Ask marketing leaders about the biggest challenge facing travel loyalty brands today, and many will point to personalization at scale. Despite the mountains of data at their disposal, these brands still lag behind online travel agencies (OTAs) when it comes to providing truly customized experiences, both in the booking process and the range of available options.

But the window to solve this challenge is shrinking fast. The next generation of travelers—Gen Z and Millennials—will soon dominate the leisure travel market, and these digitally native consumers have little tolerance for impersonal brand interactions.

For example, take 28-year-old Rachel. She knows exactly what she wants: a rental car to a port for her Alaskan cruise (she's afraid of flying), plus recommendations for vegan chef's table dinners, eco-friendly hikes and sightseeing. If her loyalty program can’t offer this friction-free experience in real time, she’ll book elsewhere.

Rachel’s preferences aren’t unusual. According to arrivia’s recent Loyalty and the Changing Traveler survey, nearly half of Gen Z respondents said the ability to book entire trips in one transaction would boost their loyalty engagement compared to just 28% of Baby Boomers. They also expressed above-average interest in options like activity bookings, sustainability-conscious travel options and alternative payment methods. While price ultimately held the most sway across all age groups, the report’s findings reveal the complexity of the current travel ecosystem. If simple segmentation could keep pace with this complexity, brands might have an easy solution. But it can’t—and they don’t.

Why Segmentation Falls Short

Marketers have traditionally relied on demographic segments to guide traveler engagement. But younger consumers are breaking those traditional categories. Zillennials, the microgeneration that overlaps in age with Millennials and Gen Z, are a prime example. According to the arrivia report, they’re nearly twice as likely as older groups to prefer international destinations and show significantly higher interest in cruise vacations than their closely related generational cousins. They’re also less likely to cite cost as a reason for travel hesitancy than other groups, but more likely to cite fear of flying, sustainability and travel bans as reasons for staying put.

Grouping Zillennials with Millennials or Gen Z ignores these critical nuances and opportunities. Rigid segmentation can’t adapt quickly enough to evolving behaviors. To close the gap, brands must adopt a more dynamic personalization strategy.

Real-Time Personalization: A New Competitive Standard

Today's travelers expect personalization based on immediate context. Arrivia’s data highlights this shift: Gen Z travelers frequently book trips just one or two months in advance, in sharp contrast to older travelers who typically plan several months ahead. To effectively capture these shorter booking windows, marketers must leverage AI-driven personalization, delivering timely offers at precisely the moment travelers are ready to convert.

Imagine Rachel again: When she starts searching for a weekend getaway four weeks out, her loyalty platform should instantly recognize her typical booking timeframe, preference for bundled travel and likelihood of traveling with a large group of friends. It should also factor in her history of renting cars, actively suggesting discounted rates if she bundles her car rental and hotel. Platforms that can synthesize this data quickly and serve relevant itineraries have a much better chance of converting her initial interest into a confirmed booking.

As Rachel gets older and starts a family, her loyalty program should evolve alongside her needs. According to the arrivia survey, Millennials—particularly those with children—strongly prefer vacation homes to hotels, likely for the added convenience and space. While 28-year-old Rachel might always choose a centrally located hotel, the platform should be intelligent enough to anticipate that 35-year-old Rachel would prefer a vacation rental.

Such real-time adaptation transforms loyalty from passive point accumulation into meaningful, personalized interactions that significantly boost lifetime value. Meeting these heightened expectations requires more than basic CRM integration; it demands advanced AI capabilities that instantly analyze real-time traveler data such as destination preferences, booking patterns, preferred travel companions and proactively adjust loyalty content to the individual.

Overcoming the Tech Gap with Turnkey Platforms

Tech fragmentation remains a serious challenge for loyalty marketers. According to arrivia’s survey, 72% of travelers book through OTAs or directly with vendors, underscoring the urgency for loyalty brands to match that seamless user experience. Turnkey loyalty platforms with embedded AI help close this gap by integrating booking engines, personalization tools and loyalty management into a single, cohesive platform.

Today’s travelers won’t stay loyal automatically. Their continued engagement depends on consistently positive interactions. To stay competitive, loyalty marketers must align their strategies with new and emerging consumer behaviors, especially among younger travelers like Rachel. But the real strength of AI-powered personalization lies in its ability to engage younger segments without alienating established customers. Each traveler receives precisely the experience they’re looking for, no matter their age or loyalty status.

The technology and insights are already here. It’s time they were put to work.