Big beauty players in the travel channel have been on the back foot this year. Their pre-Covid reliance on high-spending Chinese passengers worldwide has made them vulnerable because those same travelers today are not spending nearly as much.At this year’s Tax Free World Association (TFWA) World Exhibition in Cannes (September 29 to October 4)—the annual fair for the global duty-free industry—a presentation from consultancy Kearney indicated just how badly the industry has been affected. While 2023 passenger growth hit 30%, travel retail sales limped forward at 18% reaching $72 billion.The travel retail divisions of the two biggest groups in the market—L’Oréal and Estée Lauder Companies (ELC)—have been impacted, largely due to changes in Chinese purchasing patterns. To some extent, threats by China’s government to tighten up the diagou market may also be contributing, though Daxue Consulting estimates that 15% of luxury goods consumption in China still comes via these traders.In an earnings call in mid-August, ELC said the retail sales trend for prestige beauty in Asia travel retail did not improve during its fiscal fourth quarter (ending June). ELC’s President and CEO Fabrizio Freda, told analysts, “This was most notable in Hainan where beauty retail sales declined over 40% despite a more favorable comparison to the previous period as the quarter unfolded.”The CEO admitted that for Hainan, and Asian travel retail overall, traffic was returning, but conversion levels remained subdued “and significantly lower than pre-pandemic owing to weak consumer sentiment.