The post-pandemic travel boom is showing no sign of slowing. In the US, daily travelers passing through airport security have reached all-time highs, according to the Department of Transportation. July 4th saw record numbers of Americans hitting the road. Meanwhile, Chinese tourists are taking international trips nearing pre-Covid levels, with outbound trips reaching 89% of 2019’s total during Golden Week in May, reported Jing Daily.

Fashion and beauty retailers are benefiting from this surge, but changing spending habits of travelers have caused some brands to stumble. Western tourists prefer experiences over shopping, while Chinese tourists increasingly shop at home. Furthermore, Asian destinations are currently more popular than European ones.

Japan is emerging as a major beneficiary of this trend. With the yen trading at a 38-year low against the dollar, the country is attracting bargain-seeking tourists worldwide. Spending on fashion in Japan has doubled compared to last year, according to Mastercard’s SpendingPulse. Additionally, 64% of in-store spending by Chinese tourists took place in Japan, nearly double their spending in 2019, as found by Bernstein.

Big duty-free players like LVMH and Estée Lauder struggle to adapt to these new spending patterns. For brands that don’t depend on a massive infrastructure built around 2019’s Chinese tourism, winning holiday shoppers is more straightforward. Pop-ups like Mytheresa X Flamingo Estate in the Hamptons offer unique beauty products and jewelry, even allowing shoppers to test-drive an all-electric Porsche. Lacoste is targeting layover travelers by opening duty-free boutiques in airports like Singapore and Qatar.

As summer progresses, it’s uncertain if increased travel will boost luxury spending, which has stalled in key markets. Rising hotel and fuel costs could also impact lower-income travelers’ ability to spend on fashion.

Brian Baskin
BoF Executive Editor