Premier Vision. December 2017

Transcription

1 Premier Vision December 2017

2 Contents Tax Free Trends Summary 03 Tax Free Sales Trends Tax Free Shopping Trends 06 Fintrax Group announces two acqisitions 09 Tax Free Sales by Destination and Source 10 Top 5 Visitor Nations per Destination Country 12 Currency Trends 14 Arrivals Forecast Europe Overview 16 France 17 United Kingdom 18 Italy 19 Spain 20 Germany 21 Singapore 22 Premier Vision 2

3 Shopping & Arrivals Growth Summary December % Total Sales -5% Total Vouchers +0% Total ATV +11% Total Arrivals Top 5 Destination Markets Top 5 Source Markets Tax Free Sales Turnover Vouchers/ Transaction Avg. Transaction Values (ATV) Arrivals Tax Free Sales Turnover Vouchers/ Transaction Avg. Transaction Values (ATV) Arrivals FRA -9% -9% -0% +15% CHN +0% -7% +8% +7% GBR -1% +1% -2% +10% USA -15% -12% -4% +5% ITA +4% +3% +1% +11% RUS -15% -5% -10% +7% ESP -17% -23% +8% +9% HKG -21% -20% -1% +11% DEU -8% -10% +2% +7% KOR -1% +10% -10% +1% Premier Vision 3

4 Shopping & Arrivals Growth Summary Year to Date +11% Total Sales +8% Total Vouchers +3% Total ATV +11% Total Arrivals Top 5 Destination Markets Top 5 Source Markets Tax Free Sales Turnover Vouchers/ Transaction Avg. Transaction Values (ATV) Arrivals Tax Free Sales Turnover Vouchers/ Transaction Avg. Transaction Values (ATV) Arrivals FRA +11% +3% +7% +13% CHN +20% +13% +6% +11% GBR +9% +11% -1% +11% USA +15% +7% +8% +16% ITA +20% +18% +2% +9% RUS +9% +24% -12% +17% ESP +14% +6% +7% +16% HKG +22% +9% +12% +7% DEU +2% -1% +4% +6% TWN +29% +31% -1% +9% Premier Vision 4

5 Tax Free Shopping Sales Trends December 2017 Overview Following the strong double-digit gains seen throughout the first half of 2017, and single-digit gains seen in the second half of 2017, the final month of the year ended with a modest decline in sales of 5%. This first decline in sales in 2017 was attributable to a 5% decline in transactions, with Average Transactions Values being broadly flat in the month. Of the major destination markets, sales in the UK continued to be beset by the cumulative effect of terror attacks, comparisons to the rates of growth seen in the second half of 2016 and a strengthening Pound, whilst France and Germany saw declines of 9% and 10%, respectively. Sales in Spain experienced a 23% decline in the month following the Barcelona attack in August and the recent geo-political unrest, whilst Italy registered modest growth of 3%. The outlook for arrival numbers for the first quarter of 2017 suggests a robust 4% increase, which would be accretive to the 10% increase seen in the first quarter of 2017, with the Chinese new year on 16th February predicted to provide a particular boost to arrival numbers. Sales to Russian and American tourists fall with Dollar and Ruble weakness Sales to Russian tourists have registered a strong recovery in 2017 following two years of declining sales to these tourists, with a recovery in the value of the Ruble and an economy cautiously emerging out of it s two year recessionary period, both encouraging increased spending. However, sales to the tourists reversed again in December with a decline of 15% in the month, representing the only month sales declined in In recent months, the pace of the recovery in economic growth has slowed, and projections for 2018 are underwhelming despite the rally in oil prices, which has served to re-apply downward pressure on the Ruble. Sales to American tourists also fell by 15% in December, but in contrast to Russian tourist sales, sales to American tourists have registered sustained and uninterrupted gains for the last three years. Also in contrast to the Russian economy, economic and job growth has been robust, whilst foreign policy, uncertainty over reforms and the budget deficit have all contributed to a weakening in the Dollar. The impact of this uncertainty has been further accentuated by a robust Eurozone, however, this will be tested again in 2018 with lingering uncertainty over the Catalan dispute and Italian elections in March closes with broad based declines across destination and source markets in December Whilst the decline in sales to Russian and American tourists were noteworthy due to December representing the first decline in sales to these tourists in 2017, the fall in sales in the month was broad based in nature both from a destination and source market perspective. Of the top ten destination markets, seven destinations registered a decline in sales in the month, which was commensurate with seven of the top ten source markets also registering a decline in sales in the month. Of the major destination markets, Italy, Austria and Portugal recorded growth in the month of 4%, 15% and 3%, respectively, off-set by double-digit declines in Spain, the Czech Republic, and Ireland. The declines in the Czech Republic and Ireland followed significant double-digit gains in the same period in the prior year, whilst Spain is likely affected by the Barcelona attack and on-going Catalan dispute. Of the top 10 nationalities, as well as Russian and American tourists, sales to tourists from Hong Kong also recorded double-digit declines, with positive gains of 4% were registered in sales to Malaysian and Thai tourists, whilst sales o Chinese tourists were broadly flat in the month. Premier Vision 5

