Australians spend travel funds on luxury goods

With Australians locked in by the borders of the country, more and more are turning to luxury goods to soothe their overseas travel woes.

Porsche aficionado Niti Bajaj, with daughter Sana, eyes off another purchase at the Willoughby dealership in Sydney’s north. Picture: Nikki Short

Luxury brand sales are soaring in the wake of the coronavirus recession, as Australians splurge on French champagne, $12,000-a-night hotels and high-end cars, spending money once set aside for international travel.

Prestige cars have been at the centre of the premium sales boom, as brands such as Porsche, Audi and BMW outperform more modest brands.

Niti Bajaj purchased her second Porsche on Tuesday, eager to splash out after her overseas holiday to India was cancelled this year. “We wanted to spend the money here now, put it back into the economy and support Australia,” she said.

“Porsches are something I’m hooked on to, so I’m pretty excited to be getting another one.”

Sean Lygo, general manager of a Porsche dealership in Willoughby in Sydney’s north for the past 29 years, has seen an “extraordinary comeback” since the showroom was forced to shut in March.

“We thought sales after lockdown would be truly disastrous,” he said, “but they’ve been quite the opposite. In a usual December, we would take orders for around 30 cars. This year we took orders for over 60 cars, all ranged between $100,000-$300,000.”

Twenty cars were sold in the first week of January alone, he added, when usually the dealership would expect to sell five. Australian sales of Porsches were up 3 per cent this year, with 4243 cars sold. A similar trend was seen at Audi, which saw 1 per cent growth year on year, and BMW, which rose by 0.9 per cent.

By comparison, Mitsubishi, Honda and Holden were down 31.8 per cent, 34.4 per cent and 58.3 per cent respectively, according to data from the Australian Automotive Dealer Association.

Overall car sales dropped by 13.7 per cent in the past year, CommSec chief economist Craig James said, but the luxury market “certainly showed a degree of strength. It’s because people can’t travel overseas.

“What we’ve seen in terms of goods and services is that people are spending locally because they’re not in a position to spend money in foreign cities.”

Champagne sales have also increased dramatically, with the whole sector up by 41.7 per cent compared with 2019.

Premium label Moet & Chandon experienced 61 per cent growth and Veuve Clicquot went up 54 per cent, a combined $62.2m of sales in the past year.

“It reflects the burgeoning appeal of affordable luxuries in economically challenged times,” insights director of IRI Daniel Bone said.

“That entitlement has been further validated by many households having more disposable income to spend on treats that can be enjoyed in the comfort of their homes with wallets inflated by savings on travel and services expenditure.”

In the holiday sector, demand for exorbitant accommodation has been “through the roof” as luxury hotels across the nation are booked out well into 2021.

Tim Stanhope, general manager of Emirates One&Only Wolgan Valley Hotel three hours northeast of Sydney said the five-star resort, where rooms range from $2950 to $11,600 a night, had been operating at near-full capacity since July.

“We are finding Australian travellers are looking for a true luxury experience closer to home,” he said.