Cashing in on the experience economy

Cashing in on the experience economy

From the Museum of Ice Cream to The Color Factory, Millennials and Generation Z are immersing themselves in innovative experiences.
Published: December 9, 2018 | Updated: January 15th, 2019 at 4:39 pm
29Rooms’ “A Conversation With Your Inner Child” room.

Founding Creative Director of 29Rooms  —  Refinery29’s immersive walk-through experience — Albie Hueston had his black jacket draped over his white graphic T-shirt. Hueston, 32, stepped through the white brick doorway and made his way towards the two salt crystal statues — one resembling a child and the other an adult — mounted on a white platform in the center of the “A Conversation With Your Inner Child” room. Hueston remembers the room as meditation-level quiet. He walked past more than 10,000 arbitrarily placed pink pieces of paper with written notes. When the time came to write a letter to his inner child, Hueston walked over to the lucite table with pink fun paper and black pens. He wrote, “Little Albie, Don’t believe the bullies at school. Keep being you because this is the greatest power that you yield. You are such a beautiful soul and one day you will conquer the world and turn your demons into art. I love you X.”

Three years earlier, when Hueston and Piera Gelardi, the co-founder and executive creative director of Refinery29, decided to commemorate the media brand’s 10-year anniversary with the multi-room-walk-through experience, they had planned for 29Rooms to be a “one-off” event. In September 2015, the two, along with the rest of their team, rented a warehouse in Greenpoint, Brooklyn and built 29 immersive rooms dedicated to New York Fashion Week. On the opening day, when Hueston stood on the roof of the warehouse and stared down at more than 5,000 New Yorkers waiting in line  —  for up to five hours  —  he realized people longed for meaningful experiences. “We saw the true craving for ‘in real life’ experiences, not just an event or pop-up shop of products,” Hueston says. “[There is] something in an experience that is designed to be beautiful and transportive that really sets the stage for people to express themselves.” Four years later, Refinery29 has hosted three events, costing $40 per ticket. In 2017, the event sold out in less than a month and drew in people from 45 states and 13 countries, according to co-founder of Refinery29 Philippe von Borries.

Refinery29 tapped into the current experience-centric economy with 29Rooms by using immersive events targeted towards Millennials and Generation Z. A 2014 study conducted by Eventbrite, an event management and ticketing company, found that 78 percent of Millennials prefer to spend money on a desirable experience over a tangible product. “It’s not because they desire experiences more than others necessarily, it’s because they’re the first generation to grow up in the experience economy,” says B. Joseph Pine II, author of The Experience Economy and one of the researchers who coined the term. “They have realized they need less ‘stuff’ and more experiences.” Differentiating themselves from Baby Boomers, Millennials are commemorating their experiences with photographs and sharing them on social media. In 2018 three walk-through experiences targeted towards Millennials have popped up in New York, alone: The Museum of Ice Cream, The Color Factory, and The Rosé Wine Mansion. But with new research on Millennial’s infatuation with social media and IRL pop-ups, those experiences adapt into more innovative ones.

The Shift Towards Experiences

Millennials have only recently fueled the experience economy, but the term came to be more than 20 years ago. First coined in 1994 by researchers B. Joseph Pine II and James H. Gilmore, the experience economy describes the shift towards an economy that mass customizes services into an experience that provides economic value. Prior to the experience economy, services dominated the economy — which had been superseded by a goods-based economy. While holding several technical and managerial positions at IBM, Pine recognized that mass customization turns a service into an experience, and if experiences –such as travel –can provide an economic value, then there can be an economy based off of it. Pine shared his findings with his number one client at IBM, Gilmore, in 1996 and the two co-wrote The Experience Economy in 1999.

In tandem with Pine’s discovery that mass customizing a service transforms it into an experience, travel took off as a customizable experience and, in turn, fueled the experience economy in the 21st century. As one of the largest global industries, travel and tourism raked in $8.3 trillion of revenue worldwide in 2017  —  making up 10 percent of the U.S. GDP  — according to a 2018 report by The World Travel and Tourism Council. Millennials contribute to a large part of the travel industry. They take an average of 4.2 trips per year, while older generations take an average of 2.9 trips per year, according to a study conducted in 2015 by HVS Global Hospitality Services, a consulting firm that specializes in the hospitality industry. Brands like Intrepid Travel and Black Tomato have picked up on Millennial travel trends and target specifically to the generation. In October, Intrepid Travel, a small group travel company, limited one of its travel programs to 18 to 29-year-olds after seeing 17 percent more Millennial travelers in 2017. The “Get Lost” program by Black Tomato, a travel tour operator, drops travelers to destinations like the coast of South Africa and a jungle in Indonesia, without first telling them the destination to create an “authentic” and “self-discovery” travel experience. Bridget Hallinan, 23, writes about travel deals and unique experiences as a digital editorial assistant at Condé Nast Traveler. “More brands are reflecting the desired travel experience trend,” Hallinan says. “[The trend is] Millennials want to make memories and have those once-in-a-lifetime type of experiences.”

The desire for unique travel experiences, like Black Tomato’s customized “Get Lost” trips, differentiate Millennials from Baby Boomers. The desire for experiences does not set Millennials apart from Baby Boomers  —  as Baby Boomers wanted experiences, but lived in a service economy, Pine says. But they want life-changing experiences and need fewer tangible things. Millennials and Generation Z have even begun to sacrifice other needs in order to pay for experiences. Global travel company Expedia found that 71 percent of Generation Z would get a part-time job to pay for a leisure trip.