6 Feature: 2017 Tax Free Shopping Trends Introduction Following a tumultuous 2016, a cautiously optimistic outlook was considered as the likely prospects for 2017, which largely manifested, but as a year of two very different halves. The 11% increase in sales in 2017 was largely boosted by the 19% increase in sales registered in the first half of the year, and somewhat tempered by the 5% increase recorded in the second half of In last month s Premier Vision, we looked forward to some of the trends for 2018, and in this feature, we explore some of the trends in 2017, which was impacted by a strengthening Eurozone particularly following the French elections, currency and oil price fluctuations, the anniversary of the Brexit referendum and subsequent devaluation of Sterling, terror attacks in the UK and Spain, and subsequently the geo-political uncertainty in Spain, which all contributed to the reduction in the rate of growth in the second half of The BRIC s-were-back The foundation for the gains in 2017 were largely derived from the growth in sales to Chinese, Hong Kong and Taiwanese tourists, together representing 37% of all Tax Free shopping sales in the year and evidencing growth of 21%. This represented a significant reversal from the 10% decline in sales evidenced in 2016, with Italy and Spain being the primary beneficiaries of the major destination markets, with both evidencing gains in excess of 30%. In addition, following some significant declines in sales to Russian and Brazilian tourists, stretching back to mid 2014, 2017 marked a return to growth for these tourists with gains of 9% and 27%, respectively. As previously noted, whilst there are some lingering concerns around the recovery in the Russian economy and the performance of the Ruble, the recent recovery in oil prices to $70 per barrel, the first time it has hit this heady height since December 2014, and with increased cooperation amongst the OPEC countries to limit supplies and therefore expected to provide increased stability in 2018, this provides some cause for optimism for these tourists. In contrast, the Brazilian Real performed strongly in 2017 as the country exited recession, and predictions suggest continued growth in the economy and employment levels for In contrast to the other BRIC nations, sales to Indian tourists continued to evidence gains in Europe in 2016, and with growth of 18% in 2017, this elevated these tourists from a ranking of 15th most important nationality in 2016, to a ranking of 12th most important in Whist there are varying forecasts on GDP predictions, the World Bank has recently predicted that growth would accelerate to 7.3% in 2018, overtaking the prediction for China s predicted growth of 6.4%. With this rate of growth and subsequent and inherent growth in the middle classes that would be increasingly opt to travel and shop overseas, 2018 could become the breakthrough year for Indian tourists to enter the upper echelons of the top 10 Tax Free shopping nationalities Y/Y Sales BRA RUS IND CHN +26.7% +8.6% +17.7% +19.8% Premier Vision 6

