went really deep on social in order to engage this demographic. We've just never played the Google game at all. 100% of our marketing spend is on social. And that's also led to a lot of direct traffic because there's a lot of benefit in getting social right. It will build your brand to a much greater degree than Google.

I don't wanna name any of our competitors because they're great people, but you can spend billions of dollars on Google and have never seen someone wearing a booking.com. Hat on the street is just not as brand building of a marketing channel, although very performant on a performance basis as social media is.

What we've also turned this to is that our social media expertise allowed us to monetize the fact that we're good at social and the fact that we have audiences on social. So we created this product called HDS Media Audiences, which we now give to our partners, where we can run social ads on their behalf using the expertise we learned from deploying 200 to $300 million in social marketing spent.

But also we make our audiences available to them so that they can target them and their social audiences. So similar to what we did for mobile, like having the ability, it allowed us to actually monetize that ability into a new revenue stream.

So if I told all of you like Gen Z's really online and they use their phones a lot, I think a lot of you would nod in agreement and say, obviously I'm aware of that. One of the kind of more niche things that actually really helped us with Gen Z is that Gen Z is like very used to using like Apple Pay Cash App Venmo in their daily life to the point where they expect platforms to adapt to how they want to pay for things.

So 30% of Gen Z pay with alternate payment methods. So having compatibility for things like Apple Pay Cash app. Buy now, pay later. It's no longer this kind of niche. 5% of your transactions segment like you see it is for the baby boomers here. It's become like a very material percent of the transactions.

So we saw a huge conversion increase with Gen Z when we started to offer our new checkout experience, which combined a couple things. One is. Although Gen Z's income is going to increase by 48%, it's not very high today, so they like to split their payments across different payment methods. So we see like a very high percentage of our users splitting points, credit cards, sometimes multiple credit cards, or a debit card and a credit card in order to make their travel bookings.

This was like a really big unlock for us with younger consumers. The other thing is allowing shoppers to pay exactly how they want. So having the Klarna Affirm type, buy now, pay later offerings, allowing for everything from Apple Pay to Alipay and Google Pay which Gen Z is used to using. And also, normal support for debit cards and credit cards obviously allowed us to significantly increase our conversion.

And what we've done now on the B2B side of the business, and one of the reasons we've been so competitive is that we deployed this across all of our partners. And what we see is the Hopper app obviously, is a very it's a place where you'd expect this kind of thing to fit. But even on the Capital One portal, some of the airline hotel portals that we power, we're seeing really large conversion increases here too.

Because Gen Z and millennials are getting so large as a percentage of the population, this isn't just like a niche conversion optimization anymore. It's becoming like a very real lever that all of you today probably have the resources to launch.

The other thing with Gen Z is that I think a lot of you are aware that Gen Z is just very anxious. It's one of the most high anxiety generations ever. And that kind of translates into their travel preferences. So Gen Z is very anxious about their travel. They're worried about getting delayed, they're worried about getting canceled.

It's also because social media tends to amplify a lot of the horror stories that people have when they travel. So it used to be that unless your direct family member had some horrible travel experience, you just wouldn't hear about it. But now. Every day. If this is the kind of content you consume on TikTok, you'll see people getting delayed for 20, 24, 48 hours at a time.

Their bags got lost. All these stories, they start to see and assume that's just what traveling is like.

So flexibility and refundability, I think a lot of us think of them as like just pure revenue levers. They're becoming really important differentiators on a conversion basis for younger generations. So two thirds of Americans were either disrupted or had to cancel their plans this year. It's a very common thing.

Now, I'm sure a pretty large percentage of this room probably got delayed or had some kind of issue on the way in, but almost half of Gen Z actually say that they're actively looking for refundable and flexible options. One, because they're worried that something might happen, and two, gen Z is just not as good as committing to things like a travel to.

So one of the products we built for this, for example, is disruption assistance. And essentially the way this works is that if your flight is delayed or disrupted for more than two hours, we had to rebook you for free or we refund you the entire trip. And we built this in house. It's not through third party.

All the risk is on our books. So if it goes wrong, we go bankrupt. Anyone who gets a disruption essentially is fully taken care of in an automated way. With super high csat. We launched this primarily as a revenue driver, but what we didn't expect is just how big of a driver of customer satisfaction it became.

So when we started surveying users, they actually said I like that you have the option for me to cover this. That's why I booked, that's why I come to opera. That's one of the reasons we've been able to launch this with a lot of partners. So Frontier Airlines, for example, uses our. Premium disruption assistance today.

