Luxury Tourism in Great Britain After Brexit
The unexpected outcome of the referendum on Brexit brought with it a sharp drop in the pound sterling, which attracted tourist purchases in the UK, prompting an increase in tax-free spending by foreign visitors, according to figures from the industry.
However, there is much uncertainty and concern in the UK luxury industry for a process that in two years must conclude with the final exit of the UK from the EU.The immediate effect of Brexit’s proclamation was a year-on-year increase of 7% in tax-free purchases in the UK. Japan, Indonesia and the United States were the nations that accounted for the largest increase. Despite Japan’s economic woes, Japanese visitor spending increased by 96% in the UK compared to July 2015, while Indonesian travelers spent 88% more than last year on purchases. Spending on Chinese tourists rose only 6% in that month, but the country still accounts for the bulk of overall spending, with a 32% share.
Brexit could dissuade Britons from traveling to Europe
Many British travelers might consider taking their future vacations in the US, Caribbean, Thailand, Australia, New Zealand or in the UK itself instead. Nearly half of respondents cited the potential impact on the strength of the pound and less value on their holiday portfolios as their main concern. It is not the only source of concern. In addition, the loss of local health care guaranteed through the European health insurance card, the possible (but unlikely) visa application to visit EU destinations and higher air fares are other causes of concern, as well as a more hostile reception for tourists from Britain or the establishment of punitive tariffs for mobile telephony, which have been eliminated in recent times.
The cheapfligth.com company’s analysis of 25 million searches over 18 months suggests that consumers are making significantly fewer searches for flights to the EU in favor of long haul destinations. Searches for flights to Spain are 14% lower from the period before Brexit, while demand from France, Italy and Portugal has also fallen. By contrast, searches for flights to the Caribbean, Thailand, Dubai, Australia and New Zealand are 20% higher on average for the same period.
Big increase in tourist spending in London
Last Christmas, there was a massive increase in the spending of foreign tourists in the shops of the British capital. An estimate of growth of at least 22% has been made in credit card transactions, according to data from the main operators of the same. Visitors from Hong Kong spent an extra 69 percent on UK stores during December compared to 2015, while spending by tourists from the UAE rose 31 percent.
Chinese tourists bought 24% more, while the amount spent by French and German tourists during the festive period increased by 14%. The upscale boutiques and department stores in London’s West End were the biggest beneficiaries, with tourists spending there 35 percent more than last year. Outside London, retailers in Manchester and Edinburgh saw an increase in tourist spending of one year by 19% and 24%, respectively.
London led the world ranking of new luxury store openings in 2016
The city saw a total of 41 new luxury store openings during the year, of which 15 brands arrived for the first time in the British capital. But despite the attractiveness of London, Paris, with 36 openings, remains key to global brands, even though the flow of tourists has been hit by terrorist attacks, which has hurt the luxury business. Meanwhile, New York is the top US destination. With 31 openings. Dubai is the fourth in the world along with New York, Hong Kong with 25 openings and Milan with 24.
London has an additional attraction because of its status as a strategically well-located city. It is seen as a springboard towards opening in the largest English-speaking market, the US. And for US brands, it provides a gateway to Europe both geographically and in terms of brand profile. The departure of the EU can make the loss of economic potential.
Large influx of emerging countries (Russia, China, Middle East)
Improved in the last year, the economic and political situation in the markets traditionally important for luxury goods – in Russia and China – had a positive impact on the return of tourists to the UK and increasing their spending. Growth was also influenced by the Chinese New Year and, of course, by the already commented fall of the pound. Also this new juncture has been especially attractive for tourists from America. Meanwhile, the optimism and stimulation of the Middle East and UAE markets continued to affect the residents of these countries spending in the UK market. Growth in spending by tourists from China, the United Arab Emirates and the United States, despite the promulgation of Article 50 this week upon the departure of Britain from the European Union the long-term impact on the Retail industry remains unclear.
On the other hand, after the fall of the yuan, China’s economy could be strengthened in the second half of the year, indicating that spending by Chinese tourists increased by 103% in February. China still accounts for the lion’s share of duty-free shopping, the average transaction ticket increased by 24 percent to 922 pounds. The improvement of the Russian economy made it one of the key markets for the United Kingdom. After a volatile and unstable 2016 year for the Russian economy, this year has begun with increased by 5% over the same period last year. In February, larger duty-free shopping markets have become the Kingdom Qatar, Kuwait, UAE and Saudi Arabia. In February, the average check for the transaction of tourists from, for example, Qatar was 1700 pounds, that of the Arab Emirates from about 1500 pounds.
Concern in the British fashion industry
A year ago, British designers of fashion took a public position against Brexit. It is estimated that 90% of London creators were appalled at the idea of leaving Europe and many of them spoke out firmly against any separation, such as Burberry who came to publish a letter in The Times, supporting those who wanted to remain In the EU. Discussions with fashion designers and executives reveal considerable caution about the end result along with a general sense of sadness about what appears to be a very messy split.
Among fashion professionals, there is no doubt that Brexit will have huge Consequences for industry from training (Britain has the world’s most famous fashion school, Central St Martin, which supplies dozens of fashion houses on the continent with design talent) to exports, through status Of EU citizens living in the United Kingdom. Questions about the right to remain as residents.
Many of the leading designers in Britain like Erdem Kurtoglu, Roksanda Ilincic (of Serbian nationality) Marques and Almeida (Portuguese) or Mary Katrantzou (Greek). Practically all collections have clothes and accessories made in continental Europe. And they show their collections on a regular basis on the mainland especially in Paris. The countdown has begun, the time frame for negotiations between Britain and the EU is very low and the consequences for the economy in general as for the luxury industry in particular are unpredictable.
Disclosure: The Luxonomist is not responsible for the views expressed in the article. The text has been written freely expressing their own ideas, without receiving any compensation. The author has no business relationship with any of the companies whose shares are listed in this article.