April Planet tourist spend -98.5%year-on-year (y/y) in Europe
According to VAT refund provider Planet, tourist spending across Europe in April was down -98.5% y/y (Mar -68.4%). The severe April decline does not come as a surprise, due to store closures throughout Europe and widespread travel restrictions. Chinese spend in Europe was down -98.4% y/y, with all other nationalities also declining at a similar rate in April. All countries saw >95% y/y decline and it is reasonable to expect similar trends to continue in the near term. Assuming a degree of repatriation to Mainland China since the lifting of lockdown, we estimate that Chinese luxury spend globally in April fell -48% y/y, below the Q1 average of -40% but ahead of the Q1 exit rate. The focus now moves onto the timing of store re-openings in Europe and US and the potential shape of recovery. As highlighted in our recent report , a slower recovery in tourism (~40% of luxury sales) is a key risk to the sector in the next 12-18 months.
By Destination: all countries declining >95%
All destination countries declined >95% in April, with Italy, France and Spain down -100% given the complete lockdown, vs. -96%, 74% and -77% in March respectively. The UK was down -97% y/y (Mar -41%) and Switzerland -96% (Mar -49%). Within Asia, company comments suggest that traffic in Mainland China is gradually improving with most companies citing double digit growth in May. We don't expect companies to take action and modify the current global pricing architecture due to the importance of tourism in the sector. However, we note that some brands recently increased prices globally in order to support their organic growth.
By Nationality: all nationalities declining >98%
Chinese spend dropped -98.4% y/y in April (-85% in March) with all other nationalities also declining >98%. We expect the data to continue to reflect a significant decline in the near term, as travel restrictions between countries remain in place. UBS Evidence Lab PulseCheck surveys of Chinese, Japanese, Korean and UK consumers shows that 83% of respondents have no plans to leave their country in the next 3-4 months.