7 Feature: 2017 Tax Free Shopping Trends Middle East subdued In contrast to the majority of the major source markets that posted strong gains in 2017, following declines in 2016, sales to the major Middle East nationalities remained challenged. With the exception of Emirati tourists, the main Arab Gulf nationalities, including Kuwait, Saudi Arabia and Qatar, all registered a decline in sales in The confluence of low oil prices, and subsequent implementation of austerity measures, policies to reduce the reliance on oil, countries such as Saudi Arabia moving into a recessionary environment, and the blockade of Qatar by it s Arab neighbours, all contrived to apply downward pressure on these tourists propensity to spend in 2017, with sales to Qatari tourists experiencing the steepest fall with a decline of 11% in the year. As previously mentioned, the recent resurgence in oil prices could provide a boost in 2018, along with forecasts for modest GDP gains, and an apparent softening in Saudi Arabia on austerity measures that included an annual bonus and allowance for all state employees. However, weakness in the dollar could off-set some of these positive influences with their currencies being pegged to the dollar, with the exception of Kuwait Y/Y Sales UAE KWT SAU QAT Southern Europe heated up, led by an Italian renaissance +6.0% -1.1% -7.9% -11.2% Southern Europe destinations were the clear winners in 2017, as rising temperatures saw increasing numbers of tourists and increased spend, with sales growth of 18% in the year. Sales in Portugal and Greece both increased by 32%+ in the year, with sales in Greece not only boosted by a reported 10% increase in arrival numbers in the first half of 2017, but an additional boon was provided to retailers with the passing of legislation to lower the Tax Free shopping limit from 120 to 50, which followed hard lobbying by the Premier Tax Free team in Greece to reduce this limit. The tourism landscape in Spain was extremely buoyant in the first half of 2017, as Tax Free shopping sales saw an increase of 25%, marginally ahead of the gains in Italy at that point, with continued strong gains in tourist numbers predicted through to the end of the year. However, gains in the year closed out at 6%, the reasons for which we will explore shortly. After a difficult 2016 which saw a modest decline in sales, predominantly attributable to the strong gains in the prior year which was boosted by the influx in arrival numbers for the Expo Milano, Italy re-remerged as the destination of choice in The 20% growth in sales in the year was garnered as sales to Chinese, Russian and American tourists increased by 32%, 24% and 22%, respectively Y/Y Sales ITA ESP PRT GRC +20.5% +14.0% +33.4% +31.6%

8 Feature: 2017 Tax Free Shopping Trends Terrorism and geo-political uncertainty re-emerged The significant events that affected sales performance in 2016, i.e. the Paris attacks in November 2015 and the spate of attacks in Germany in the summer of 2016 and Berlin in December 2016, re-emerged in 2017 to affect the UK and Spain. Whilst the UK was impacted by the events listed below, as previously noted, the UK was also affected by the anniversary of the Brexit referendum which made growth comparisons inherently difficult, and also currency fluctuations have recently seen Sterling move to it s highest level against the Dollar since the referendum. UK Terror timeline: - 22 March: Westminster attack - 22 May: Manchester Arena bombing - 3 June: London Bridge attack - 19 June: Finsbury Park attack - 15 Sept: London tube train bomb In Spain, the Barcelona attack on 17th August and the Catalan referendum on 1st October saw a significant reversal of the 25% gains seen in the first half of 2017, with only 6% growth registered in the second half of the year, as the year ended with a sales decline of 6% in the final quarter of the year. Trump Slump and North Korea crisis contribute to European tourism resurgence The reported Trump Slump has led to commentators stating that 2017 has gone down as one of the worst and most challenging years for US tourism in recent memory. Whilst it has been reported that the decline may have started in 2016, the signing of the executive order barring travel from seven Muslim majority nations on 27th Jan 2017, pre-empted an aversion to travel to the US. In addition, on 2nd March 2017, it was reported that Chinese officials instructed travel agencies to stop selling trips to South Korea, in a retaliatory move against Seoul s decision to deploy an advanced U.S. anti-missile defense system. As a result, South Korea saw Chinese tourists numbers decline by almost half, and in further retaliation, there was a reciprocal decline in South Korean tourists visiting China in As a result of the aversion for travel to the US, and the reciprocal aversion for Chinese and South Korean nationals to visit the other s nations, it could be seen that arrivals to European destinations were afflicted by events within Europe, it also benefitted from these external geo-political events.

