Luxury tourism on the rise

Last week, Asia Briefing reported how the billionaire boss of Chinese conglomerate Tiens had brought 6,400 employees to the south of France on holiday. Not to be outdone, this week the Guangzhou-based direct-sales firm Infinitus took 12,700 staff on trip to Thailand.

The Tourism Authority of Thailand (Tat) reported that the group would be split up into groups of several thousand for their various jollies in Bangkok and Pattaya.

Last year about 50,000 Chinese travelled to Thailand under an incentive tourism programme provided by Tat for business operators such as direct-sales firms in China, the Xinhua news agency reported.

Some six million Chinese are expected to visit Thailand this year, compared with 4.6 million last year, according to Tat. The Chinese make up 20 per cent of all foreign travellers to Thailand.

Chinese tourism is changing the world as consumers from China now make up more than 30 per cent of global luxury spending. They are largely responsible for the shift from local consumption to touristic spending, which now accounts for about 50 percent of all luxury spending.

According to a report by luxury consultancy Bain & Co's report (Worldwide Luxury Markets Monitor 2015 Spring Update), the European market overall had a good start to 2015. This was fuelled by rising tourist spending, especially from China but also from the US, which is enjoying the strength of the dollar versus the euro.

“Pricing, distribution and customer strategy remain at the top of the agenda for luxury companies, but the old models are being called into question,” said Bain partner Claudia D’Arpizio,lead author of the report. “In this new environment, brands must undergo a fundamental paradigm shift if they want to win in the years to come.”

Japan was the top luxury performer, with 5 to 7 per cent projected growth at constant currency in 2015. Japan is benefitting from surging Chinese consumer spending, which already represents up to 20 per cent of total sales.

Hong Kong and Macau are suffering from weak in-bound flows, while Taiwan and South Korea are posting positive performance, supported by increasing Chinese spending.

The anti-corruption campaign in mainland China is still trying to shake a negative outlook, and the economy is expected to fall by between 2 and 4 per cent in real times.

It’s not just austerity: slower growth means that shoppers shifting towards a more price- sensitive attitude that benefits off-price sales and purchases abroad.

The overall global personal luxury goods market reached €224 billion in revenue at retail equivalent value in 2014, up 3 per cent from 2013. Without considering currency effects, that would have been a 4 per cent rise.

The overall number of luxury consumers has increased from 140 million worldwide to more than 350 million.

President Xi Jinping's crackdown on corruption is having some odd effects. Australia is reporting an uptick in sales of Lamborghini cars by people who want to buy models such as the Aventador but who don't want to appear to be breaching rules on frugality.

And sales of Tibetan mastiffs – once the luxury dog of choice -- have fallen by up to 35 per cent in the past year.