The Financial Times (subscription required) has a report on how baby boomers’ “resolve embodies the spirit of a generation like no other in US history. The 77m “baby-boomers” – born between 1946 and 1964 when the optimism fostered by victory in the second world war and rapid economic development prompted Americans to procreate – have been the largest and wealthiest demographic cohort in the country for more than half a century”. The report also notes that “unlike previous trend-setting generations – such as the “New Dealers” born between 1936 and 1945 and the “Silents” that preceded them – the boomers do not appear ready to step aside in favour of younger blood. On the contrary, new research by McKinsey, the management consultancy, found that boomers will instead tighten their grip on America’s economic levers over the next few years”. Furthermore, the boomers will have a networth of $26trillion by 2015 – a mere seven years from now.
The implications for the economy of the “retirement” of baby-boomers has produced reams of paper that cover virtually every aspect from the over-wrought social security crisis, that some say will cripple the economy, to the paucity of workers and shortage of health care. What has not been covered, or at least not often enough, is the spending power of the boomers and its impact on the economy as they move into their latter decades in life. The FT report notes how America “ought to be busy devising novel ways to lure these ageing big spenders”. And apart “from pharmaceutical companies and financial services providers, which have traditionally targeted older consumers, there are few signs that large companies have recognized the giant opportunity presented by boomer consumers”. That list ought to include hotel companies as well as the industry like most others have focussed their efforts “on teenagers and the young” as per Jeff Taylor, founder of Eons.com, an internet portal for older people.
A Mckinsey & Company study quoted in the report notes that “one of the unwritten rules of good consumer marketing has traditionally been the focus on younger people because they are open to change and willing to spend.” As per David Court, from McKinsey’s worldwide market and sales practice. “For marketers in the last few decades, the core of the market and boomers were one and the same thing”. But that will change dramatically around 2015 beginning when “the 18-49 age group will grow by only 1m people in the next 10 years, compared with the 22.5m Americans set to enter the 50-plus bracket”.
The most telling aspect of the foregoing is the enormous spending power in the hands of the boomers. Hospitality companies have for the past five plus years been focusing on Gen X and Gen Y but as per McKinsey’s study that’s not where the money will be. So what should hotel companies do to go after a diverse and arguably fragmented group that will have most of the discretionary dollars but most definitely does not want to be labeled as “old”? For starters, that means designing rooms, websites and equipment that are functional for people who are long-sightedness and less dexterous with their hands. However, that does not mean going away from technology as most boomers are very gadget friendly if not obsessive and certainly fairly web-savvy. But attention to easy to do aspects of the room like a rheostat based switches for every light source that vary intensity along with door handles that facilitate easy gripping are a good start. It also means that any promotional advertising in-house or elsewhere is not overtly age oriented while at the same time remains “user-friendly”.
Additionally, there will also be a substantial market of boomers whose “sense of entitlement” developed from years of pampering by marketers but who will, nevertheless, be less well endowed financially. The FT notes that those likely will look for value of the kind promised by a “Jet Blue” or “Target” and will almost certainly shun the Wal-Marts of the world. That represents a challenge and opportunity for hotel franchises. The challenge lies in not emphasizing either their target market’s age or cost while highlighting value. The latter is best exemplified by two competitors from the auto industry:- Volvo and Subaru. No prizes for guessing the vehicle of choice for boomers.