Why tourists aren't loading up on luxury goods this summer

Taking a holiday in Paris or Milan without loading up on Chanel and Prada goodies might seem a bit of a waste – but it looks as though that is what an increasing number of tourists have done this summer.

Tourists spent 14 percent less in July 2016 than July 2015, according to global figures from value added tax refund company Global Blue compiled for UBS. The figures, which are a barometer for tourism spending, could herald a knock-on effect across the entire luxury industry, as tourism spending makes up about a third of global luxury revenues, and more than half of European luxury sales, according to Bain.

The decline happened despite what should have been a favorable boost from this year's timing of Ramadan, which is often key to spending by Middle Eastern tourists.

So why are tourists pulling out their credit cards less?

Terror attacks in Paris and Nice, previously thought of as safe tourist destinations, appear to have discouraged trips to France, which is usually the biggest market for tourism spending in Europe as brands like Louis Vuitton and Chanel wield international clout. Spending in France was down 24 percent in July compared to July 2015, according to Global Blue. This is "most likely due to the continued fallout from terrorist attacks," analysts at UBS wrote in a research note.

The euro's continuing strength, fuelled by years of unconventional monetary policy by the European Central Bank's efforts to manage the fallout from the credit crisis, may be about to hurt sales at some of the continent's most recognizable companies.

The Chinese luxury goods consumer is the most important to the global market -- and they're spending a lot less. One of the factors behind the drop-off is that the Chinese currency, the yuan, has depreciated by around 8 percent against the euro this year. Combined with a clampdown on graft - Western luxury goods have often been used to bribe officials - and new import restrictions imposed by the Chinese government earlier this year, and it's little wonder China's luxury buyers seem to be keeping their money in their handbags.

One destination where tourists are spending more is the U.K., where spending rose by 6 percent in July in sterling terms, helped by the weak pound, according to UBS estimates. The country is now the cheapest country globally after tax refunds, according to UBS research – which should be good news for British luxury goods companies like Burberry and Mulberry.