How Are Global Demographics Changing and What Does This Mean for the Hospitality Industry?

When discussing global demographics, the majority of information available will state that the world’s population growth has slowed. Though both “developed” and “less developed” nations are struggling to sustain their aging populations, developed countries such as Japan are experiencing the direst affects as studies will suggest that within the next decade the countries wealth will decline as a result of having to support the elderly portion of the population. World population has more than doubled in the last 50 years, and it has nearly quadrupled since 1900. Currently, world population is growing at a rate of 1.35 percent per year. The United Nations’ most recent forecast, however, predicts a slowing in the growth of world population to about 0.33 percent per year by 2050, at which time forecasters are predicting that world population will total 8.9 billion persons (A global demographic…Mueller, Paige, Ball, Asli). The hospitality industry relies heavily on the younger generations to fill front-line and entry level positions therefore the diminishing percentile of youth in certain countries will hold negative consequences in coming years for companies who rely on their skills to function.

While the world’s population growth has slowed, improvements in life expectancy have continued. These two conditions are leading to a rapid aging of the population, which is depicted in Table 1. By looking at average or median age, it becomes clearer that there is an increase in the aging population. Over the past 50 years, the median age of the world’s population has increased by 2.8 years, from 23.6 in 1950 to 26.4 in 2000 (Batini, Callen, McKibbin 2006). The United Nations estimates median age to rise to 36.8 years in 2050. More developed countries are expected to have an increase in median age from 37.3 years to 45.2 years, and lesser developed countries, from 24.1 years to 35.7 years. Using an estimate for 2005, Japan is the country with the oldest population, having a median age of 42.9 years. Japan is projected to have a median age of 54.9 years in 2050. Similar changes are occurring in Europe an example of which can be seen with forecasts for the Italian population. Italy’s median age in 2005 was 42.0 years and it is projected to have a median age of 50.4 years in 2050.

So what does this mean for the future of the hospitality industry? If the forecasts are accurate, the hospitality and tourism industries will face disadvantageous obstacles in coming years. Human resource issues are the most pertinent as many countries now face a shortage of skilled workers. With the number of people within the appropriate age gap to work declining quickly, many companies are forced to hire people without the qualifications and accreditations normally necessary for certain positions. With the fore mentioned also comes the issue of being able to recruit employees from foreign countries. With recent changes to national security occurring in many countries as a result of political instability and violence related to religion exploding in various regions, the freedom for people too travel between borders without visas is decreasing and as a result, many companies who normally hire foreign workers are struggling to find staff. Without the personnel required to conduct basic operations, companies are going to face the issue of having to hire employees who are either above or below the age bracket which they desire. Though not as prominent as the issue of human resources, the problem of people no longer wanting or being able to travel rises and could eventuate to investors finding other places to place their capital which would be deemed more profitable in the future.

Many companies are struggling to find employees today therefore if predictions for future demographics are correct, they are going to need to find alternatives to hiring youth, perhaps by seeking technological advancements to replace man power or by making greater efforts to retain current staff. If visa requirements were lifted and sponsorship of foreign employees in more developed countries became easier, this could give greater balance to countries whose workforce, for the most part, are already at the median age. As campaigning to encourage the younger generations to have more children is farfetched the hospitality industry as a whole will need to be innovative in order to resolve the issues it is due to face in coming years.

References

“The Global Impact of Demographic Change”
N. Batini, T. Callen, and W. McKibbin
Available online: http://www.imf.org/external/pubs/ft/wp/2006/wp0609.pdfhttp://www.imf.org/external/pubs/ft/wp/2006/wp0609.pdf [accessed July 2008]

“International Investing: A Global Demographic Primer” Mueller, Paige, Ball, Asli Journal of Real Estate Portfolio Management, Sep-Dec 2006

“Top Ten Global Issues and Challenges In the Hospitality Industry for 2006” L. Raleigh Available online: http://www.hotel - online.com/News/PR2005_4th/Dec05_TopTenIssues.html [accessed July, 2008]

“Changing world demographics and trade imbalances” W. Poole
Available online: http://www.stlouisfed.org/news/speeches/2007/04_16_07.html [accessed, July 2008]