The Power Of FOMO

The sacrifices Millennials make to experience travel, such as extra jobs and buying fewer items, can be credited to the rise of social media. In July 2018, Daniella Sheerins, 21, walked into the Rosé Wine Mansion in New York knowing exactly what pictures she would get. She passed the pink, neon “Rosé All Day” lighting sign she saw on Instagram, recorded her first of eight rosé tastings on Snapchat, and had her friend snap a picture of her jumping into the rose petal bath. The museum had only been open for a week, but Sheerins wanted to take her friend visiting from Los Angeles to the rosé-inspired experience because of the guaranteed photo opportunities. “The rosé samplings were small, but I knew they had trendy, Instagram-able rooms so it ended up being worth my money,” says Sheerins, a senior at Syracuse University.

Sheerins represents the Millennial generation and its infatuation with posting experiences on social media. A study in The Journal of Travel Research shows that Millennials feel envy over peers’ social media posts and 25 percent of Millennials chose travel destinations and experiences based on posts they saw on platforms like Instagram and Facebook. “I wanted to see what all of the hype around The Rosé [Wine] Mansion was, for myself,” Sheerins explains. Like many Millennials, Sheerins shares posts on social media to avoid FOMO. The fear of missing out drives 69 percent of Millennials to desire experiences, according to Eventbrite. Pine says Millennials take more photos of experiences because of FOMO. And as Millennials take photos to share on social media, they also take photos to remember the experience. Seventy-seven percent of Millennials say their experiences help shape their identity and create their best memories, according to Eventbrite. “People are now using the word memory for the word photo,” Pine says. “They are two different things. But in fact, Millennials are missing out on a great part of the experience because they are taking pictures of it.”

Experiences such as the The Rosé Wine Mansion and The Museum of Ice Cream in San Francisco, a multi-room-walk-through experience dedicated to ice cream, designed the event space with the intention of guests taking photos  —  and that’s what draws Millennials in. The original Museum of Ice Cream in New York City sold out in the first three days, leaving 200,000 people on the waitlist, and bringing in $6 million in revenue from tickets. But this does not include the whopping 295,000 Instagram followers the pop-up amassed in the 18 months from those who experienced it through social media. But just because Millennials have pictures of the experience, does not mean they will fully remember it later on.

Linda Henkel, a researcher and professor of psychology at Fairfield University, conducted a study to determine the effect of taking photos during an experience on memory. “We do become slaves to [social media], and we are addicted to it,” Henkel says. “It’s too easy to click ‘like’ and not have any level of interaction with the photo and the experience.” Through her research, Henkel found that it’s not the action of taking a photo that affects memory, but the quality and quantity of the photos. She says that the mass and volume of photos becomes the biggest barrier to remembering an experience. “Some photos are not good for memory because they don’t have a lot of memory-rich cues in them.” Henkel explains that taking photos that include personal or specific details will help retrieve memory. “We don’t just take photos to remember things, we take photos to brag about what we are doing and to communicate emotions with other,” Henkel says.

But this doesn’t mean that all photos disrupt the memory of experiences. Alixandra Barasch, a researcher and assistant professor of marketing at New York University, studies the implications of taking photos and found that photos can actually help one remember experiences. Barasch explains that the act of taking a photo makes one aware of visual components in their surroundings and can create a more concrete memory. But taking photos actually shifts one’s memory perspective. “We are starting to remember our life as an observer would watch us in third person as opposed to first person,” Barasch says. “We’re seeking things that are more picturesque and shareable. We want to find the hole in the wall.”

>But 22-year-old Jackie Homan, an editorial assistant at luxury online travel magazine Jet Setter, looks for more than just a “shareable” experience. Homan attended 29Rooms in 2015 when it first opened, but left craving a more immersive experience and not just an Instagram post. “Looking back, I would never do that again.” Homan explains. “If they have more to offer than an opportunity to take an Instagram, like a new perspective or entertainment, it would be more valuable.”

Homan says that one of the most popular topics she writes about are life-changing destinations and quizzes that provide readers with customized answers. “People really want to know the trip that will be so valuable [to them],” Homan says. “Our readers love to feel like the answer is really custom to them.”

The search For custom, life-changing experiences

When it came time for Hueston to brainstorm rooms for the September 2018 “Expand Your Reality” 29Rooms, he wanted to leave people feeling “transformed.” After seeing Actor and Musician Kat Cunning emotionally connect visitors in the “Dreamer’s Den” room, in which she reenacted visitors dreams in a dark, smokey cocktail bar-esque room, in the 2017 29Rooms, Heuston knew he needed to make the rooms personal in order to transform people. Enter: the “29 Questions” room — a completely personalized experience within 29Rooms.

Now that the experience economy is in full swing, customized and life-changing experiences will be on the rise. “I realized [in 1994] that if you design a service that is appropriate for a particular person, exactly what they need at this moment in time, can’t help but turn it into a memorable event,” Pine says.

A host welcomes Hueston and 29Rooms guests into a dark room. He sits down at one of the many tables adorned with decks of cards for the seven-minute guided experience. Hueston sits across from a complete stranger and is told to close his eyes and then stare at his partner for 30 seconds. After shuffling the deck of cards, his partner asks him questions like “Who do you miss?” or “How do you want to be remembered?” Once the seven minutes is up, Hueston gets up out of his seat. He feels a sudden wave of empathy between him and his partner as he watches other partners exchange phone numbers before heading to the next room.

Infographic: 5 immersive experiences
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is a magazine and IM&T senior, founder of University Girl Magazine and contributor to The NewsHouse.