MILAN — The European Cultural and Creative Industries Alliance, or ECCIA, has released a study analyzing the impact of high-end tourism on the European economy and the great potential for growth it has.
The main takeaway was that sales generated by high-end tourists in the continent, which were estimated at between 130 billion euros and 170 billion euros in 2019, could triple to reach 520 billion euros by 2030 to 2035 through investments in sustainability, infrastructure, visa policy and education.
This multiplier effect was a recurrent theme in the presentation held Tuesday by ECCIA’s president Matteo Lunelli, who is also the chairman of Altagamma, the Italian association of luxury goods companies.
The ECCIA alliance includes five other European associations along with Altagamma, such as Comité Colbert in France; Circulo Fortuny in Spain; Gustaf III Kommitté in Sweden; Meisterkreis in Germany, and Walpole in the U.K. Between them, these organizations represent more than 600 brands — mostly SMEs — and cultural institutions.
Since its foundation in 2010, ECCIA has highlighted the importance of luxury as a key driver of growth and jobs in Europe, having shown in a 2020 study that European high-end cultural and creative brands account for more than 70 percent of the world’s market, representing 4 percent of European gross domestic product with a 800 billion euro turnover.
On Tuesday, Lunelli reiterated the importance of this segment while introducing the preliminary findings of the first “ECCIA High-end Tourism Study” that will be released in its final version next month.
Conducted by Bain & Company in collaboration with the Forward Keys analyst of travel trends based on international flights, the Global Blue tax-free shopping service provider and the Virtuoso network of tourism operators specializing in luxury travel and experience, the report is intended to identify strengths and strategic levers to maximize the sector’s potential in the post-pandemic world.
The study showed that, even representing a minority, high-end tourists — who are considered those staying in five-star facilities and are mainly American and Chinese travelers — accounted for 22 percent of total tourism revenues in Europe, which in 2019 were estimated between 575 billion euros and 725 billion euros.
With just 2 percent of accommodation providers, high-end tourism accounted for 22 percent of total spending on accommodation and up to 33 percent of spending in culture, entertainment and shopping, which were grouped in a single cluster in the report.
Daily spending by high-end travelers was eight times higher than that of the average one. Culture entertainment and shopping represented half of their expenditure (versus accounting for 35 percent in the case of overall tourists) while accommodation accounted for 30 percent, followed by dining and transportation.
Benefits in attracting a high-end target extended to jobs, too, as proven by luxury hospitality operations employing nearly twice the workforce of lower-end facilities of the same size. Other indirect contributions included the enhanced perception of the overall tourist offer; the increasing attractiveness for investments and improvement of infrastructure, services and cultural programs; the consequent beneficial effect on countries’ image and reputation, and the preservation and development of know-how and professional skills, among others.
In terms of geographies, 75 percent of the sales from high-end tourism were generated in five European countries, including France, Italy, Germany, Spain and the U.K. If considered the international tourist influx, overall Europe attracted 51 percent of global arrivals, with the aforementioned five countries accounting for 35 percent of this share.
The split for each nation showed sales from high-end tourism of between 22 billion euros and 27 billion euros in France and around 25 billion euros in Italy, while total tourism’s revenues for both was between 80 billion euros and 100 billion euros in 2019. In the U.K., the segment was worth around 33 billion euros to 35 billion euros.
Meanwhile, smaller countries grew fast in attracting this cluster of travelers, including Switzerland, Greece and Portugal, where sales generated from this type of tourism were estimated around 5 billion euros to 10 billion euros, 10 billion euros and 4 billion euros to 6 billion euros, respectively. In some cases, this segment represents a pillar of the economy with an impact on GDP that is double the European average, as in the case of Greece.
The study showed that travelers are increasingly interested in emerging countries with value propositions aligned to their new needs, as quests for wellness destinations, once-in-a-lifetime experiences — also linked to natural phenomena such as aurora borealis in Iceland — luxury resorts and entertainment islands are in demand.
“Take Mykonos, where the percentage of five-star facilities is higher compared to Italian islands… Italy might be the most sought-after destination, but at the end is not the most visited one by these travelers, often for a lack of infrastructures or adequate transportation,” noted Lunelli.
In particular, the report showed that five-star facilities in Italy account for 1.7 percent of total accommodations versus 6 and 7 percent in Greece and Portugal, respectively.
“These countries are performing better, they made a clear strategic choice focusing on a higher positioning.…We’re not here promoting this kind of approach because we’re snobs, but to safeguard countries themselves,” said Lunelli, pointing to how, in the future, increasing the number of tourists won’t be a sustainable option for cities, replaced by improving the quality of tourists instead.
Due to the lack of international travelers, in 2020 sales generated by high-end tourism in Europe were estimated to have lost between 65 billion euros to 75 billion euros. In Italy alone, the loss estimated was between 10 billion euros and 12 billion euros.
Lunelli noted that if initially high-end tourism was forecast to return to pre-pandemic levels by the end of 2022, restrictions in China and the ongoing war in Ukraine further postponed the recovery to 2024 in the best scenario.
“But it’s important to use this moment to think and study not only how to relaunch tourism overall but how to reposition it,” said Lunelli. “If we defend the current market share, we will organically double sales, reaching 280 billion euros by the 2030 to 2035 period, but if we invest and act on key levers we could triple these revenues.”
Lunelli urged a proactive approach as other destinations outside of Europe are stepping up their game in attracting this cluster of travelers. The chairman pointed to the Middle East “which is not represented by just Dubai anymore;” the U.S. for enhancing its appeal in the eyes of domestic tourists; Hainan’s vision of becoming a duty-free shopping destination, keeping Chinese high spenders in the country, and Bali improving its facilities and becoming a recognized wellness destination.
Also in light of this increasing competition, Lunelli underscored the importance of investments in luxury facilities and services, the coordination between private entities and institutions, and the development of high-quality entertainment programs and cultural offering, among others.
ECCIA identified five core areas to leverage to fulfill the sector’s potential, including development of sustainable, nature-based tourism; investment in infrastructures from hospitality to transportation to meet the demands and higher standards of this target; a simplification of bureaucracy, especially of visa and tax-free policies, and the creation and promotion of educational programs to train adequate staff in hospitality and tourism to fulfill jobs in the luxury segment.