The post-pandemic travel boom is showing no sign of letting up. In the US, the Department of Transportation has reported a series of all-time highs for daily travellers passing through its airport security checkpoints, and July 4 saw Americans hit the road in record numbers. Chinese tourists also appear to be taking international trips in numbers that are starting to approach pre-Covid levels — outbound trips reached 89 percent of 2019′s total during Golden Week in May, according to Jing Daily.
Fashion and beauty retailers have mostly benefitted from the tourism surge, though a rapid and seemingly permanent shift in how and where travellers spend their money has thrown some brands for a loop. Western tourists are spending more on experiences. Chinese tourists, meanwhile, show a growing preference to shop at home rather than while on holiday abroad, and a post-lockdown preference for Asian destinations over European ones has carried through to this summer.
Certainly, a dramatic increase in the overall number of travellers, and how much they spend on holiday, seems set to lift all boats. However, the big winner looks to be Japan, where the weak yen — the currency is trading at a 38-year low to the dollar — is attracting bargain-seeking visitors from around the world. Tourists there have more than doubled their spending on fashion from a year earlier, according to an analysis of credit card data by SpendingPulse, a division of Mastercard. Bernstein found that 64 percent of in-store spending by Chinese tourists took place in Japan, nearly double the country’s share in 2019.
Big duty free players, such as LVMH and Estée Lauder, have struggled to keep up with the shift in travellers’ spending patterns. For fashion and beauty brands not saddled with vast infrastructures catering to circa 2019 Chinese tourism, winning a share of holiday shoppers’ wallets is much simpler. An over-the-top resort pop-up is always popular; at the Mytheresa X Flamingo Estate outpost in the Hamptons, vacationers can purchase beauty products and jewellery, or even test-drive an all-electric Porsche. Others are still trying to catch tourists on their layovers; Lacoste is opening duty-free boutiques in airports in Singapore, Qatar and other hubs favoured by big spending long-haul travellers.
As we get deeper into summer, we’ll see whether increased travel numbers translate into a rebound in luxury spending, which has stalled out in many key markets. It’s also an open question whether lower-income travellers will splurge on fashion. Soaring hotel and fuel costs are squeezing budgets, and shopping sprees may not always make the cut.
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