Improving trends in performance, as well as a slate of luxury hotel openings in the country, have given tourism officials in Portugal confidence that travel and hospitality revenues will rebound to pre-pandemic levels by 2023.
In a sign that demand for hotels is growing, new luxury hotels that had delayed opening due to the pandemic are finally starting to welcome guests this year.
Discovery Hotel Management, which has a portfolio of 18 hotels spread across Portugal, opened two new properties in 2021 — the Évora Farm Hotel & Spa in the Alentejo region and the Patio Suite Hotel in the Algarve.
The company also is in the final phase of defining a new hotel concept it plans to debut in the Colares region of Portugal.
One of Lisbon’s most-anticipated hotel openings in 2021 was The Ivens, a luxury property themed around famous Portuguese explorers.
The upscale Lumen Hotel, which offers a nightly video-mapping light show, also made its debut in the summer of 2021.
“We opened our doors on July 21, right in the middle of the pandemic, which was a very troubled and difficult time,” said Sérgio Bernardo, general manager of the Lumen Hotel. “Nevertheless, the expectations were far exceeded, once the hotel’s occupancy rate reached above the most optimistic forecasts prior to the opening."
The first W Hotel in Portugal will open in the Algarve this spring, as well as the first luxury hotel in Ericeira, a fishing village 30 miles northeast of Lisbon that is mostly known for its surfing scene.
Discovery Hotel Management CEO Luís Mexia Alves said he is optimistic about the hotel sector in Portugal, predominantly within the luxury segment.
“We are equally realistic and at times still remain uncertain. However, the past two years have pushed us to adapt and become flexible in comparison to how we operated pre-pandemic,” he said.
Data from STR, CoStar's hospitality analytics firm, and Turismo de Portugal show positive trends in hotel performance across Portugal. Tourism in Portugal has suffered significantly during the pandemic from travel restrictions in the United Kingdom, its largest feeder market.
In the first nine months of 2021, revenue for tourist accommodations in Portugal exceeded the total for full-year 2020, although it was still half the value for the same period in 2019. Room nights for October and November surpassed June and July figures.
Since August, hotel revenue has surpassed 2019 levels in Madeira, which comprises four islands off the northwest coast of Africa and is one of two autonomous regions of Portugal.
Rooms revenue increased in August by 7%, in September by 4.2% and in October by 11.9%.
Chitra Stern, owner of Martinhal Hotels & Resorts, said the company was happy to achieve 60% of 2019 room revenues in 2021. Martinhal operates properties in the Algarve, Cascais, Lisbon and Sagres.
She said the company's hotels also had their best October ever in 2021 with more than 90% occupancy, and achieved the same high occupancy levels in the days leading up to New Year's Eve.
“This is promising for the year ahead,” Stern said.
Research from STR showed 2020 occupancy up 46.4% compared to 2020 and average daily rate up 19.5%, pushing the latter above 2019 levels. Revenue per available room increased in 2021 by 74.9% over 2020 numbers.
Online searches for travel in Portugal have also increased, which is another indicator of the positive direction of the recovery. Officials with Turismo de Portugal said consumers are once again optimistic about booking trips, and tourism and hospitality performance are forecast to reach pre-pandemic levels by 2023.
Government Support
Much of the recovery of Portugal's tourism industry has been made possible by government support on both financial and operational levels.
Programs include the government-funded Revive scheme, launched in 2016 to restore vacant public properties with architectural, historical or cultural value through private investment, including hotels and restaurants. To date, it has supported almost 70,000 companies.
The Nest program, also known as the Tourism Innovation Center, supports the development of new business ideas in the digital economy, while the BEST program is a free online training academy promoting the development of management skills in tourism, which already has involved 170,000 people. The Call Fit program invests in tourism projects in pre-development phases.
The programs are part of the Portuguese government's effort to exceed 27 billion euros ($31 billion) in annual tourism revenues in 2027, while accelerating plans for sustainability.
“The tourism board has been continuing to engage in public relations and marketing activities throughout the pandemic, which has been crucial for Portugal to remain in people’s minds,” Martinhal Hotels & Resorts' Stern said. “We would not have succeeded in this alone. The government’s efforts on various fronts have helped us get more business than we would have otherwise."
Focus on Digitization
Many hotel operators have used the pause forced by the pandemic to focus on digitizing — investing in tech and growing online platforms.
Martinhal has upgraded its check-in procedures and invested in a central reservations system which makes it easier for customers to give feedback and allows its sales teams to tailor offers to different market segments.
At Discovery Hotel Management, the focus has been on upgrading meeting technology. DHM created a “What’s Up Concierge” program aimed at speeding up the response to customer requests, installed digital signage throughout its hotels and made food and beverage menus accessible on mobile devices through QR codes.
“We have acquired additional [IT equipment] to allow for better quality hybrid meetings, including increasing our internet network. We also now allow electronic check-in to improve and streamline the check-in process, primarily within the [meetings, incentive travel, conferences and exhibitions] segment,” Mexia Alves said.
He said his city hotels and large beach resorts were on average down 30% from 2019 in occupancy, due to a reduction in meetings and event business.
But the investment has started to pay off for the company. Within its upscale and luxury properties, DHM exceeded 2019 performance with 60% occupancy and a 10% increase in average daily rate, Mexia Alves said.
Remote Workers
The normalization of remote work and Portugal’s attractiveness as a destination from which to do it has led to growing demand for longer hotel stays and better Wi-Fi, not only for conference guests.
Martinhal has introduced long-stay offers to accommodate these guests and now offers specific Wi-Fi services for families who need to both work remotely and have their children attend school online.
“We have even dealt with families from other time zones who had to gain access to conference rooms or the main lobby area for them to work quietly while the rest of their family was sleeping,” Stern said.
Mark McSorley, general manager at Quinta do Lago, a resort that has both hotel rooms and private residences located in the popular Algarve region, said demand has increased for rental houses with a home office.
“We’ve noticed a considerable shift in residents spending the majority of their time in their second home,” he said.
Mexia Alves said numerous reservations at DHM hotels have turned into extended stays.
“We are prepared for this with dedicated areas in each of our room categories where guests can comfortably work and lounge spaces where guests are welcome to work,” he said.
This remote-worker trend has been very noticeable in Madeira, where the government teamed up with Startup Madeira to launch a 2021 pilot project aiming to attract digital nomads.
Nuno Vale, executive director of Madeira Promotion Bureau, said the rapid recovery of tourism on the island, particularly in late summer 2021, has been a double-edged sword.
“It has resulted in a lack of human resources in the hospitality sector,” he said, adding the diversification of tourism target groups is having a positive impact on the sector.
He added his bureau is supporting hoteliers by waiving membership fees and increasing flexibility in payments.
“Madeira’s tourism is becoming more resilient, diversified and less vulnerable to the economic outlook,” he said. “We hope to reach 2019 global figures already by the end of 2022."