Lisbon Will Impose Limits on New Hotels

7 November 2017

The Lisbon City Council will survey the number of tourist accommodations and create a map of the city’s parishes with quotas for traditional hotel units, similar to what it intends to do with local tourist accommodations.

The Lisbon City Council is looking to dampen the opening of new hotels in the city. In addition to quotas that will limit the number of local tourist accommodations in Lisbon, a move that is expected to move forward next year, the agreement signed between the PS and the Left Block for the next mandate provides for the establishment of a determined, maximum capacity of hotel units, with the aim of ensuring sufficient space in the city for housing.

The measure can only go ahead after a revision to the Municipal Master Plan (PDM), an objective that also appears in the agreement signed between Fernando Medina, the re-elected president, and Ricardo Robles, the councilman elected by the Left Bloc. They intend to approve, by the end of February 2018, “simplified changes” of procedure relating to the PDM. Following this amendment, the first measure will be the “extension of the list of properties considered to be of municipal interest, together with other cultural and real estate assets.”

In addition to a review of the PDM, the Lisbon city council is expected to “immediately begin a technical study to define the maximum capacity of hotel units per city area to ensure the multifunctionality of neighbourhoods, particularly in historic areas.” This study will be done simultaneously with the survey of local accommodation capacity in the city.

Once these studies have been completed, a “revision of spatial planning instruments, or other suitable tools for the same purpose, will be made with the establishment of a map of quotas” for the opening of hotel units. These quotas, an official source of the Left Block explained to ECO, will apply only to new hotel buildings, i.e. existing licenses will not be affected.

“The hotel industry absorbs a lot of what could be residential space. The pressure that local accommodation creates on housing is similar to that of the hotel industry. Therefore, a policy of maximum quotas should also apply to the traditional hotel industry.”

Ricardo Robles – Councillor of the Lisbon City Council

The rationale for this measure is the same as that for deciding to impose quotas on local accommodation: tourism is consuming too much space in the city, the number of houses available for housing is decreasing, and house prices are increasingly high. “The hotel industry absorbs a lot of what could be residential space. The pressure that local accommodation creates on housing is similar to that of the hotel industry. Therefore, a policy of maximum quotas should also apply to the traditional hotel industry.” Ricardo Robles explained in an interview with ECO in May, while campaigning for local elections.

As a result of these measures, the Lisbon City Council expects more space to be made available for housing. The agreement signed between Medina and Robles also stipulates that 25% of new construction or rehabilitation operations should be employed in controlled-cost housing. The change in territorial management instruments to move forward with this measure will be phased in over 2018 and 2019, and the rule will take effect in 2019.

Different quotas for each parish

The limits will not be the same for all areas of the city. Much as with the quotas that the council will impose for the local accommodation industry, the limits to the opening of hotels will depend on the pressures of tourism in each parish.

The first step will be the survey of the number of accommodations throughout the city. Once this survey has been completed, the city council will have data on the number of traditional hotel units, local accommodation and what will be considered as housing tourism (houses that are exclusively destined to tourist accommodation).

The objective of the Left Block, as Ricardo Robles explained to ECO in May, is that local accommodation should be defined as properties that house tourists for a maximum period of 90 days a year, and no quotas will be imposed on this type of accommodation. Residential tourism should have the same treatment as traditional hotel units, with limits on the granting of licenses, that is, the imposition of maximum quotas. These details, however, were not defined in the agreement signed with Fernando Medina, nor is there a deadline for these quotas to begin to be imposed.

Nor has a decision been made on what these quotas will be. There may even be parishes, little affected by tourism, where no limits will be imposed on the opening of new units, a source from the Left Block stated. The priority, as defined in the agreement, will be “historic areas”. Parishes such as Santa Maria Maior (which covers the area around the Lisbon Cathedral) are the focus of the measures, where about a fifth of available houses are currently used for tourist accommodations.

Hotel offer in Lisbon has skyrocketed 70% since 2010

The tourist offer in Lisbon has skyrocketed in recent years. According to data from the National Statistics Institute (INE), the number of hotels in the capital went from 163 in 2010 to 279 last year. In all, there were, in 2016, more than 61,000 beds available, an increase of nearly 48% compared to the availability available in 2010.

This is in addition to local tourist housing, which began to increase significantly in 2014 when a new regulatory regime for the business area was approved. Today, the district of Lisbon has a total of 13,345 units registered in the National Registry of Local Accommodations. At the end of 2010, only 250 local lodgings were registered in Lisbon; at the end of 2014, after approving the new legal regime, there were 1,590 dwellings. The real number will be even higher, considering that many accommodations are not registered.

The number of visitors has also been growing. INE reported that the Lisbon Metropolitan Area hotel industry received almost 5.4 million guests last year, 65% more than in 2010. These guests accounted for 12.6 million overnight stays, equivalent to an 82.7% increase in six years. The same goes for prices. In 2010, the average income per room available (RevPar) of hotels in Lisbon was 40.8 euros per night; in 2016, it was 61.5 euros.

Despite these increases, the hotel occupancy rate in Lisbon is still 50% (much because of the low season, since in the high season, hotels are almost full). Even though many beds remain empty, hotel companies see room to continue to increase supply. This year, according to data provided by the Portuguese Hotel Association  (AHP) to ECO, 15 new hotels were opened in the city of Lisbon, in addition to five other refurbishments or re-openings. Next year, the association anticipates that another 15 new hotels will open in the capital.

Original Story: Economia Online – Rafaela Burd Relvas

Translation: Richard Turner