The comeback of Chinese group tours would create a surge in luxury goods sales.
As China removed its restriction on group tours, LVMH helped luxury stocks in Europe rise. This strengthened the case for tourists to spend their money on pricey watches and clothing. Removing the travel ban means that there would be more Chinese tourists who are willing to spend on luxury goods in Europe.
The biggest country in Asia, as per Goldman Sachs Group Inc., is reportedly responsible for 25 percent of European luxury goods sales. Included in this percentage are the tourists from China who loves shopping for luxury goods in Europe.
LVMH, Hermès International, and L’Oréal SA had a combined $22 billion in market value because of the lifted group travel ban. Respectively, LVMH rose 2.6%, Hermès International increased 2.4%, and L’Oréal SA grew 1.8%. Aside from these fashion-hard hitters, Watches of Switzerland Group Plc, the Rolex retailer, increased 5.9% due to the lift.
“We expect group travel to resume in 2H23E and support Chinese spending on luxury goods globally. The adverse price elasticity effects suffered by the industry in 2020,” when spending from Chinese tourists had dried up, “will unwind,” Lucas Solca, an analyst from Sanford C. Bernstein, said.
The travel ban includes group travel being allowed in Switzerland, Italy, Spain, France, Greece, Denmark, Iceland, and Portugal.
Banner photo via Instagram @louisvuitton.