Consumer Insights

Foreign Travel Leads To Luxury Spending

Travelers Spend More On Luxury

It was Mark Twain who said, “Travel is fatal to prejudice, bigotry and narrow-mindedness.” And while that’s all true, a new study appears to highlight an added effect of cross-border sojourns that Twain missed: a willingness to spend, spend, spend on luxury goods.

The insight comes from a study conducted by Contactlab and Exane BNP Paribas, via Forbes. Looking at the global revenues from the luxury market, the study found that 30 percent of these purchases are made by travelers while outside of their native countries. Citizens of certain countries show an even greater affinity for these kinds of indulgent buys while overseas. Russia, for example, sees 70 percent of its global travelers buy luxury goods abroad, with travelers from “new economies” hovering around the 30–40 percent range. On the whole, Russsian, Brazilian and Chinese foreign travelers spend more on luxury goods abroad than they do at home, while American and Japanese travelers seem to spend almost evenly on both. European jetsetters, though, don’t seem to follow this trend.

Regardless, it’s a dynamic that retailers need to keep on their radars, Contactlab CEO Massimo Fubini said, especially luxury brands in search of rare, captive audiences.

“Summer is on the way, and many people will be going abroad to their favorite destinations,” Fubini said. “Luxury brands need to leverage this opportunity in order to get in front of these tourists to influence their shopping decisions. Luxury travelers account for around 50–80 percent of heritage countries’ revenues. Luxury brands are being gifted with customers from abroad who are adding an additional stream of revenue to their domestic customers, which should not be ignored.”

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