Issue The experience economy splits between premium spenders and low-cost emotional substitutes

Summary

McKinsey describes an experience economy that is pulling in two directions at once. On one side, some consumers can and will pay for premium, high-value experiences outside the home, and luxury travel has outgrown its non-luxury equivalents. Luxury hotels, for instance, expanded by nearly 6 percent between 2023 and 2025 while hotels overall grew about 3.5 percent. On the other side, respondents in every generation say price is the most decisive factor when they buy an experience. The report suggests this helps explain why people are devoting more of their time to digital entertainment, social media and wellness routines as cheaper ways to get similar emotional rewards. Companies therefore face a split market in which both premium and low-cost emotional offers can succeed.