9 Feature: Fintrax Group announces two acquisitions Planet Payment Acquisition In December 2017, Fintrax Group, the holding company of Premier Tax Free, successfully acquired Planet Payment, a leading provider of international and multi-currency processing services, based in New York. This strategic acquisition will position Fintrax Group at the forefront of global digital payments innovation. Planet Payment s suite of solutions, including a service that allow banks and merchants to offer customers personalised payments in their home currency at the point of sale, online or at the ATM, are complementary to Fintrax Group s current product offering, which includes VAT refund services as well as similar Dynamic Currency Conversion payment processing services. The acquisition will build on the strengths of both businesses, taking their respective portfolio of services to an extended set of customers in new regions around the world. Patrick Waldron, Chief Executive Officer of Fintrax Group said, The purchase of Planet Payment expands our ability to serve our 300,000 global merchants, both directly and through 100 partner banks. Our combined business will operate in 55 countries across five continents, positioning us as a leader in Dynamic Currency Conversion (DCC) and multi-currency processing in North America, Latin America, Asia Pacific, the Middle East, Africa and Europe. We look forward to working with Carl Williams and his team, who have built an impressive business with some of the world s leading acquirers and banks. Carl J. Williams, Chairman and Chief Executive Officer, Planet Payment added, We are excited to join the Fintrax organization and to combine our unique products and services, adding more value to our banks and acquirers. Fintrax will bring increased global scale investment that expands our services, and ultimately deepens our relationships with our customers. GB Tax Free Acquisition At the end of 2017, Fintrax Group also acquired GB Tax Free, one of the largest tax free providers in the UK. The complementary talents of GB Tax Free and Premier Tax Free will enhance the quality and scale of the service offering to the clients of both companies. Customers seek solutions that deliver a new worldwide shopping experience; the strategic acquisition will provide access to this service for customers looking to expand into new territories. While the acquisition of GB Tax Free plays a major role in growing our UK tax free footprint, it also expands our ability to partner with even more merchants worldwide through GB Tax Free s network of partnerships with various acquirers. Part of Fintrax Group Part of Fintrax Group

10 Sales Performance December 2017 By Destination By Source Market FRA -8.9% CHN 0.1% GBR -1.5% USA -15.4% ITA 4.0% RUS -14.6% ESP -17.0% HKG -20.7% SGP -6.5% TWN -0.8% DEU -8.5% KOR -10.3% AUT 14.8% MYS 3.7% CZE -20.5% UAE -10.0% PRT 2.7% THA 4.0% IRL -12.0% SGP -7.7% Premier Vision 10

11 Sales Performance Year to Date By Destination By Source Market FRA 10.7% CHN 19.8% GBR 9.4% USA 14.9% ITA 20.5% RUS 8.6% ESP 14.0% HKG 21.9% DEU 2.1% TWN 28.7% SGP -6.3% KOR 15.9% AUT 20.3% UAE 6.0% CZE 29.7% THA 5.6% IRL 11.0% SAU -7.9% PRT 33.4% KUW -1.1% Premier Vision 11

12 Top 5 Visitor Nations per Destination Country December 2017 Market Share Avg. Transaction Values (ATV) Year on Year Sales Market Share Avg. Transaction Values (ATV) Year on Year Sales FRANCE CHINA 32% 1,939 7% HONG KONG 9% 5,188-26% USA 7% 1,308-11% SOUTH KOREA 5% % RUSSIA 4% 1,690-18% SINGAPORE CHINA 31% 418-6% INDONESIA 15% % INDIA 11% % MALAYSIA 7% % VIETNAM 4% % UK CHINA 25% 454-7% KUWAIT 6% 356 9% USA 6% % UAE 5% % SAUDI ARABIA 4% 530 3% AUSTRIA CHINA 18% % RUSSIA 15% 504 8% TAIWAN 10% % SWITZERLAND 9% % THAILAND 6% % ITALY CHINA 29% 1,111 15% RUSSIA 10% 1,037-8% USA 7% 1,078-6% TAIWAN 5% 1,223-2% SINGAPORE 4% 1,172 7% CZECH REP. RUSSIA 25% % TAIWAN 23% 229 1% CHINA 15% % SOUTH KOREA 5% 188-5% ISRAEL 4% 197-5% SPAIN CHINA 27% % USA 7% % RUSSIA 6% % SOUTH KOREA 4% 429-9% ARGENTINA 4% 268-5% PORTUGAL CHINA 30% 1,822 4% ANGOLA 17% 410-5% BRAZIL 16% % HONG KONG 5% 9, % USA 5% 1,215 13% GERMANY CHINA 28% % RUSSIA 14% % SWITZERLAND 5% % THAILAND 5% 1,114 25% TAIWAN 5% % IRELAND CHINA 33% % USA 25% 138-3% MALAYSIA 6% % AUSTRALIA 4% % THAILAND 3% 1,569 80% Premier Vision 12

