Circos Brand Karma

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The Incredible Shrinking Taiwanese Twentysomethings

with 3 comments

A few days ago I was at a conference in Taipei where I presented data about the major shifts in the Taiwanese market.  I compared the outbound traveler data from the first half of 2009 to the first half of 2002.  Both 2002 and 2009 were preceded by events that negatively affected the travel industry (i.e. September 11, the financial crisis, and H1N1).  As the total outbound travelers January-June was 3.7M in 2002 vs. 3.8M in 2009, it appeared that those events had a similar degree of impact on the overall market and I could compare them to see the shifts.

There were a few insights that I shared at the conference based on this analysis, including how outbound destinations shifted in this time period due to the opening of direct flights between Taiwan and Mainland China this year.  However, the most interesting insight to me was this: for all age groups, the relative % of market remained the same except for the 20-29 year-olds vs. the 50-59 year-olds.  The 20s group experienced a 15% decrease v. the 50s that had a 44% increase.

To ensure that this wasn’t an aberration for 2009 only, I also compared the first half of 2008 (a more prosperous time) with 2002.  It turns out that while the overall market grew by 19% in 2002, the 20s segment grew by only 2%.  In fact, every other age segment grew by double digits except for the 20s.  Meanwhile, the 50s grew by 53% between 2008 and 2002.

The data is counter-intuitive.  Travel is about discovery, and we associate that with something that younger people would be excited about.  But the data suggested just the opposite.  As the 20-29 year-olds are the youngest of the independent travelers (below 20 the travel activities tend to be largely as a result of family travel), they are an important bellwether segment to observe.  And the data showed bad news.  I shared this with a few Taiwanese friends and industry insiders and they were puzzled and surprised.  No one had a good explanation for what was going on even though there were quite a few plausible suggestions related to the economy.

The down trend bothered me so much that I did some more research in the last few days.  Here’s what I found.

According to government statistics, The population of 20-29 year olds in Taiwan from 2002 to 2008 decreased by about 6% whereas the population of 50-59 year olds increased by about 44%.  However, the % of 20 year-olds and the % of 50 year-olds who traveled remained relatively constant in these years (monthly, about 3% of the 20s  vs. 4% of the 50s).  Taking the additional data into account, it made sense that:

Trend of Taiwanese Population by Age, 20s v. 50s (in 000s)

Trend of Taiwanese Population by Age, 20s v. 50s (in 000s)

  • In absolute numbers, there were now many more Taiwanese in their 50s than 20s traveling to destinations outside Taiwan, whereas in 2002 the numbers were about the same
  • The reason for this may not be behavioral or socio-economic, but simply due to the decrease in the overall population of 20 year-olds in Taiwan from 2002 to now versus the increase in the overall population of 50 year-olds during the same period

A 29 year-old in 2008 would have been born 1979.  I decided to look and see the birth rate of Taiwanese babies from 1979 through present day to see how that will impact future population.  What I found was alarming.

Population trend of 20-29 year-old Taiwanese based on births from 1979-2007

Population trend of 20-29 year-old Taiwanese based on births from 1979-2007 (in 000s)

The birth rate in Taiwan has been in sharp decline.  For example, there were more than twice as many babies born in 1979 than in 2007.  The chart on the left shows the population of 20-29 year-olds for the next 20 years.

This means that in 2027, there will be 35% fewer Taiwanese in their 20s than today.

If the percent of people who travel stay roughly the same and there is no big influx of people immigrating to Taiwan to offset the decline, then this segment of travelers will severely impact the travel industry as they grow older and move into the older (and more affluent) age categories of the 30s, 40s, and 50s.

I think the travel industry in Taiwan needs to reconsider their strategy targeting outbound Taiwanese travelers, starting with how to attract young travelers and win their loyalty.  Also, with the young population declining, Taiwanese airline and hotel operators need to have a better strategy for attracting inbound travelers.

Further, destinations like Japan and Hong Kong where a large number of Taiwanese visit should also take note.  It’s kind of downhill from here.

While on the one hand I was glad to see that young Taiwanese people are still out discovering the world, I was sad to realize that there are going to be fewer Taiwanese people in the future.

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Written by Morris

September 18, 2009 at 12:14 am

3 Responses

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