What is the value of the pink pound to our industry?

Opportunities for the hospitality industry in the Lesbian, Gay, Bi-sexual and Transgender (LGBT) market. Chris McCoy, Equality & Diversity Manager, VisitScotland reports

A business without customers is a dying business. Yet many organisations, including the hospitality sector, can sometimes take their customers for granted, believing that the products, services and processes they have always used will continue to meet market needs. They fail to notice that the customer base is changing as needs and tastes evolve, and as communities change. A strong commitment to diversity and developing workplace practices that attract the finest talent available will ensure that businesses can not only survive but thrive in today's highly competitive global economy.

Diverse companies significantly outperform nondiverse companies in the stock market. A diverse company was one which had a ood representation of minority groups, a good percentage of purchasing going to minority firms and offered diversity programmes. This finding signifies the need for companies to attract, retain and develop employees from minority groups in order to maximise overall business performance. One of the minority groups that the hospitality industry needs to take a look at again is the Lesbian, Gay, Bi-sexual and Transgender (LGBT) market. Interestingly, Out Now, a specialist gay marketing agency, are launching the biggest ever survey of the LGBT market. The’2010 Out Now Global LGBT Market Study’ will research tourism and leisure patterns of LGBT people living in 14 countries across Latin America and Europe. Detailed information on travel habits will be researched in the study.

Spending Patterns

The ‘Pink Pound’

Approximately six percent of the UK adult population are gay men and lesbians – some 3 million people. The average full-time income for lesbians is reported as £24,783, and for gay men is £34,168. These figures are considerably higher than the UK national averages for men and women in general. Recent UK national average wage figures indicate that women in full-time work earn £18,531, while men earn £24,236. Research also shows that LGBT people are 20- 30 per cent more productive if they are “out” at work and supported.

In total, the UK’s gay and lesbian citizens last year earned over £70 billion. British lesbians and gay men, on average, are very well-employed, well-paid and spending on a range of lifestyle product categories. Furthermore, 74 per cent of gay and 42 per cent of straight consumers are less likely to buy products from organisations that hold negative views of lesbian and gay people.

Research into the LGBT market

LGBT people are widely recognised as frequent and well-spending travellers. In one recent LGBT customer complaint, the complainant made the following comment:

“We went to the restaurant spending £100 for lunch. I mention that in this complaint to give you an indication that my partner and I are perhaps the kind of tourist that the industry should be attracting to Scotland… if we had stayed, my partner and I would have probably spent another £100 in the Dive Centre on the fourteenth.”

A report written by VisitScotland in 2008 looked directly at developments in the LGBT travel market and attempted an assessment of how Scotland is placed as a destination for LGBT travellers, and this can be applied to all the hospitality industry across the UK. The LGBT is a year round travel market, travellers are not often limited to school holidays, and often avoid the main season and school holiday times.

LGBT travellers are a valuable segment of the market. They are often in two income couples without dependents and so have the disposable income to travel frequently and well. Our short breaks research in the US showed that LGBT travellers have similar interests, needs and wants as other segments and don’t want to be pigeonholed by their sexuality. However, they are faced with certain challenges while travelling. In particular, the check in procedure at their accommodation can often be daunting. Another recent complaint stated that the atmosphere at the check in desk was fine, until the customer said they wanted a double room, “then the atmosphere turned frosty and very uncomfortable”.

Therefore, LGBT travellers tend to look for destinations and tourism businesses which clearly state their gay-friendliness. Many destinations are increasing their efforts to target LGBT travellers. Other sectors of this market which have had increased focus include cruises and luxury travel. Companies actively targeting the gay market include in the UK are Hilton and British Airways, and in the US they are Starwood, Hilton, United Airlines, American Airways and Southwest Airlines.

LGBT travel markets in the USA and the UK

USA

The LGBT community, and its purchasing power, is well recognised in the US and there is more specific marketing, and travel research information, available here than anywhere else.

Around seven percent of US adults – 15 million people – identify themselves as LGBT, and the buying power of these consumers in 2007 was expected to be around US$690billion, and forecast to grow to US$835 by 2011. LGBT people travel more than Americans in general, taking more overnight trips, travelling more by p lane, spending more, staying longer away from home and go abroad more. 76 per cent of respondents held a valid passport compared to 36 percent of all US citizens.

The total economic impact in the US of LGBT travel is estimated to be around US$64billion.

Research by Harris Interactive backs up many of the findings above. This found that nearly half of LGBT travellers said a destination’s gay friendliness was important to them when making leisure travel choices. The most important considerations when choosing a holiday hotel were price, location, cleanliness and fair treatment of LGBT guests.

Top European destinations are the UK, France and Italy. Top cities are London, Paris, Rome, Venice, Amsterdam, Berlin and Barcelona. Younger LGBT people are most interested in visiting the top urban destinations. However, older LGBT people travel more frequently than younger. The most popular UK cities are London, followed by Manchester and Brighton. The UK shows significant growth as a destination. It is especially popular with gay men. Key factors in choosing a destination are recommendation by a friend, offer of unique attractions and gay-friendliness. Essentially, they look for destinations where they can relax and be themselves. Positive signs include the possibility of gay marriages (Canada’s tourism industry is thought to have benefitted from that). Personal safety is a significant factor when considering destinations. Negative news or reports about the treatment of the LGBT community will seriously affect a country’s potential to attract.

For businesses that invest time and effort in understanding the gay and lesbian market there are tangible benefits to be had. They need to develop marketing plans that better position their brands to attract gay and lesbian customers, as well as taking time to consider the products and services that they are bringing to this certain market.

EP Magazine

What is the value of the pink pound to our industry?