13 Top 5 Visitor Nations per Destination Country YTD Market Share Avg. Transaction Values (ATV) Year on Year Sales Market Share Avg. Transaction Values (ATV) Year on Year Sales FRANCE CHINA 31% 1,704 20% HONG KONG 8% 5,036 32% USA 8% 1,327 19% SOUTH KOREA 6% 725 4% RUSSIA 5% 1,571-1% SINGAPORE CHINA 32% 388-3% INDONESIA 15% % INDIA 13% 594 9% VIETNAM 5% % MALAYSIA 4% % UK CHINA 26% % USA 7% 406 8% KUWAIT 6% 365 2% UAE 5% 610 9% SAUDI ARABIA 5% 438-7% AUSTRIA CHINA 26% % RUSSIA 13% % SWITZERLAND 10% 403-5% TAIWAN 7% % UKRAINE 4% % ITALY CHINA 27% 1,063 32% RUSSIA 11% % USA 10% 1,113 22% TAIWAN 5% 1,218 17% SOUTH KOREA 3% % CZECH REP. RUSSIA 29% % CHINA 21% % TAIWAN 13% % SOUTH KOREA 6% % USA 5% 503 5% SPAIN CHINA 27% % RUSSIA 8% % USA 8% % ARGENTINA 5% % MEXICO 4% % IRELAND CHINA 39% % USA 32% 112 9% CANADA 3% 99 1% AUSTRALIA 3% 141-1% MALAYSIA 2% % GERMANY CHINA 35% 579-1% RUSSIA 11% 560 7% UAE 5% 773-1% THAILAND 5% 1,000 14% TAIWAN 4% % PORTUGAL CHINA 29% 1,677 33% BRAZIL 21% % ANGOLA 20% % RUSSIA 4% % USA 3% % Premier Vision 13

14 Currency vs Euro & GBP: Top Source Markets Currency movements: Last 52 Weeks CNY > EUR RUB > EUR CNY > GBP USD > EUR HKD > EUR USD > GBP Premier Vision 14

15 Arrivals Forecast In partnership with Know tomorrow s travellers

16 Europe Overview Outlook Arrivals numbers saw an increase of 11% in December, which was disproportionately higher than both sales and transaction gains in the month. This gap in the rate of gains was evidenced across both destination and source markets, an indication that increasing numbers of tourists are opting to travel to Europe, but this is also likely symptomatic of a lower mix of High Net Worth Travellers. Furthermore, of the top five source markets, some of the largest growth gaps between arrivals and transactions were registered with Americans, Russians, and tourists from Hong Kong. As previously noted, both the Ruble and the Dollar have weakened against the Euro in recent months, indicative of a lower purchasing power for these tourists, and with the Hong Dollar being pegged to the US Dollar, this has also affected the spending power of these tourists. Opportunity The first quarter of 2018 is predicted to continue to see Italy to be the destination of choice, no doubt also supported by this destination now being the last bastion of the major destination markets not to be affected by terror attacks. Italy will likely therefore not only influence tourism and shopping in the first quarter, but the outcome of the elections in March will also provide guidance on the direction of the performance of the Euro in The Chinese new year on 16th February is predicted to off-set a decline in Chinese tourist numbers in January, and accounting for the difference in timing, total arrival numbers of Chinese tourists for the quarter is expected to increase by 5%, whilst tourists from Hong Kong and Taiwan are both predicted to increase by 13%. Growth in arrival numbers of American tourists is forecast to be tempered in the forst quarter of 2018, with gains of 4% predicted, whilst Russian tourists are predicted to evidence a modest decline of 2%. However, the resurgence of Brazilian tourists is expected to continue with growth of 14% expected, and Japanese tourists are predicted to increase by 13%. UK MAR % MAR % FRANCE MAR % MAR % GERMANY MAR % MAR % ITALY MAR % MAR % SPAIN MAR % MAR % Premier Vision 16

