Rented jets, yachts, castles, and private farms is available to all, but few are those who enjoy real luxury travel.
Now that leisure and recreation are becoming scarce goods, will we end up cataloguing tourism as a luxury in itself? Hopefully not. As we explained in our previous article «Luxury, an excellent investment«, the luxury sector is a rather important income source for most countries, be it from locals or from the tourists they host throughout the year. Our consumption habits change in all areas of our life, including tourism. We travel through our tastes and preferences to other ways of consuming our leisure time. And we realize that experience generally begins to prevail over ostentation.
It may well be that our concept of luxury is changing. This means that ever more people start to follow the sector, with the result that it is gaining market share. But not only our consumption habits are changing – the way we meet those changes does too. We talk about new ways of acquiring luxury, actually renting it: From aircrafts to yachts, fashion… the market is driven towards this modality. Products based on business related to tourism, where innovation plays a key role. Special attention is required for marketing, technology and the human factor for products and services offered.
Many brands are aimed at customers looking for distinction and exclusiveness: Bottega Veneta, LVMH , Prada , Christian Dior, Michael Kors , Jimmy Choo and all of them try to attract tourists to buy their products with a tax-advantage in comparison to their country of origin. For example, cosmetic products are heavily taxed in China, so trips are used for purchasing this kind of products. A very important fact: More than half of purchases of luxury items by Chinese citizens are made abroad. Therefore, we believe that it is worth focusing on the Asian giant. Chinese buyers account for almost a third of the sales of luxury products.
In 2014, Chinese tourists spent $130,000 million while travelling and this figure is expected to double by 2019. The land of the rising sun occupies the first position in tourist spending, above the United States. And this tourism is heading in one direction: Luxury. If we associate luxury products to financial investment in companies in the sector, we can find companies that are traded indifferent markets. To name just a few, we’d cite France (LVMH and Christian Dior ), the US (Michael Kors and Estee Lauder), Germany (Hugo Boss), Switzerland ( Richemont ) and Japan (Shiseido).
Is it possible to find good prices in the luxury sector? The answer is yes. The price tag has fallen considerably in recent months, so buying stocks today looks like a good investment opportunity. In fact we would recommend to start taking positions in these companies, some of which are already part of KOKORO CAPITAL INVESTMENTS SICAV portfolio (a collective investment vehicle advised by AFS EAFI Finance Advisors). We consider the tourism sector, in particular the one linked to purchases of luxury items as a megatrend of the future. It is one of our recommendations for an adequate diversification of financial assets, based on prudence, safety and with a mid to long term horizon. People aim for an excellent quality of life. Quality and luxury go hand in hand.
Disclosure: The author is not responsible for the views expressed in the article. The text was written freely expressing ideas, without receiving any compensation. The author has no business relationship with any of the companies whose shares are listed in this article.