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Chinese tourism boom that propped up luxury brands is faltering

03/07/2019| 12:47:53 PM|

“Luxury brands have gained a lot of traction and growth out of China, but the bloom is off the rose,” said Pam Danziger, president of Unity Marketing.

From Tokyo’s glitzy Ginza shopping district to Hong Kong, Macau and New York’s Fifth Avenue, there are noticeable cracks in what has been the very bankable strategy of catering to throngs of newly affluent Chinese traveling the world. Explanations vary from China’s slowing economy to the government’s push to spur spending at home and fluctuations in currency values. Whatever the reason, the result is increasing worry across the globe.

“Luxury brands have gained a lot of traction and growth out of China, but the bloom is off the rose,” said Pam Danziger, president of Unity Marketing in Lancaster, Pennsylvania, which researches affluent shoppers. “You can’t blame them because that’s where the easy money was.”

Over the past few months, executives have been hounded by questions about high-end Chinese shoppers, who Bain & Co. says generated a third of global luxury sales in 2017 -- mostly outside China’s border.

Cruise line operators are grappling with this, too. Many poured resources into catering to the Chinese traveler over the past few years only to have demand disappoint. In early 2017, Norwegian Cruise Line Holdings unveiled a ship “built for China” that included bigger rooms specifically designed for extended families. But the effort was a flop and the company is now spending $50 million to revamp the ship for Alaskan cruises.

Casinos are feeling the pressure, particularly in Macau, the world’s largest gambling hub, which includes properties from Las Vegas Sands Corp. and MGM Resorts International. Chinese daily visitors from the mainland are still streaming in, spurred by the opening of a bridge linking to mainland China and Hong Kong. 

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TAGS: Chinese tourists | luxury brand
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