It's been very successful in their channel. It's not just ancillary revenue. It's actually something that people are coming and looking for and it's becoming a marketing message.

Very similarly. We built our cancel for any reason product in house. This was actually our first foray into FinTech internally, and what this allows you to do is, it does exactly what it says in the box. You pay $40 more per traveler in this case. And we'll refund you, no questions asked. The reason that we did this is that we surveyed a lot of our users and nobody understands cancellation insurance, especially on the Gen Z customer.

Most of them have never made like a claim before for an insurance product, so they just assume that it doesn't work, and often it doesn't. What we built is cancel for any reason where I didn't show the cancel flow here, but it's literally just the button that says cancel. Okay. Do you want credit or refund to your credit card?

Here you go. Thanks. And that's it. Similar to what I said about disruption assistance, this became a major value proposition for a lot of the partners that we rolled that out on. So some of the banks that we work with we're now offering this product in their funnel. Use it as the primary marketing message in the billboard and TV campaigns that they're doing in Brazil or Japan, where if you book with us, you can make any flight refundable and you don't have to worry about whether the airline has terms and conditions or whether there's some kind of, insurance claim process that I have to go through that has really ambiguous terms and conditions.

So when you think about Gen Z, I think, there's the two kind of. Obvious ones. You need a mobile first booking experience and you need social media driven growth. I think everyone here intuitively probably could have guessed those two points would be part of any four point Gen Z plan.

But the one thing I want to say is even though every brand I speak to or a lot of the brands we work with know that, and they're still under investing significantly, one because of what I said where they think of oh yeah, gen Z. Those cool teenagers on TikTok, like I'll worry about that when they have money.

They're starting to really have money today, and now is the time to capture them. And mobile first booking experience doesn't mean that you have a team in some satellite office with three engineers. Building a mobile app that everyone's gonna hate, it means actually investing in a real booking experience that'll become a revenue driver, a significant revenue driver for your company.

But there's also payment. Optionality and flexibility are two things that Gen Z are looking for and might not be communicating as obviously as they're on their phones a lot. So building payment optionality, building flexibility. These are big conversion drivers that worked with Gen Z but have overall turned into massive revenue drivers for our business on the B2B side that have allowed us to grow to what Hopper's become today.

So that's it for me. Thanks a lot everyone.

Announcer: Lakota, we do have time for one question. If you would like to take it a question.

Makoto Rheault-Kihara, VP of Growth, Hopper: Yeah, sure.

Announcer: We have time for one question. Is there any thoughts you guys might have had? Okay. We have one already.

Audience: On the paid, on the social side, that's where you're driving. Is it both organic and paid that you're using to promote Hopper? Yeah. And are able to book within the platform?

Makoto Rheault-Kihara, VP of Growth, Hopper: Yeah, so we're doing both organic and paid. We don't do booking in platform today. The reason that we haven't focused so much on in platform booking and there's a lot of social commerce discussion is that.

Getting an app installed from social one is a very natural thing to do it. It's something that people are used to discovering apps on social media, especially younger consumers, but the challenge with social is that online Google, the user's not ready to travel yet. So when you're advertising on ICM, someone's typing flights Miami to Las Vegas, it's a pretty sure bet that they're looking for a flight from Miami to Las Vegas.

And so the entire kind of travel booking experience today is optimized for the customer that knows what they want. So it's a search book, get you down the funnel on some like popups and pressure as to like you need to book. Now there's 28 people looking at this. With social media it's very different 'cause you're way earlier in the travel booking process.

So if you try to convert them on the spot, it's not gonna work, right? I don't think any of us here have seen an ad for flights to Miami and thought you know what? I'll book you right now. So what we've done with Hopper is basically like all we need you to do at the time that you're browsing is download the app and then we've built a significant part of the product into appealing to you before you're ready to book.

So whether it's like helping you find a destination, our first and most viral product features, still price prediction, where we tell you if you want to go to Japan next year. Come back in November, it'll be the best time to book and we can talk about your trip. Then all of these features that like appeal to like the much lower intent travelers mean that even though you won't convert them on the spot, when it is time for them to book, you'll be there and you won't have to buy the Google ad basically.

So for both organic and pay, that's how I think about it, where like those are just two mediums for the channel. But the important thing is to land them on something that will be useful to them at the time that they're in right now, which is I'm on my couch scrolling, not in the mood to make a purchase.

Announcer: All right. Thank you so much. A round applause. Please.

Makoto Rheault-Kihara, VP of Growth, Hopper: Thanks.