SOLID GOLD: It’s Golden Week once again, and it’s glittering more than usual in the U.K., with Chinese tourists set to take advantage of an historically fragile pound in the aftermath of the Brexit referendum.
Just as Golden Week was kicking off, British Prime Minister Theresa May announced during the annual Conservative Party conference that she plans to trigger the Brexit process as of March, which sent the pound plummeting to historic lows against the dollar.
Pre-referendum, the British currency was trading at $1.48, and after the vote in June it hovered around $1.30. On Tuesday it tumbled to a 31-year low against the dollar, dipping to $1.27 on fears that British exporters and the financial services industry will be crippled by a new trade deal with the European Union.
The weak pound, however, is good news for shoppers with pockets full of yuan. Golden Week, a Chinese family holiday period that revolves around travel and shopping, is typically a peak shopping time for Chinese visitors, with an increase in average transaction values, and stores including Harrods, Harvey Nichols and Selfridges traditionally mounting campaigns aimed at the high-spending tourists.
“The weakened pound has continued to work in retailers’ favor as international visitors have made plans to travel to enjoy the U.K.’s warmer weather and take home with them British luxury items due to the improved exchange rate,” said Gordon Clark, managing director, U.K. and Ireland at Global Blue.
He cited statistics from Ctrip, the travel services provider, which show that a trip to the U.K. is now about 20 percent cheaper than it was this time last year. More than half of Ctrip’s routes to the U.K. were booked up one month ahead of Golden Week.
“Global Blue is optimistic that international tax-free spend in the U.K. will further strengthen over the coming months, due to the ongoing benefits of the weakened pound, which travelers will continue to take advantage of,” Clark added.
He said that while forward bookings for October travel to Europe are currently between 30 percent and 50 percent down on last year, the U.K. is outperforming the entire region.
“It very much remains a key destination on Chinese traveler’s itineraries, and we anticipate September and October tourist spend to follow August’s surge.”
In August, total international tax-free shopping spend was up 37 percent in the U.K., year-on-year. Clark called the uptick “a very welcome result for retailers following a tumultuous few months in the industry.”