Customers aged over 65 spent £37bn in the UK hospitality and leisure sector in the last year, according to new research from Barclays.
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.
However Barclays has claimed the sector missed out on at least a further £16bn in additional revenues by underestimating the spending power of the older generation in the last year.
Just 5% of businesses within the sector see the over-65s as the most important demographic in terms of sales and revenue for their company, with only 22% ranking the age bracket in its top three.
Barclays said 76% of those surveyed 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.
It said 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.”
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.
