Last week, YouGov released research which showed that 40% of package holiday bookers over the age of 55 do not use price comparison sites before making a purchase, compared to just 19% of under 55s.
While I believe the figure – my mother scrapes in to the Over 55s category but often needs help changing the channel, let alone using something like Skyscanner – I’m not so sure of the explanation given in the article. The reason provided for Over 55s reluctance to compare prices is not an issue of technological sophistication, or one of financial necessity, but rather because they already have a clear idea of where and when they want to go on holiday; 75% of Over 55s knew exactly where and when they wanted to travel, compared to 64% of 35-54s and 58% of 18-34s.
YouGov’s article pays lip service to the role of technology, stating that “[a]s we would expect, bookings on tablet and smartphones are way down among the over 55s, with just 3% purchasing package holidays this way, compared to 22% of 18-34s”, but further analysis proves the extent of the differences in technological sophistication across age groups, while also highlighting the pivotal nature of the over/under 55 distinction.
The below chart illustrates the portfolios of internet activity across age groups, accumulating the extent of use of certain types of online behaviour, and the variety of online behaviour to create accumulated profiles of use by age group; 97% of 16-24s use the internet for communication, 93% use it for general surfing/browsing, and when all these categories are added up we reach a figure of 701% for this age group. The arrows show the extent of the difference from age group to age group; the 16-24s accumulated figure of 701% is 4% higher than the 25-34s accumulated figure of 672% and so on.
What emerges is a significant digital divide between those aged above and below 55. Across the board, extent and breadth of use declines with age, but nowhere is this difference more pronounced than between the 45-54s and the 55-64s – with another significant fall from the 55-64s to the 65-74s. Further, while the most basic forms of internet use are fairly prevalent across the sample, the more sophisticated the use, the greater the magnitude of difference between ages. For ‘Leisure information’ – where we could consider shopping around for a holiday to fall – use declines from between 38-55% in the 16-54 groups to between 31-14% in the 55-75+ groups.
The reality is that behaviours such as the use – or lack of use – of a service such as a price comparison website will always be irreducible to one single issue. Data from the Office for National Statistics’ Family Spending survey (chart below) shows that older age groups in the UK spend both more money, and a higher proportion of their total expenditure, on recreation and culture – the spending category which includes package holidays.
Perhaps this increased spending is the effect of not shopping around, with older consumers paying more for their holidays than their younger counterparts. More likely, however, is that we are observing in this data the driver of less discerning consumption. Older consumers, more likely to own their own homes, with fewer parental responsibilities and higher individual disposable incomes may simply not feel the need to pinch pennies when it comes to their package holidays. Other potentialities abound; older consumers are more likely to be return customers, with repeated positive experiences with a travel agent or a company and a desire for reliable quality rather than the lowest price perhaps negating any desire to use a comparison site – and of course, as we’ve discussed, perhaps they just don’t know how.
Ultimately, the likelihood is that all of these factors contribute to decision-making on whether or not to use price comparisons. While we must be careful to avoid the myth of singular generational experience, businesses must be wary of the demographic realities of different age cohorts. Businesses selling package holidays to the Over 55s in 2018 might soon feel the sharp edge of market forces as groups that have grown up with price comparisons driving down prices maintain these behaviours into old age and shrink profit margins.
Understanding these realities, and how they will change over time, will be crucial to the tourism industry, and by monitoring demographics, businesses can cater their services to generational groups that will be increasingly different from the ones that preceded them.