WILL RECESSION AND CRISIS AFFECT LUXURY EVENTS?

One of the biggest concerns this year for both people and businesses is the current economic situation. I would like to address this concern starting from the general, global economy, and focusing in on the luxury event sector in Spain.

At a macro level, the first thing to understand is that economic predictions made at the end of 2022 and the reality in 2023, differ considerably. The dreaded recession due to rising inflation, increasing energy prices, and geopolitical conflicts all appear to be less than predicted. EU countries are starting to make forecasts with minimal growth, but growth, nonetheless. Germany recently forecasted that its GDP would grow 0.2% (in the past 4 months the forecast changed from a 0.4% decline to a 0.2 % incline). The same is true in Spain, which is already forecasting a 1.1% growth according to the IMF.

Focusing on the luxury sector, its growth has been meteoric after COVID, and that growth will continue. According to a Bain & Company study, the luxury sector will grow 60% between 2022 and 2030, which means that its turnover will increase from €353 billion to €540-580 billion in 8 years.  The richest man in the world is not a technology CEO, but none other than, Bernard Arnault, owner of LVMH. This has to be an indicator that the luxury industry is in good health. 

The fear that face-to-face events would be replaced by digital events has dissipated. From my point of view, luxury brands have realized the need to produce events that create unique experiences where guests or clients feel privileged to be invited. This isn't so different from a pre-Covid event, but it does differ in that brands now seek that their events be so exclusive they become an “object of desire.” This is done by guests generating content and flooding social networks, which in turn provokes a strong desire by those not invited to the occasion to belong to that exclusive group. 

The Spanish market has always been receptive to great luxury brand events and this sector has evolved spectacularly well. For years, brands put on minor events in Spain and saved their larger events for other locations. However, since lockdown, Spain, and Madrid, in particular, have become destinations for large international events. This is due to the emergence of large chains of luxury hotels that bring with them premium consumers, new boutiques, and restaurants.  

It is a snowball effect; one thing leads to another. People who consume luxury goods are staying in these types of hotels and they need boutiques to shop in and this makes brands decide to put on their events in our city. There are several examples of this from last year: Dior’s haute couture parade in Seville, Cartier's High Jewellery event in Madrid, and Kiehl's international event in Madrid.
This all leads me to believe that Spain's luxury event sector will continue to grow in the coming years and that the crisis should not affect our industry at all. 

Alfonso Martínez, Managing Director of SOMOS Experiences.