Report

Portugal Hotels & Chains Report 2023

The 2023 edition of the Portugal Hotels & Chains Report offers an extensive analysis of the dynamic hospitality industry in Portugal, emphasizing the remarkable post-pandemic recovery and the challenges faced by the sector. The report also highlights the increasing interest from international investors and the leading role of domestic hotel chains.

Portugal is a vibrant hospitality market, contributing over 40 billion Euros to the economy, almost 16% of GDP. Portugal is also unusual in that the top hotel chains are locals, for those of you following our Chains Reports across Europe, beating Accor into third place is highly unusual.

Over the last year, a remarkable post pandemic resurgence is evident. Robust demand has propelled most markets to exceed pre-pandemic levels, allowing for unprecedented rate increases that have pleasantly surprised property owners.

Key Findings

Market Overview and Recovery:

Portugal’s tourism sector is a significant contributor to the national economy, accounting for nearly 16% of GDP. The industry’s resurgence post-pandemic is evident, with demand surpassing pre-pandemic levels by the end of 2023.

Despite global challenges like inflation and energy supply issues, the hospitality industry in Portugal has shown resilience, with property owners experiencing unexpected rate increases due to robust demand.

Growth in Hotel Chains:

The total number of chain hotels in Portugal increased by 7% from 2022 to 2023, reaching 623 hotels, while the total number of chain rooms grew by 6% to 73,405 rooms.

Domestic chains continue to lead the market, with Pestana Hotel Group and Vila Galé Hotéis being the largest players. Pestana operates 80 hotels with 7,688 rooms, while Vila Galé has 31 hotels with 5,006 rooms.

International Presence:

International chains are increasing their footprint, now making up 28% of the total hotel stock. Accor leads the international brands with 38 hotels and 3,940 rooms, followed by Marriott Hotels & Resorts with 20 hotels and 3,844 rooms.

Hotel Pipeline and Investment:

The pipeline for new hotel projects in Portugal is robust, with 90 projects currently underway, which will add approximately 11,900 rooms to the market. Lisbon and Porto remain the most attractive destinations for investors, accounting for about 75% of the pipeline projects.

The investment in hotel acquisitions over the past 24 months reached around €1.5 billion, driven by significant deals such as the ECS portfolio acquisition by Davidson Kempner Capital Management and Highgate-Hospitality.

Challenges and Opportunities:

The report identifies inflation, energy supply issues, and staffing shortages as major challenges impacting hotel operations. However, the continued interest from international brands and investors presents opportunities for growth and expansion in the Portuguese market.

Portugal’s hotel industry has shown remarkable resilience in the face of global challenges, with strong growth in both domestic and international hotel chains. The ongoing development of new hotels, particularly in key destinations like Lisbon and Porto, coupled with substantial investment activity, underscores the sector’s potential for continued expansion and success.