Travel industry must adapt to ‘dramatic impact’ of ageing population

The travel industry in the UK and all mature markets must adjust to the “dramatic impact” of a rapidly ageing population and increasing taxation, the head of European travel association Etoa warned this week.

Etoa chief executive Tom Jenkins told the association’s Global European Marketplace in London: “We’re selling to an increasingly shrinking proportion of the population in every market. What is happening in the demographics of origin markets will have a dramatic impact.”

Jenkins noted birth rates in high‑income countries have declined continuously since 1951 and fallen below the rate to replace existing populations, meaning that by 2100 “there will be fewer people in Europe and East Asia than in 1960”.

He said: “It’s a massive challenge for us and we’ll have to adapt in a reasonably short time.”

Jenkins acknowledged those aged over 65 “have money and time and their numbers are growing”, but he said: “About 40% have some form of disability. So, that is a factor in how they’re accommodated.”

He suggested “the crucial question” will be “is the price right?”, arguing: “One of the great problems in Europe is the level of indirect tax on tourism. The Netherlands just raised VAT on accommodation from 5% to 21%, and Amsterdam has added 12.5% [in city tax] on top of that. Edinburgh is adding a city tax of 5% on top of 20% VAT.”

Jenkins said: “The price has been right in the US for the last 60 years and the value of inbound arrivals has grown, only declining when there has been a surge in the value of the dollar. 

“The price of Japan has dropped dramatically in the last few years, and inbound tourism has grown.”

But he warned the sector in Europe faces a “Buckaroo moment” in which it is pushed past its limits, saying: “The industry just can’t take any more.”

He said: “President Trump was criticised for his ‘Liberation Day’ [announcement of trade tariffs] designed to stop money flowing out of the economy. But imposing taxes on money flowing into the country is nuts.

“The difficulty is that these city taxes are driven locally [in the UK] by cash-strapped councils. The councils have no money, so they have to do it. But it’s incredibly dangerous. It makes Trump’s tariffs look enlightened.”