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120 Tourism-based Ventures to Open by 2022

2 December 2017

40 are expected to open just in Lisbon, the clear majority of which will be in the four- and five-star category, located in the city centre

More than 120 tourism-based projects are expected to begin operations in Portugal in the next three to five years, with 40 in Lisbon and 18 in Porto, according to figures from the real estate consultancy Cushman & Wakefield (C&W). The profitability of operations in Portugal has been increasing in the last three years and is arousing the interest of international investors.

The study “Hospitality Market Portugal 2017”, presented this week by C&W, addresses the growing interest of real estate investors in the Portuguese tourism market, where diverse investment options and competitive rates of return can be found. Lisbon, Porto and the Algarve region have emerged as appealing destinations for international capital that see a significant potential for appreciation in the hotel assets in these areas.

The hotel industry was affected by the crisis but began to recover after 2014, with the revenues of hospitality operations registering successive double-digit annual growth. According to the study, the Metropolitan Area of Lisbon is the most significant tourist destination in the country in terms of visitors, having received 4.7 million guests between January and September of this year, 10% more than in the same period of the year before. The Portuguese capital concentrates more than 60% of the units and rooms of this region and the hotels are primarily located in the historical centre, with a significant cluster in the Parque das Nações and, more recently, on the riverside.

The 40 projects planned for the next five years in Lisbon, will add 3,500 housing units and most are destined for the city centre, belonging to the four and five-star categories. According to the study and “given the planned openings for the next three years, the average annual supply growth can be estimated at around 3%. Overnight stays in the capital has increased at an average annual rate of 11 percent over the last three years, more than three times the expected pace of supply.”

In the north of the country, in Porto, the increasing attractiveness of the city for international tourists has been bringing in investment in new hotel units. 18 new projects have been announced, with a total of more than 1,200 rooms, also primarily in the four- and five-star categories.

The trends outlined in C&W’s study point to a modernisation of Portugal’s product, with an increase in supply concentrating on higher category units. The consultancy argues that there will be a separation of ownership and management and that the participation of institutional property investors in the tourist market will increase. Consolidated destinations, such as Lisbon and Porto, are attractive to institutional investors, which are beginning to look at hotel assets for their profitability and as a means to diversify their real estate portfolios.

The current proliferation of smaller operators in the market will be reduced through the growth of dominant brands, which will purchase existing units and also experience organic growth. There will also be an increase in alternative products focused on nature (Azores and Serra Algarvia), surfing (west coast, Alentejo, Vincente and north of Lisbon), with new sun and beach destinations (Troia and Alentejana coast) and cultural destinations (Évora, Coimbra, Aveiro, Guimarães and Braga).

Original Story: Expresso – Maribela Freitas

Photo: Nuno Botelho

Translation: Richard Turner