Initially, experiential luxury was expected to outperform other categories in luxury goods in 2020. As the world was hit by the unforeseeable global COVID-19 pandemic, however, experiential luxury did not manage to meet this expectation.
Luxury hotels experienced a sharp decline in sales to both domestic and international consumers as both local and foreign customers felt the effects of the global health crisis. With almost no inbound tourists and a very limited movement of domestic customers in 2020, luxury hotels bore the brunt of the drastic reduction in domestic and foreign travel as France and other countries implemented strict foreign travel bans and stringent restrictions on movement at a local level.
Following the easing of national lockdown restrictions, luxury foodservice continued to suffer lower sales throughout 2020. This is partially due to the fact that Paris Fashion Week was cancelled in July 2002, which is an important time of year for experiential luxury in general as the event brings a high volume of wealthy consumers interested in luxury goods into the capital city.
Tourists from non-European countries, which are a key target audience for luxury hotels, will be slow to return to France, and especially Paris. This will be exacerbated by further lockdown measures which have been taken going into 2021 and the forecast period.
When the national lockdown came to an end, experts raised the question of whether the COVID-19 crisis would exacerbate the already mounting competition between luxury hotels and premium short term rentals in the summer. Experts noted that luxury hotels offer consumers the confidence of a professional background and a high standard of safety and sanitisation processes.
Before the return of international consumers through foreign travel and tourism, French experiential luxury will need to rely on wealthy domestic consumers. In the forecast period, local consumers will be incentivised by the trend for staycations and the opportunity to share their experiences via social media platforms such as Instagram.
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