PARIS — Surging tourism — a boon to Europe’s lackluster economies and its top luxury players — hit the brakes in October, and is set to wither further as fears over future terrorist attacks continue to grip the continent and beyond.
Tourist spending in Europe increased only 1.6 percent in October versus a gain of 16.4 percent in September and 36.4 percent in August, making it “the worst affected region,” according to figures released Tuesday by tax-refund firm Global Blue.
Detailed in a research report by Barclays, the data suggests that the Paris attacks that claimed 130 lives on Nov. 13 and injured hundreds are “likely to further dampen future figures as trips are likely to be delayed or canceled.”
Overall, global tourism spending rose 6.5 percent in October, the slowest monthly growth since January of this year as Chinese tourist spending rose only 23.5 percent, versus 49.2 percent in September and 65.8 percent in August.
The findings echo third-quarter results from European luxury players such as Burberry, Hugo Boss and LVMH Moët Hennessy Louis Vuitton “who all saw a slowdown in travel and spending from the Chinese consumer and weak underlying growth generally,” Barclays noted.
Spending by Russians deteriorated further, dropping 44.2 percent, adding to the gloomy outlook for the continent, as Brussels entered its third day of security lockdown as it hunts down terrorists, and the U.S. government issued a worldwide travel alert to its citizens.
Russian tourist spending globally has declined for 22 consecutive months “and the similar fate in European spending, down 44.1 percent in October, highlights that there is no regional bias in the spending, but a general decline in activity. The ruble is still at a significant discount to the euro and USD from a year ago, and the sanctions remain in place,” Barclays explained.
Tourists spend roughly seven times more than domestic customers, with the average spend on shopping abroad totaling 3,400 pounds, or $5,150 at current exchange rates, according to Global Blue Analytics.
By nationality, the biggest spenders per transaction are Thai, followed by Chinese, Indonesian, Japanese and Russian. (Global Blue data does not reflect tourism spending in the U.S., U.K., Hong Kong and Dubai as these nations do not have VAT refund systems in place.)
Barclays noted that Chinese spending was closely aligned with trends in the rest of the world in August, suggesting it was driven, “by continued high volumes of middle class Chinese spending in Asia, in particular Japan.”
Europe accounts for 84 percent of tourism sales monitored by Global Blue, which estimates that the overall travel retail market is worth more than 48 billion pounds, or $72.75 billion, and accounts for 60 percent of the European luxury market.
Sales to tourists typically accounts for around half of a luxury brand’s sales, according to Barclays research, estimating that 20 percent of Tod’s sales in Europe comes from tourists, versus 40 percent for Hermès and Jimmy Choo; 50 percent for Burberry, and 70 percent for Salvatore Ferragamo.
In October, leather goods was the best category, rising 11.6 percent globally and 13.3 percent in Europe, with fashion and clothing essentially flat and jewelry and watches registering its first decline — 7.4 percent globally and 9.4 percent in Europe — since August 2014.
Meanwhile, several Paris retailers cited improving traffic and sales over the past weekend, which coincided with the onset of several private sales — offering discounts to VIP clients ahead of regulated sales periods — and the first of several Sunday openings ahead of Christmas.
Printemps said traffic at its Boulevard Haussmann flagship had dropped 30 percent the five weekdays following the Friday the 13th wave of terror, while Nov. 21 registered a more mild 15 percent decrease.
The retailer said the events in Paris had no noticeable impact on sales in locations outside the French capital, nor on its e-commerce site Place des Tendances, acquired in 2013.
Michael Hadida, buyer and business strategist at Paris specialty store L’Eclaireur, said while its e-business has been stable in the aftermath of the Paris attacks, foot traffic and sales in its physical stores spiked 200 percent in the course of last weekend versus the same time last month.
“All we did was send out a newsletter on Friday evening to say that there would be some special offers. And it was crazy. Out of our six stores here, only three were offering the private sale, but traffic spiked in all locations. People were coming and spending. It was Christmas before Christmas. We eventually decided to stay open on Sunday. Paris is back,” Hadida asserted, crediting a sense of solidarity in times of crisis. “The Parisians are more united than ever. I have never seen anything like this before. The city represents lifestyle, and that’s what we are communicating — a city of style with a French touch. We were sleeping on it, until these people woke us up.”
Hadida said L’Eclaireur decided not to go overboard with excessive security measures, but to keep those that were already in place. “We are putting our efforts in something else instead: serving coffee — and Champagne — to create a warm and humane atmosphere,” he said.
The multibrand retailer is slated to relaunch its Web site at the end of next week to focus on a more personalized offer.
Data suggests a discrepancy in visits between store formats. François-Marie Grau, managing director of the French Women’s Ready-to-Wear Federation, said the drop in foot traffic in multibrand stores in France from Nov. 14 to Nov. 22 was between 20 and 30 percent and the drop was around 40 percent in department stores.
Belgian department store chain Galeria Inno, a subsidiary of Hudson’s Bay Co.’s Kaufhof department store division, has decided to keep its four stores in the greater area of the Belgian capital closed.
“All employees were informed to stay at home….The management of Galeria Inno is in permanent exchange with the local security authorities. They are going to decide when to open the stores again considering the official security assessment,” a spokesman for the division explained to WWD.
No impact has been visible on online sales, according to the spokesman.