The luxury sector, barely affected by the economic crisis
The high-end market is expected to exceed pre-pandemic levels with 320 billion euros in sales worldwide this year and Spain is the European leader in this type of tourism
Economic crises also affect the rich, it is true, but not as much as the rest of us. In 2019, the turnover of luxury products and services reached a record of 281 billion euros. In 2020, sales in the sector fell by 26%, due to the virtual impossibility of traveling to other countries, but this year they are expected to reach record levels again.
But who are these super-rich? Real estate consultant Knight Frank’s latest Global Wealth Report placed Spain 11th on the list with 11,685 extremely wealthy residents at the end of 2021. And according to investment firm Capgemi, there are 246,500 rich in this country if all those worth more than one million dollars (954,000 euros) are included.
The wealthy are often viewed with suspicion, especially in times of crisis. In Spain, the richest 10% own almost 58% of the total wealth. However, it is a powerful industry with an increasing weight in the national economy.
Spain is the European country in which high-end tourism contributes the most to GDP: 2% against 0.9% on average, according to the specialist consultancy Bain & Company, which quantifies this contribution at 25 billion euros. per year. This represents 26% of the total income of the Spanish tourism industry, which is between 70 and 95 billion per year, depending on the scale used.
The Bain study shows that while traditional tourists spend 39% of their budget on shopping, the wealthy spend 50% on shopping, 26% on accommodation and 20% on restaurants. Around 54% say they like eating in the best restaurants – and 228 of them in Spain have a Michelin star, which explains its popularity.
When it comes to the luxury market (jewellery, cars, fashion, perfumes and cosmetics), the bad pandemic dream is long gone. In 2021, turnover increased by 15.5% in Spain (19% worldwide) despite the lack of visitors from China, South Korea, Japan, the United States and America Latin due to Covid.
Bain has drawn up three scenarios for the global luxury sector this year. The most optimistic are counting on an annual growth rate of 15% to 330 billion euros in revenue, while the most conservative are counting on an improvement of 5% to 305 billion euros and the average estimate on an increase of 10 % to 320 billion.
These calculations took into account the sharp drop in Russian high-end consumption, due to EU sanctions after the invasion, and the sluggishness of the Chinese market due to pandemic restrictions (even if, last year, it accounted for 21% of the luxury market). And that’s how big stock firms feel: The S&P Global Luxury Index fell 19% last year.