An ageing but increasingly-wealthy and mobile Asian population represents a boon for the travel sector, and one which is requiring a new focus from industry service providers. Abacus International President and CEO, Don Birch, says…
An ageing but increasingly-wealthy and mobile Asian population represents a boon for the travel sector, and one which is requiring a new focus from industry service providers. Abacus International President and CEO, Don Birch, says ‘grey travellers’ are one of the fastest-growing segments for the travel industry globally, and in Asia.
“We’re seeing the emergence of a new generation of older travellers who are healthy, active, street-wise and have unprecedented spending power. This is a lucrative segment but one which has specific needs,” he says.
While there is increasing understanding of the needs and preferences of this segment, Mr Birch says there is still some way to go if the industry is to fully tap and meet the expectations of grey travellers.
“Perceptions need to change so that we can adapt our services to meet the needs of this market – one which is going to continue to grow in value and size for at least the next 10 years.”
Latest research from Compete, Inc. Online travel comes of age travel study estimates that baby boomers in the US (aged 45 to 60+ and tagged baby boomers due to the number of births following the war) will earn an estimated US$3 trillion in annual income this year, and weld a discretionary spending power of some US$800 billion.
Mr Birch says that Compete, Inc.’s forecast of baby boomers spending 40 per cent more time holidaying and 74 per cent more money on a traditional vacation than 18- to 34-year olds, creates a wealth of opportunities for the travel industry.
“While Asia’s population maybe getting old, it will remain fit and healthy – the 60 year olds will become the new active 40s,” he says.
“In recent years, the travel and tourism industry has made some good headway compared with other industries and is now actively tailoring services to take a bite of the senior traveller market.”
Increasing value in ageing population
Asia is not a young market. The number of senior citizens is increasing significantly and this trend is expected to continue in the near future. By 2050, the proportion of people over 60 in industrialised countries is expected to reach a third of the population, and 40 per cent in Japan (source: United Nations Population Division 2000).
“While people may be ageing, they are becoming ‘younger’ too. More and more seniors treat travel as a ‘natural thing’ to do, so they become a source of increased demand. With the segment getting bigger and bigger, the travel and tourism industry has responded to the signal and are beginning to cater to this group,” said Mr Birch.
“To do that effectively, travel agents need to firstly understand the senior citizens’ wants and needs. Only by knowing what they really want can the travel agents craft special packages or rates, and be able to make the most of the opportunity grey travellers present,” Mr Birch says.
Being creative and customer-focused are key to capturing the grey travel dollar, he says.
Hertz offers specific promotions to select groups based on demographic profiling. The company`s Managing Director, Asia& Japan, Mr Wong Soon Hwa says senior travellers tend to be repeat customers as they are more discerning and have higher spending power.
Retired travellers in the middle income bracket of US$30,000 to US$100,000 spent US$17.5 billion in 2004 – which is 16 times more than singles in the same income group – and are projected to spend US$23.6 billion by 2014, MasterCard Asia-Pacific research shows. Countries accounted for included Japan, South Korea, China, Taiwan, Hong Kong SAR, Singapore, Malaysia, Indonesia, Thailand, the Philippines, India, Australia and New Zealand.
Need for the personal touch
Grey travellers may be financially independent and adventurous, but they are also hungry for attention and enjoy a personal touch, Mr Birch says. “They are not afraid to spend as long as it is value for money and convenience which meets their needs and concerns.”
“The bottom-line is they are the largest and most lucrative group of travel related consumers. We ignore senior travellers at our peril,” says Mr Birch.
Packages and programs that include wine tasting, historical tours, movie filming sites, healthcare packages and celebrity elements have all become popular new offerings from the travel industry.
Chan Brothers Travel markets customised tour packages targeted at this age group for cultural enrichment and special events.
“We notice that a majority of baby boomers tend to shy away from the regular organised tours. They want to explore on their own or with friends who have similar interests. Hence we have special interest packages to make help them make their vacations a relaxing and memorable one,” said Mr Chong Meng Kee, Director, Chan Brothers Travel.
Abacus International President and CEO, Don Birch, says travel service providers therefore should diversify and target according to mind-set and life stage, but definitely not age.
According to global research company ACNielsen’s Life Jugglers and Life Surfers collaborative consumer study, baby boomers have higher average personal and household incomes and are spending more on almost everything, from phones and mobiles to groceries, financial services, travel and tourism and even technology and the Internet.
Demand for better quality
The same trend has been identified by an annual IPK International survey (European Travel Monitor 1997), which shows ‘grey’ tourists generally prefer to spend their holidays in higher standards with services to match.
“They don’t mind to pay more for better quality when it comes to travel,” Mr Birch says.
Research shows that seniors are generally well-travelled and have more confidence to travel. More and more travel service providers like airlines and hotels are providing special marketing offers to meet this increased demand.
Abacus-connected travel agent, Century Travel Centre in Brunei, has created special airfares packages and cruise discounts for their senior citizen travellers. Marriott International is another offering special concessionary rates for seniors in some locations.
“We would never label any age group as ‘seniors’ and we try to ensure that we understand the dietary requirements of all our guests. We ensure that our menus cater to many dietary requirements and we make our facilities user-friendly,” says Bernadette Dennis, Vice President, Asia Pacific, Global Sales Organisation, Marriott International, Inc.
On the practical front, she says, “Rooms are equipped with special lighting and comfortable beds, and bathrooms with easy access and handles and anti-skid rubber mats.”
Reassurance – a key consideration
Though adventurous, evidence shows that peace of mind is critical too for the grey traveller, says Mr Birch, with travel insurance a key consideration. ICICI Lombard General Insurance for example, saw seniors account for 16 per cent of its total policy buyers in 2005-06, compared with 13 per cent the previous year.
Mr Birch says travel insurance providers are coming up with better plans that cover different types of protection, especially travel to exotic countries – and coverage can be easily integrated into travel packages with the latest GDS (travel booking systems) software such as that used by more than 11,000 Abacus-connected agents throughout Asia-Pacific.
According to ACNielsen’s Life Jugglers and Life Surfers collaborative consumer study, more than 60 per cent of baby boomers are now online and this increasingly presents an opportunity for travel agents to market offers and tap into the grey traveller market, says Mr Birch.
This is supported by Compete, Inc.’s Online travel comes of age travel study, where over 10 per cent of the 17 million baby boomers who research travel online each month will also book online, which is considerably more than young travellers who tend to window-shop.
“The Internet is becoming an extension of interface provided by travel agents over the phone and in person. And trust is very important in this area,” Mr Birch says.
“It’s all very well to have your tour options loaded onto your webpage on the Internet, with customisable packages, flights, hotels, and other add-ons – but the grey traveller wants to know who they’re dealing with so brand, professionalism and credibility on the Web is critical,” he says.
Similarly repeat customers and referrals is also an important component of serving the baby boomer segment.
Bernadette Dennis, of Marriott International, Inc. says understanding customers and learning to serve them better through effective CRM (Customer Relationship Management) can make the difference of whether they decide to come back, or visit a property more frequently.
Mr Birch says the value and size of the ‘grey traveller’ means that service providers are becoming increasingly focused on this segment.
“This is not a trend that is going to go away – it makes commercial sense for travel and hospitality providers to really understand this market.”
He says Abacus works closely with its network of travel agents, airlines and other content providers, to identify new ways of tailoring solutions and help meet this growing demand.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
