TRAVEL INSIGHTS Travel wanderlust: Age is not a constraint, but income might be

Richard Lung

February 22, 2017 - Older populations are the fastest-growing demographic globally, in every region of the world. This has major implications for the travel and tourism industries. By 2025, people aged 65 and older will account for 11 percent of the world’s population and their international travel—the number of cross-border trips they take per year—will more than double1.

Despite increases in senior travel overall, the frequency at which most seniors travel is lower than other age groups—half the rate of younger travelers. In fact, surveys of international travelers show that only 25 percent of seniors (aged 65+) take international trips, compared to 45 percent of the general population2.

How age impacts travel propensity

What the survey data does not explain is why seniors travel less frequently. If anything, shouldn’t travel increase, not decrease, with advancing age, especially as seniors have more time available to them and are staying healthier longer3? Or, does older age by itself predispose people to travel less?

To look deeper into this question, Visa sampled data from 6 million people in 25 of the most active U.S. cities for international travel. The sample was based on VisaNet data and enhanced using anonymized demographic and income data from third-party sources4, comparing people who traveled internationally in 2015 with those who did not.

The result? It turns out that age isn’t the primary determinant of an individual’s propensity for international travel. Rather, income is. By holding income constant—looking only at cross-border travel for those in the same income bracket—the research indicates that very little changes in travel propensity with age. In reality, twenty percent of cardholders with an annual income of $150,000 travel internationally at least once each year, until they reach the age of 80. Similarly, at lower income levels—or as income levels fall—so does travel propensity. Bottom line: those who have the means will travel regardless of their age.

People who travel internationally at least once per year
(Percent of U.S. cardholders, by age and income)

Source: VisaNet, TransUnion, Acxiom

Understanding travel propensity is an important part of the growing trend in international travel over the next decade—with more and more people expected to travel internationally as an expanding global ‘traveling class’ and improved infrastructures help fuel the growth, according to a 2016 Visa travel study1.

Shifts in traveling population

Fortunately, the rising traveling class and senior population will also offset an impending shift in population demographics. In fact, by 2025, seniors will be the only international traveler segment that will increase as a share of the total global population, while the prime traveling population—those between the ages of 25 and 65—will see their shares begin to decline.

Population dynamics create new challenges, and opportunities
Global population aged 25-65 (share of total population)

Source: United Nations

By 2025, seniors should account for 13 percent of all international travel (from 10 percent in 2016)—mostly because more seniors will be traveling than ever before.

This distinction helps explain why senior international travel is increasing overall, despite the lower frequency of travel among seniors as they get older. It appears that even though there are more seniors (and more seniors traveling), they may be taking fewer cross-border trips per year per person, opting for quality over quantity in their traveling preferences. Additional survey data in the U.S. seems to support this theory—showing that American seniors tend to take longer trips on average and spend more while on their trips5.

Today’s baby boomer generation will become a critical demographic for the global tourism industry in coming years. The industry’s ability to attract affluent baby boomer travelers looks to be a key differentiator for countries and travel destinations hoping to create the next big travel experience for the traveler of the future.

Richard Lung is a senior director and international economist at Visa. Prior to joining Visa, Lung was a vice president/senior analyst for Moody’s Investors Service based in Hong Kong, where he covered the Asian banking market. He also held senior positions with the Federal Reserve Bank of San Francisco and U.S. Treasury Department. Lung holds degrees from Harvard University and the Fletcher School of Law and Diplomacy at Tufts University.

Sources

1 “Mapping the future of global travel and tourism,” June 2016. www.visa.com/travelinsights.

*Projected from 2015 data.

2 Oxford Economics using IPK data

3 Harvard Medical School, 2013

4 TransUnion, Acxiom

5 TNS; Prosper Insights & Analytics, January 2016

Forward Looking Statements and Disclaimer

This article contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements are generally identified by words such as “outlook,” “forecast,” “projected,” “could,” “expects,” “will” and other similar expressions. Examples of such forward-looking statements include, but are not limited to, statements we make about Visa’s business, economic outlooks, population expansion and analyses. All statements other than statements of historical fact could be forward-looking statements, which speak only as of the date they are made, are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, many of which are beyond our control and are difficult to predict. Studies, survey results, research, recommendations, opportunity assessments, etc. (the ‘Information’) should be considered directional only. The Information should not be relied upon for marketing, legal, regulatory or other advice. The Information should be independently evaluated in light of your specific business needs and any applicable laws and regulations. Visa is not responsible for your use of the Information, including errors of any kind, or any assumptions or conclusions you might draw from their use.

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