Experiential Luxury in France

2021 DEVELOPMENTS

Experiential luxury continues to suffer under impact of pandemic

As the world was hit by the global COVID-19 pandemic in 2020, however, experiential luxury suffered a heavy decline in retail current value sales. In fact, experiential luxury performed worse than other categories in luxury goods because of the emphasis this category has on experience and location – both of which were impacted by travel and social restrictions.

Severe lack of inbound tourists continues to limit recovery of luxury hotels

Luxury hotels experienced a sharp decline in sales in 2020 to both domestic and international consumers as both consumer groups felt the effects of the global health crisis and it measures. 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.

Outlets located in Paris pay a bigger price than coastal sites

One of the main issues for the luxury hotels and luxury foodservice categories is the concentration of their locations. Most palaces (the highest tier luxury hotels) are in Paris as are four fifths of luxury foodservice sites/outlets.

PROSPECTS AND OPPORTUNITIES

Recovery of experiential luxury will begin in provinces; luxury hotels must reinvent themselves to meet new exclusivity demands

With only a few exceptions (triggered by events such as the Bastille Day terrorist attack in 2016 and the yellow vests protests in 2017), experiential luxury has posted strong year-on-year growth over the last decade. As such, provided there will be no further lockdowns or major COVID-19 restrictions, the category is set to see strong retail value recovery rates in the next few years with a return to pre-pandemic sales within the forecast period.

First residents, then Europeans and much later the rest of the World

In terms of luxury hotels, the recovery is likely to firstly dependent on domestic customers, followed by Europeans, followed by travellers from the rest of the world. This is because global travel is likely to be one of the last things to recover in the aftermath of the pandemic.

Lack of tourists and rise of e-commerce to delay revival of luxury foodservice

The outlook for luxury foodservice is rather uncertain because the success of this industry relies on the footfall at restaurants and other stores (such as apparel and footwear specialists that host a café). With luxury players accelerating their digital and omni-channel strategies, e-commerce is set to surge in popularity which will negatively impacts footfall.