New research released today by Barclays shows that the over 65s added £37 billion to the UK economy through spending on the Hospitality & Leisure sector in the last year. This contribution equates to over a third (36%) more than the average consumer and 27% higher than the 35 – 54 year olds who are the second biggest spending generation.
Despite this, the An ageing population: the untapped potential for hospitality and leisure businesses report from Barclays Corporate Banking, reveals that the UK Hospitality & Leisure Sector has missed out on at least a further £16 billion in additional revenues by underestimating the spending power of the older generation in the last year.
Sector must innovate and re-focus to capitalise
Just 5% of businesses within the sector see the “overlooked generation” (those aged 65 and over) as the most important demographic in terms of sales and revenue for their company. In fact only one in five businesses (22%) ranked over 65s in their top three target age groups. While a significant number of Hotel and Travel businesses are alert to the fact that the over 65s spend more per customer than any other group (38% and 44% respectively), more than a third (37%) of businesses in the sector perceive 34-44 year olds as their priority target market, despite these consumers spending less money on average.
Furthermore, more than three quarters of businesses (76%) have no plans to introduce products or services that specifically targets the over 65s. Of these, 37% have not even considered targeting this age group and 28% see little financial opportunity in catering to them.
Without action, this missed opportunity is only set to increase in line with the UK’s ageing population. The total annual spend of over 65s could grow to at least £57 billion by 2025, based on the projected 34% growth in the population of over 65s. This could be even higher considering the increased mobility and active lifestyles the over 65s are now living.
Mike Saul, Head of Hospitality and Leisure at Barclays, said: “It is clear from the Report that the over 65 age group is a huge and untapped opportunity for the Hospitality and Leisure Sector with the UK. There appears to be a gulf between the perception and reality of the spending power of over 65s. By not fully focusing on the needs of this generation, and the revenue growth opportunity they represent, businesses may risk missing out on their share of £16 billion this year alone.
“We have found that almost two-fifths of businesses in the sector expect that the proportion of their turnover generated by over 65s will increase over the next five years. Yet more needs to be done to start planning and accommodating for the currently ‘overlooked generation’. By investment in targeting these customers now, businesses can pre-empt the effects of an ageing population, ensuring they are able to meet and capitalise on the increasing demand.”
Investment within the industry
The report also reveals that the vast majority of hospitality and leisure businesses are planning to invest in their businesses in the next five years. Four in five businesses (83%) are planning to invest money in the next five years and nearly a fifth (18%) are planning a major investment. 15% of the planned investments will be used to meet the needs of the over 65s.
Loyalty grows with age
The report shows that not only are the over 65s bigger spenders than the younger generations, but they are also the most loyal customers – offering an even greater opportunity for businesses in the sector. When asked, over 65s are much more likely (41%) to mention a company they were loyal to than younger age groups. The ability to this drops to just 19% amongst 18-34 year olds.
Overall, the most important factors for loyalty are level of service (46%), value for money/prices (31%) and rewards/incentives schemes (23%). There is a generational difference here though, for those aged 65 and over, level of service, value for money/ price are key, while rewards programmes or incentives appeal to younger age groups more.
Research and booking: a digital pursuit
With less than one in 10 (8%) over 65s visiting travel agents in shops when looking for information on products and services, the use of digital tools is becoming increasingly important for over 65s planning their leisure time. When looking for information on products and services the first port of call for the over 65s is the internet. 58% of over 65s use search engines, 35% of them turn to online customer reviews and 15% use online travel agents.