Luxury sector impatient for return of Chinese tourists - The Straits Times

PARIS – The European luxury sector is welcoming the end of pandemic lockdowns in China, as the return of big-spending Chinese tourists could sustain further growth.

Prior to the pandemic, Chinese tourists visiting Europe were a major source of sales for luxury houses.

The Chinese accounted for a third of luxury purchases in the world, and two-thirds of those purchases were made outside China, said Ms Joelle de Montgolfier, head of the luxury division at management consulting firm Bain and Co.

Their return has led RBC bank to revise up its growth forecast for the sector this year to 11 per cent, from 7 per cent previously.

“China reopening is one of the key ‘mega-themes’ for the luxury sector in 2023,” RBC said in a recent note to clients.

After a drop in 2020, the luxury sector managed to surpass its pre-pandemic sales in 2021.

It made an estimated 22 per cent jump to US$384 billion (S$507 billion), according to a November forecast by Bain and Co.

That growth was supported by the wave of post-lockdown US tourists visiting Europe armed with a strong dollar, as well as South Korean and South-east Asian tourists.

Another pleasant surprise was Europeans “who had been ignored for decades... and were more interested in luxury goods than expected”, said Mr Erwan Rambourg, a luxury industry insider turned analyst and author of the book Future Luxe: What’s Ahead For The Business Of Luxury.

With the lifting of travel restrictions in China “there will be a considerable return of Chinese tourists but that will be more likely in the second quarter”, said Mr Arnaud Cadart, a portfolio manager at asset manager Flornoy.

“The pandemic is still very active in China and it will affect lots of people.”

The Chinese tourists may be needed if the flow of US tourists slows.

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