New research by Barclays shows that the over 65s added £37 billion*(2) 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*(3), 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.”
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