Are leading brands about to have their Taylor Swift moment? Artemis’ Ramachandran examines ‘Swiftonomics’ in context of Chinese tourists

by | Mar 26, 2024

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For centuries, the return of the common swift to the UK in mid-to-late spring has heralded the approach of brighter days to come. Over the past couple of years, the migratory pattern of a different type of Swift has had a similar effect on the mood of business owners across the US, says Swetha Ramachandran, co-manager of the Artemis Leading Consumer Brands Fund.

The biggest star in the world today, Taylor Swift, grossed $1.04bn from her Eras tour alone last year, selling 4.35 million tickets across 60 dates.

This is big business, and not just for Swift and her entourage. Data from Navan shows the average price of a hotel room on the night of tour show was 50.28% higher ($99 on average) than the equivalent day the following week.



Beyond the impact on hotel rooms, the wider influence of “Swiftonomics” is expected to generate $5 billion in consumer spending across the US for the duration of the Eras tour, including on new outfits, travel and restaurant bookings.

As owners of US hotel brands such as Hilton and Marriott in our portfolio, what do we as fund managers take from these figures?

Not much. Aside from the fact these are global businesses, any boost to US earnings will be limited and short term in nature, so will not affect our long-term investment views on the stocks.


It might be different if, rather than a single star and her fans, an affluent subset of the world’s second most populous country decided to descend on a certain region en masse this year, but is this likely to happen? Surprisingly, we think the answer could well be ‘yes’.

The return of the Chinese tourist

Pandemic-related lockdowns in China had implications far beyond the country’s borders and it wasn’t until the final quarter of last year that outbound tourism finally exceeded 2019 levels.


But despite significant excess savings accumulated during Covid, most Chinese nationals prioritised travel to nearby Asian destinations over Europe. In Q1 2023 for example, outbound travel to France and Italy had recovered to just 6 and 5% of pre-pandemic levels respectively. By Q3, these figures had risen to 39 and 23% – a significant improvement, but still well below where they were in 2019.

Why is the recovery of this demographic important? China was the world’s largest outbound tourism market in 2019, accounting for $255 billion, or 20%, of total spending. Prior to the pandemic, more than half of spending by Chinese consumers on brands took place outside their home market.

Fortunately, there are signs that things could soon return to normal. Data from Global Blue suggests in-store tax-free shopping globally reached 141% of January 2019 levels in the equivalent month this year. In continental Europe, it reached 132%.

This was fuelled by a rebound in spending from Chinese tourists, at 71% of 2019 levels in February, up from 58% in Q4 2023. Not there yet, but definitely moving in the right direction.


This could lead to a much-needed boost for the consumer brands sector, but we would warn against counting on a uniform rebound. The past few years have seen a growing polarisation between ‘leading’ and ‘lagging’ brands, with the former extending their advantage over the latter.

This was notable in luxury goods towards the end of 2023 when companies such as Hermès and LVMH (Louis Vuitton Moët Hennessy) beat sales forecasts despite the ongoing slowdown across the sector following two years of giddy ‘revenge spending’.

Of course, it is easy to highlight the winners with the benefit of hindsight, but the roots of their outperformance become apparent if you look at their long-term strategy.

Among the criteria we use to define leading brands is that they continue to invest during times of economic hardship and in this regard, both Hermès and LVMH stood out from the rest of the luxury goods sector during the pandemic.

As the world locked down and Hermès’ peers went into survival mode and cut costs, it insisted on retaining every employee on full pay without resorting to government assistance. This is despite the fact it makes 90% of its sales in its stores, which were shut for the best part of six months.

Meanwhile, LVMH significantly extended its digital capabilities in distribution and marketing and in January 2021 finally completed its acquisition of jewellery brand Tiffany & Co. for $16.2 billion.

A head start

Such long-term thinking allowed these companies to win a disproportionate amount of market share in the subsequent rebound and strengthened their brand power against their peers.

It is a pattern they have demonstrated again and again, through crisis after crisis ever since they were launched, in 1837 for Hermès, and 1854, 1743 and 1765 for Louis Vuitton, Moët & Chandon and Hennessy.

Think less Taylor Swift, who will likely be usurped by The Next Big Thing within a matter of years, and more the common swift, whose patterns of behaviour – and their promise of brighter days to come – have been established over a matter of centuries.

Swetha Ramachandran is co-manager of the Artemis Leading Consumer Brands Fund

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