Tourists’ tax-free spending exceeded pre-pandemic levels

According to Global Blue, a tax-free services provider, international travellers from most of the leading global economies showed a resilient recovery in tax-free shopping in the first quarter of 2024. However, the anticipation for the return of Chinese shoppers continues.

In 2019, the Chinese were the top luxury consumers globally, contributing €6.7 billion in tax-free spending. In 2023, as China’s borders reopened, even though expectations were high for their return, Europe recorded less than 50% and APAC noted 75% return of the Chinese tax free spenders.

In 2024 Q1, this trend continued as the number of Chinese shoppers in both Europe and APAC remained notably below pre-pandemic levels. Nonetheless, they spent substantially more on shopping than ever before. For instance, high-net-worth Chinese individuals, who spend €20,000 or more in tax-free shopping, spent an average 2.8 times more in Europe and 3.5 times more in APAC in Q1 '24 vs Q1' 19.

Even affluent Chinese travellers who spend between €2,000 and €3,000, spent nearly two times on tax-free shopping in APAC and 1.5 times more in Europe.

This year, in APAC, Japan continued its reign as the top destination for tax free shoppers post pandemic, potentially influenced by the weakened Japanese Yen. Japan Tourism data shows that in March, 3.08 million tourists visited Japan, with South Korea, China, and Taiwan leading the numbers. It is the first time ever that Japan has seen more than 3 million tourists in one month. However the recovery of tourists from China was still below 2019 levels. Number of tourists from Japan’s top markets- South Korea, Taiwan and Hong Kong crossed pre-pandemic levels this March. Last year the country received 25 million tourists.

Global Blue forecasts indicate that Chinese tax-free spending may recover post financial year 2025-2026. However, the growth rate thereafter will not be as high pre-pandemic times. While in the decade preceding 2019, Chinese drove double digit growth in tax-free spending, post full pre-pandemic recovery, Chinese growth is expected to plateau around 4% to 6% per year.