The Watches and Wonders Geneva exhibition, a premier event for the luxury timepiece industry, wrapped up its public days on April 20, 2026, at the Palexpo convention center. While brands like Rolex, Patek Philippe, and Cartier showcased their latest innovations, the event was overshadowed by a significant downturn in one of luxury's key growth markets: the Middle East.
Gulf Region Sales Plunge
Escalating conflict in the Middle East has severely disrupted consumer spending in the Gulf, a region that had recently served as a reliable engine for luxury growth amid softer demand from China and Europe. Financial reports from leading conglomerates reveal the extent of the damage. LVMH Moët Hennessy Louis Vuitton reported that the regional situation trimmed at least 1% from its group sales in the last quarter. The company's Chief Financial Officer, Cécile Cabanis, noted that mall foot traffic across the Gulf initially plummeted between 30% and 70%, stabilizing at an average decline of around 50%.
Kering, the parent company of Gucci, echoed this trend. The group saw its retail revenue in the Middle East fall by 11% in the first quarter, with the conflict alone shaving 3% off March sales. Gucci's sales dropped 8% globally, marking its eleventh consecutive quarterly decline. Even Hermès International, often considered a resilient player in the sector, felt the impact. While its sales grew 5.6% on a currency-adjusted basis, this fell short of the 7.1% analysts expected. Revenue in the Middle East specifically declined 6% to 160 million euros, with finance chief Eric du Halgouet describing March as an "abrupt halt."
Retail and Travel Retail Disruption
The sales slump was most visible in flagship retail destinations. Data indicated sales drops of 30% to 50% at Dubai's Mall of the Emirates in March, with foot traffic down 15%. The larger Dubai Mall saw traffic roughly halved. The airport duty-free channel, another critical luxury touchpoint, also suffered. Flight cancellations in the region peaked at 65% on March 3, according to Cirium data, severely impacting travel retail. LVMH noted that its DFS duty-free division reduced growth in its selective retailing segment by two percentage points.
This downturn comes at a challenging time for the Swiss watch industry. Federation of the Swiss Watch Industry data shows exports declined for a second consecutive year in 2025, falling 1.7% to 25.6 billion Swiss francs. Export volume dropped more sharply by 4.8% to 14.6 million pieces. The sudden reversal in the Gulf is particularly stark given that markets like the United Arab Emirates and Saudi Arabia had posted growth of 3.5% and 8.9%, respectively, the previous year.
Fair Highlights Amid Market Gloom
Despite the macroeconomic headwinds, the Watches and Wonders fair itself was reportedly busy, with organizers anticipating a "record edition" and very few brand cancellations. The event, which ran from April 14 to 20, featured 65 brands. Attention focused on new releases, including Rolex's Oyster Perpetual "100 Years" Rolesor and "Jubilee Dial," Patek Philippe's Celestial Sunrise and Sunset models, and technical showcases like Hermès's H08 Skeleton. Industry observers noted a trend toward both smaller-scale cases and complex technical showpieces among the novelties.
However, analysts pointed out a disconnect between the excitement at the fair and real-world sales. Oliver Müller of LuxeConsult highlighted that Middle Eastern buyers account for approximately 10% of Swiss watch exports and noted a steep slowdown in tourist-driven markets like the UAE. According to Le Monde, the Middle East represents about 5% to 6% of the global luxury goods market. Investment firm Bernstein had not anticipated a quick return to the 6% to 8% growth rates seen in 2025, given the conflict's impact on mall traffic, duty-free sales, and air travel.
The fundamental question now facing luxury watchmakers extends beyond creating scarcity for their products. The real test is whether the Gulf's high-net-worth consumers will resume their high-spending travel and shopping habits as war, currency volatility, and dampened sentiment continue to weigh on the global luxury landscape.
