Globe-trotting baby boomers are transforming travel
The estimation is that travel spending will reach an average of $5,305 a year per traveller by 2025.
Internationalism is booming.
Yes, we know that pundits and pollsters are bearish on globalisation. But tech-savvy seniors are racking up passport stamps like never before. Over the next decade, international travel will become more common and easily attainable due to three trends: an expanding global middle class, an ageing global population, and improved technology and infrastructure.
Our optimism is backed by data. We estimate that travel spending will reach an average of $5,305 a year per traveller by 2025 – and that does not include costs spent before a trip, such as for an airline ticket. We are seeing a rising “traveller class” that will spend a growing portion of its household income on cross-border travel. Tomorrow’s travelling class will likely be much older and hail from the emerging markets – very different from today’s typical international traveller.
In every region, populations are ageing, with senior citizens representing the fastest growing demographic globally. By 2025, seniors will account for 11% of the world’s population. This shift is more pronounced in developed countries, where 22% of all citizens will be seniors versus 9% in emerging markets. For example, senior citizens will comprise 20% of Europe’s population by 2025, up from 17% today. The rate of ageing is also strong in Asia and South America, where the percentage of over-65s will rise from 6% in 2004 to more than 10% in 2025.
But what does this shift mean for the travel and tourism industry? Although seniors tend to have more time and financial resources than younger groups, they only travel half as much as the other age groups. At Visa, we re-examined why travel by seniors tends to drop off. We sampled 6 million people in 25 of the US cities that are most active when it comes to international travel.
Note: Percentages measure the share of population segmented by age and income who have travelled internationally in 2015.
What did we find? First of all, we discovered that age is secondary to income in cross-border travel. One in five individuals with an annual income of $150,000 or more travel internationally at least once each year. As income levels fall, so does travel propensity, with health and ageing secondary compared to income. Those who have the financial means travel regardless of their age. Affluent seniors continue travelling abroad well into their seventies.
The improvements in internet connectivity globally continue to play an important role in adding peace of mind by simplifying trip planning, while improved transportation infrastructure makes the trip itself more enjoyable. But innovative companies are using digital platforms to further enhance the travel experience. They not only encourage greater spontaneity in travel but also provide a broader array of personalised travel and tourism options. We continue to see new technologies and innovations being introduced globally, focusing on new ways to pay, including payment wearables and mobile phones, letting consumers swipe, dip, tap or click their way all around the globe.
We believe that globe-trotting baby boomers will remain a critical demographic for the global tourism industry for years to come and that the global travel and tourism industry’s ability to attract tech-savvy and affluent travellers over the age of 65 has the potential to emerge as a differentiator for countries and destinations.
_This article was republished courtesy of the World Economic Forum.
Written by Wayne Best, Chief Economist and Senior Vice-President at Visa Inc and Jack Forestell, Head of Global Merchant Sales & Solutions at Visa._