Luxury consumerism and urban tourism, two sides of the same coin

Gildo Seisdedos. Professor. IE Business School

25 July 2014

Urban tourists enjoy a level of purchasing power and the kind of interests that makes large cities see them as a very attractive source of income and global positioning. But first they have to know what these urban explorers are looking for.

If we had to find the sector that best capitalizes Spain’s leading position on a global level, both in terms of international outreach and economic impact, there would not be much of a discussion. Spanish tourism is viewed with respect and admiration by both emerging and consolidated destinations (it is no coincidence that the World Trade Organization is the only Madrid-based global organism with a higher profile) and it is a major growth engine for the Spanish economy.

However, when we think about tourism, we tend to overlook one of its key aspects, namely luxury tourism, which in turn is very closely linked to urban tourism. According to a study carried out by Altagamma in 2013, over 85% of purchases of personal luxury products in the US are made in New York, London is where 75%  of the UK’s luxury purchases are made, and 70% of France’s luxury goods  are purchased in Paris.

These figures are heavily weighted because so many tourists use their trips to these cities to purchase luxury products (which are not necessarily produced in the host country: the Japanese market loves Loewe but also buys Gucci in Madrid).

Last week, the latest report drawn up by the Observatory on the Premium Market and Prestige Products was presented in the course of an interesting workshop held here in Madrid. The report, which examines the relation between tourism and sales of luxury products, was entitled “Urban explorers and positioning of tourist destinations.”

The report opens up an interesting line of research on how tourists with a certain level of purchasing power (known as urban explorers) spend their leisure time when they visit a city, and how this behavior varies depending on the destinations.

The study reveals how the dichotomy between mass tourism and luxury tourism is now very fine-tuned. The categorization of international visitor is becoming more segmented and complex. The factors that influence the attractiveness of an urban destination (and how it is perceived by an urban explorer) can be viewed from two perspectives that are in turn subject to fine-tuning.

First, we can talk about the hard variables of leisure consumption which are associated with the purchase of a tangible good (basically hospitality and purchases), and soft variables, which are associated with intangible services, such as visits to museums, shows, concerts, and night clubs.

We then have to consider the local or global dimension of these variables. Thus, the analysis also includes variables that refer to markedly local attractions in an urban destination, such as local festivals, popular events, or traditional markets and craft shops.

Local variables offer greater authenticity and a more unique experience than global variables. In the case of global variables the comparison between different destinations is based more on price than what the place itself has to offer (shopping in large shopping malls would be an example of a global variable).

On a general level, we could say that urban explorers value both hard and soft elements given that they tend to center on the three main factors that comprise urban attraction: culture (soft) and shopping and eating (hard).

Night life and sports (both as a participant or spectator) do not seem to be factors that the urban explorer values in particular, thereby strengthening the theory that this type of visitor already has this type of activities covered and does not seek them when they visit other cities.

But if we take a closer look, the answer is ambiguous, and the urban explorer appears to be a segmented category when it comes gauging the attractiveness of a city.

Hence, the variety of leisure activities on offer in urban destinations throws up different profiles of urban explorers, depending on their interests, motivations, and personal needs when choosing an urban destination.

In short, the profiles of urban explorers are rich and varied, and the Observatory of the Premium Market and Prestige Products looks forward to continuing to further examining them in the future.

Published by Via@IEBusiness


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