Premier report: Tax Free Shopping trends record improvement during July 2016

Tax Free Shopping trends in July saw an improvement versus June, as transactions returned to positive territory with growth of 5%, versus the 4% decline in June, according to Premier Tax Free Vision report.

Tax free sales fell by 6% in July, which was also an improvement on the 12% fall in June.

The decline in sales was attributable to continued reductions in average transaction values, mainly due to a decline in spending levels by Chinese tourists and a subdued market in France. 

Arrivals of Chinese tourists to the major European destinations declined by 7% in the month, but tax free transactions only saw a 3% decline.  However average transaction values for these tourists fell by 15%.  Therefore, whilst there is currently a lower quantum of Chinese tourists that are choosing to travel to European destinations, the type of tourist has changed.  See page 7 for more detail.

Tourism receipts sees resurgence in transaction growth; ATV declines

Of the top 5 major European destinations, the UK, Italy and Spain experienced double-digit gains in transactions with growth of 16%, 19% and 23%, respectively. 

Although each of these countries also saw positive returns in the form of sales growth, Italy and Spain also experienced a decline in Average Transaction Values of 10% and 11%, respectively.  

The UK was the outlier as one of the few countries across the region to see an increase in Average Transaction Values, a result of the depreciation of Sterling post the outcome of the Brexit referendum, and consequent increase in tourist purchasing power. (See page 6 for more detail).

The timing of the end of Ramadan also contributed to the total gains in transactions, with transactions to Emirati, Saudi, Kuwaiti and Qatari tourists seeing gains of 48%, 23%, 35% and 41%, respectively.

Israeli & Indian tourists continue march to prominence

The predicted rise of Indian tourists this summer came to fruition in July, where transaction growth of 14% elevated these tourists from 7th position in July last year to 4th position this year.  This growth in transactions was all the more impressive given that this was accretive to the 19% growth reported in July 2015, and follows the 18% growth seen last month. Transactions in Italy, Spain and Germany saw growth of 72%, 59% and 42%, respectively.

This non-traditional cyclical ranking position for these tourists suggests that these tourists will continue to gain prominence.  India is now one of the fastest growing economies in the world,  with the number of High Net Worth Individuals  (HNWI’s) set to increase by 34% by 2020.  

Transactions to Israeli tourists also saw strong gains in July with growth of 31% and sales growth of 21%.  On a transaction basis, this propelled these tourists from 17th position in July 2015, to 13th position in July 2016.  Transaction growth for these tourists has now seen double-digit gains for the last 23 months in a row.

American tourist transactions return to double-digit growth

Following single-digit increases in the last 2 months, transactions to American tourists returned to a double-digit growth rate of 19% in July, and with sales growth of 20%, this consolidated their position as the 2nd most important nationality for tourism spend.  Sales to these tourists have now grown consecutively, for the last 24 months.

The diversity of the source of this growth in July, is demonstrated by the fact that 3 out of 4 destination markets saw growth from these tourists, and more than half saw double-digit gains, with the UK, Italy and Germany seeing growth in sales of 43%, 42% and 35%, respectively.  In addition, Austria, the Czech Republic, Iceland, Portugal, Netherlands, Sweden and Hungary, all experienced growth of 40%+.

Travel data specialist ADARA has reported a 25% increase in flight bookings to the UK in the wake of Brexit, with American customers taking advantage of Sterling’s fall, with the average daily room rate of hotel rooms declining by 8%.