Leisure and hospitality businesses could be missing out on up to £16bn in additional revenues by failing to adequately cater to the needs of over 65-year-olds.

That is the topline finding of An ageing population: the untapped potential for hospitality and leisure businesses – a new report published today (22 April) by Barclays Corporate Banking which found many businesses are failing to appreciate the power of the ‘grey pound.’

Britain’s ageing population means the importance of this market will continue to increase. With the population of over 65s expected to have grown 34 per cent by 2025, Barclays predicts that leisure and hospitality spending by over 65s will reach £57bn by the middle of the next decade.

The report highlights that despite over 65s being by far the biggest spenders in terms of age bracket, just five per cent of leisure and hospitality businesses see over 65s as their most important demographic in terms of sales and revenue.

“It is clear from the Report that the over 65 age group is a huge and untapped opportunity for the hospitality and leisure sector within the UK,” said Mike Saul, head of Hospitality and Leisure at Barclays.

“There appears to be a gulf between the perception and reality of the spending power of over 65s. By not fully focusing on the needs of this generation, and the revenue growth opportunity they represent, businesses may risk missing out on their share of £16bn this year alone.”

Barclays research found that over 65s added £37bn to the UK economy through hospitality and leisure spending in the last year. This level of spend represents 36 per cent more than the average consumer and 27 per cent higher than 35 to 54-year-olds – who are the second biggest spending generation. The £16bn figure is derived by Barclays from the estimated amount of additional spend businesses could attract by prioritising the over 65s market.

According to the report, hospitality and leisure businesses have been slow to realise this potential, with only one in five businesses (22%) ranking over 65s in their top three target age groups. While a significant number of hotel and travel businesses are alert to over 65s’ spending power (38% and 44% respectively), more than a third (37%) of businesses in the sector perceive 34-44 year olds as their priority target market.

Another key finding was that as well as being the biggest spenders, over 65s also tend to be the most loyal customers. Around 41 per cent of over 65s are likely to recommend a company they were loyal to, compared to just 19 per cent among 18 to 34-year-olds. Level of service and value for money were found to be the key criteria for over 65s, while rewards programmes or incentives are less appealing to them than younger age groups.

“We have found that almost two-fifths of businesses in the sector expect that the proportion of their turnover generated by over 65s will increase over the next five years,” added Saul.

“Yet more needs to be done to start planning and accommodating for the currently ‘overlooked generation’. By investment in targeting these customers now, businesses can pre-empt the effects of an ageing population, ensuring they are able to meet and capitalise on the increasing demand.”