17 3 Month Arrivals Outlook RUSSIA HONG KONG CHINA MAR % MAR % MAR % FRANCE MAR % MAR % MAR % S. KOREA MAR % USA MAR % MAR % BRAZIL MAR % MAR % KUWAIT MAR % MAR % MAR % JAPAN MAR % MAR % TAIWAN MAR % MAR % THAILAND MAR % S.ARABIA QATAR UAE INDIA AUSTRALIA MAR % MAR % MAR % MAR % MAR % MAR % MAR % MAR % MAR % MAR % MAR % Premier Vision 17

18 3 Month Arrivals Outlook RUSSIA HONG KONG CHINA MAR % MAR % MAR % UK MAR % MAR % MAR % S. KOREA MAR % USA MAR % MAR % BRAZIL MAR % MAR % KUWAIT MAR % MAR % MAR % JAPAN MAR % MAR % TAIWAN MAR % MAR % THAILAND MAR % S.ARABIA QATAR UAE INDIA AUSTRALIA MAR % MAR % MAR % MAR % MAR % MAR % MAR % MAR % MAR % MAR % MAR % Premier Vision 18

19 3 Month Arrivals Outlook RUSSIA HONG KONG CHINA MAR % MAR % MAR % ITALY MAR % MAR % MAR % S. KOREA MAR % USA MAR % MAR % MAR % JAPAN MAR % BRAZIL MAR % MAR % MAR % TAIWAN MAR % KUWAIT MAR % MAR % MAR % THAILAND MAR % S.ARABIA QATAR UAE INDIA AUSTRALIA MAR % MAR % MAR % MAR % MAR % MAR % MAR % MAR % MAR % MAR % MAR % Premier Vision 19

20 3 Month Arrivals Outlook RUSSIA HONG KONG CHINA MAR % MAR % MAR % SPAIN MAR % MAR % MAR % S. KOREA MAR % USA MAR % MAR % MAR % JAPAN MAR % BRAZIL MAR % MAR % MAR % TAIWAN MAR % KUWAIT MAR % MAR % MAR % THAILAND MAR % S.ARABIA QATAR UAE INDIA AUSTRALIA MAR % MAR % MAR % MAR % MAR % MAR % MAR % MAR % MAR % MAR % MAR % Premier Vision 20

21 3 Month Arrivals Outlook RUSSIA HONG KONG CHINA MAR % MAR % MAR % GERMANY MAR % MAR % MAR % S. KOREA MAR % USA MAR % MAR % MAR % JAPAN MAR % BRAZIL MAR % MAR % MAR % TAIWAN MAR % KUWAIT MAR % MAR % MAR % THAILAND MAR % S.ARABIA QATAR UAE INDIA AUSTRALIA MAR % MAR % MAR % MAR % MAR % MAR % MAR % MAR % MAR % MAR % MAR % Premier Vision 21

22 3 Month Arrivals Outlook RUSSIA HONG KONG CHINA MAR % MAR % MAR % SINGAPORE MAR % MAR % MAR % S. KOREA MAR % USA MAR % MAR % MAR % JAPAN MAR % BRAZIL MAR % MAR % MAR % TAIWAN MAR % KUWAIT MAR % MAR % MAR % THAILAND MAR % S.ARABIA QATAR UAE INDIA AUSTRALIA MAR % MAR % MAR % MAR % MAR % MAR % MAR % MAR % MAR % MAR % MAR % Premier Vision 22

23 Part of the Fintrax Group Fintrax Group Holdings Headquartered in Galway, Ireland Web: premiertaxfree.com/business If you would like to know more about Tax Free Statistics, please get in touch with your Premier Tax Free representative.