Tourism Decline in Europe and Japan is Hurting Luxury Brands

Global luxury brands have experienced a significant downturn in sales in Europe and Japan, as American and Chinese tourists, who were previously main contributors to luxury sales growth, have sharply slashed their overseas expenditures.

2024 witnessed a notable increase in luxury sales driven by tourist activities, when Japanese yen was at its lowest point in 30 years and Chinese shoppers were flocking to Japan. In the meantime, American shoppers took advantage of a robust US dollar, leading to a surge in their luxury spending across Europe.

However, in 2025, these trends have changed significantly, as the yen has appreciated and the US dollar has depreciated due to hefty tariffs enacted by US President Donald Trump.

LVMH Moët Hennessy Louis Vuitton SE Chief Financial Officer Cécile Cabanis attributed a 9% drop in Q2 sales of its fashion and leather goods division to shifting tourist patterns, stating that spending by American tourists has significantly slowed down. According to Ms. Cabanis, the drop in tourist sales in Japan could not be compensated for by local demand.

LVMH, world leader in high-quality products

A family-run group, LVMH strives to ensure the long-term development of each of its Houses in keeping with their identity, their heritage and their expertise.

Analysts suggest that US demand may further weaken amid expectations that imported goods will rise in price due to tariffs imposed by Trump. The investment firm Bernstein has adjusted its 2025 global luxury revenue forecast from a 5% growth to a 2% decline to align with this perspective.

According to Bernstein analysts, the decline in tourist shopping spending points to more significant issues within the industry, which has jacked the prices way beyond inflation during periods of robust demand. Luxury consumers are still seeking value and too many luxury brands have implemented excessive price hikes, the experts warned.

In spite of market pressures, brands such as LVMH have been reluctant to embrace discounting strategies, choosing instead to concentrate on exclusivity and high profit margins through premium pricing.

A report from Bain & Company last year revealed that the global luxury customer base has shrank by approximately 50 million consumers from 2022 to 2024, decreasing from around 400 million to 350 million. The report attributed this decline to economic uncertainty and escalating prices.