The 520-billion-euro plan: Europe's luxury industry wants to lure wealthy tourists

Europe is the most visited region in the world, accounting for 51 percent of global international arrivals. Many of these visitors (especially from China and the USA) are “big spenders” and are not willing to skimp on food, accommodation or luxury. Accordingly, major luxury brands have already returned to or even surpassed pre-pandemic levels in terms of sales.

This is not the case for the tourism industry, which is still suffering from the effects of the Covid pandemic. A missed opportunity, finds the newly formed European Cultural and Creative Industries Alliance (ECCIA), which consists of the six associations Altagamma in Italy, Meisterkreis in Germany, Comité Colbert in France, Walpole in the UK, Circulo Fortuny in Spain and the Gustaf III Committee in Sweden. Together they represent more than 600 brands and cultural institutions.

ECCIA therefore commissioned a study, prepared by Bain & Company, to make the case to the EU Commission and national governments for a Europe-wide tourism strategy. The results of the study were presented a few days ago. The main finding is that the European economy could potentially lose 520 billion euros should it fail to promote this top tourism in Europe, which currently accounts for 130 to 170 billion euros and could grow threefold by 2030 or 2035 with the right kind of promotion.

“Europe is the world’s top tourist destination and tourism is a strategic sector of the European economy, but there is a wealth of untapped potential in the high-end category: though it represents only around 2 percent of hospitality structures, it is worth 130-170 billion euros and generates 22 percent of overall tourist spending, thanks to a strong multiplier effect”, explains Matteo Lunelli, chairman of Altagamma and the newly founded ECCIA.

High-end tourism also accounts for 22 percent of total spending on accommodation and 33 percent on culture, entertainment and shopping. The high-end segment also has a multiplier effect on employment, employing nearly twice as many people as regular tourism for the same size accommodation. In addition, there are “soft spillovers” such as an appreciation of the general tourism offer, investments in various similar sectors, and job creation in other sectors as well.

High-end tourism by country

By country, the five main destinations of France, Germany, Italy, Spain and the UK generate around 75 percent of the total value of peak tourism. In the UK, this accounts for about 30 to 35 billion euros (out of 80 to 100 billion euros total), 22 to 27 billion euros in France, 25 billion euros in Italy, 20 to 25 billion euros in Spain and about 5 to 10 billion euros in Germany (out of 85 to 100, 80 to 100, 75 to 95 and 65 to 85 billion euros total, respectively).

Countries such as Switzerland, Greece and Portugal also have a well-developed top tourism, generating 5 to 10 billion euros, 10 billion euros and 4 to 6 billion euros, respectively. The rest of Europe accounts for about 9 billion euros.

According to ECCIA, this potential must not be allowed to trickle away unused, for example due to hurdles such as lengthy visa procedures, inadequate infrastructure or inadequately trained staff in the hospitality and retail sectors.

“High-end tourists spend eight times more than the average visitor and have a significant impact on local areas. A plan for the development of high-end tourism in Europe could lead to an increase in value for the sector, rising to 520 billion euros. The ECCIA study provides an initial snapshot of the situation, and identifies a number of possible levers, including creating sustainable, nature-based tourism, improving high-end mobilityinfrastructure, simplifying the visa process and providing training geared to high-end hospitality,” adds Lunelli.

In addition, the competition is not sleeping and is gearing up - the study cites, for example, free-trade zones such as Dubai, Singapore and Hainan, the promotion of cultural heritage sites in Japan, innovative hotel and service concepts in Bali, nature experiences tailored to high-end tourism in Australia, and activities and attractions in the US tailored that cater to different budgets.

“This report clearly demonstrates that high-end tourism is an asset for the whole of Europe. In some countries, such as Italy, UK, France and Spain, this segment is large in absolute terms, reaching up to 20-35 billion euros. In others, its incidence on the GDP is remarkable, such as in Greece where it weighs 7 percent of GDP. Furthermore, travellers – who are increasingly curious and attentive to sustainability - are showing interest in new destinations, both in the best-known and emerging countries such as Croatia, Slovenia, Portugal and the Nordics,” state Claudia D’Arpizio, global head of fashion & luxury, and Fabio Colacchio, partner of Bain & Company.

“High-end tourism is a global asset to be protected and developed for the sake of all. After the shock of Covid-19 – a quantifiable loss of over 70 billion euros due to the loss of international travellers alone – the high-end tourism industry is finally showing strong signs of recovery”, sum up D’Arpizio and Colacchio.