Some have estimated that by 2050, 1 in 3 people will be over the age of 65 in many advanced economies, namely most of Western Europe, Japan, South Korea, New Zealand and a few others.
Just think about how this grand shift will permeate through your daily life. For instance, you go for your daily walk and there’s an outside chance you don’t see a single "young" person.
Yes, that’s 2050 — a long way off. So, why care? Well, demographic shifts of this nature aren’t like flipping on a light switch — or punctuated events like pandemics, world wars and supervolcano eruptions. They happen gradually, often at a glacial pace that only economists can accurately describe in hindsight. While this 1-in-3 stat is for 2050, expect to see this become an ever-present issue within a decade’s time. Knowing is half the battle, and now it’s time to pivot your business accordingly.
This burgeoning and global change to demography has a catchy label, also known as "The Silver Tsunami," although we specifically put the word "young" in quotations in the opening paragraph because when everyone is old then youth becomes the outlier. As a digression, the word "silver" is also presumptuous because it assumes that by 2050 we won’t have the longevity science, practices and technology to effortlessly reverse hair graying.
Our purpose with this column is to first calm your mind at what can seem on the surface to be a paralyzing long-term development. In fact, it’s the opposite; it will usher in a prodigious new profit center for hotel brands that rivals or even exceeds rooms revenues, if these companies play their cards right. While your organization can go the route of medical tourism — people traveling specifically for a healthcare treatment with the hotel experience as secondary — or anti-aging wellness — hotel experience primary with longevity programming as the auxiliary incentive — let’s discuss a third vertical that relies upon the "dependency ratio."
A term ripped straight from economics textbooks, the dependency ratio describes a national or multinational percentage of the total citizenry that falls outside of the highly productive working-age population — today defined roughly as ages 18 to 65 — and is thus dependent on those in the working-age population for all matter of sustenance, be it food production, shipping, manufacturing, software development or caregiving services. The higher the dependency ratio, the more strain there is on the working-age population to provide a great tax base to support public goods — such as infrastructure projects, pension funds or hospitals — and the lower the overall supply of labor, which can in turn lead to sector-specific labor crises, salary inflation, commodity disruptions and numerous other macro-effects.
The Silver Tsunami, combined with the strides being made in longevity practices, present vast and highly lucrative opportunities around the world to target local, regional and international guests for wellness experiences, with applicability for all hotel categories. This truly is an evergreen territory that any hotel company can investigate as a new source of long-term revenues.
The question is how do you prepare your hotel brand to profit from all of this? There are plenty of opportunities in the near-term:
- Accessibility will become a primary determinant for hotel bookings, meaning that you need to adjust your messaging on the website, in marketing materials, in pre-arrival communications and through the retraining of chatbots to dispel concerns and raise booking confidence.
- With the make-or-break nature of accessibility for many travelers’ purchasing decisions, some hotel companies may benefit by pivoting to become the brand of choice for this graying demographic, centering their offerings around "all-accessible rooms," where every guestroom or suite is configured with new amenities, safety features and Internet of Things integration that give peace of mind to the elderly, along with myriad value-added, on-demand caregiving services.
- Also given the rising demand for caregivers, there’s an opening for new hotel brands that blend traditional guestroom and extended-stay products with offerings more indicative of long-term care facilities so that specialized eldercare labor can be shared between the two verticals.
- Building on the notion of chatbot and machine-learning tools, hotels should start to investigate their options for robot workers to help offload the more rudimentary houseman and runner operations.
- Rising dependency ratios can lead to increasing multigenerational travel in which working-age guests bring along a senior family member — or other dependent — and will be influenced by on-site caregiving services, wellness programming targeted at the elderly, the ability to book adjoining rooms directly off the website and any packaging that mixes these together to offer more perceived value or convenience.
Hopefully it’s clear that every brand needs to map out a plan to capitalize on this global trend.
Take a moment to consider the decades-long effects from the recently introduced "Time Bank" concept in Switzerland, whereby young people can volunteer to help the elderly and thereby accrue "time credits" for when they too are older.
The dawn of The Silver Tsunami, and any resultant labor issues, is not a battle that hotels need fight alone; it is a challenge that all industries and businesses will face to varying degrees. Yet, as always, there are lucrative first-mover advantages to those hotel brands that start evolving their services and features for these dependent travelers.
Larry and Adam Mogelonsky are partners at Hotel Mogel Consulting Limited, a Toronto-based consulting practice.
The opinions expressed in this column do not necessarily reflect the opinions of Hotel News Now or CoStar Group and its affiliated companies. Bloggers published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to contact an editor with any questions or concern.