Report

Portugal Hotel & Chains Report 2022

As we move past the pandemic, hotels have been experiencing a sharp upturn in performance, almost reaching 2019 levels.

The march and rise of the brands and branded hotels seem inevitable however.

The question remains; however, how many brands is too many and how good are we as an industry at explaining to the clients what each stands for?

Portugal’s potential as a global tourist destination is now clear to all, and proof of this is found in an improvement in tourism statistics, which in turn translates into greater interest from international investors. International branded hotel supply is increasingly significant, far outstripping the national offer and showing a need for greater diversification by local chains.

Key Findings

Market Recovery and Growth:

Portugal’s tourism sector has shown strong signs of recovery, with the number of hotel transactions reaching approximately €330 million in 2021. This represented 15% of the total investment in the real estate sector, reflecting renewed investor confidence.

In 2022, the total number of chain hotels in Portugal increased by 9% to 581, while the total number of chain rooms grew by 6% to 68,990. This growth is driven by both domestic and international operators, with international brands increasing their presence by 26% compared to 18% for national brands.

Top Hotel Chains:

Pestana Hotel Group remains the largest chain in Portugal with 76 hotels and 7,472 rooms, followed by Vila Galé Hotéis with 28 hotels and 4,747 rooms.

Accor Hotels leads the international chains with 38 hotels and 3,956 rooms, followed by Marriott Hotels & Resorts and Minor Hotels with 15 and 16 hotels, respectively.

Geographical Distribution:

Lisbon and Porto dominate the hotel pipeline, representing 52% of the total projects underway. These cities continue to attract significant international investment, particularly in the upscale and luxury segments.

The Algarve and Alentejo regions are also key areas of development, with mixed-use projects gaining popularity, especially in tourist destinations like Lagos, Faro, and Troia.

Market Dynamics:

Chain penetration by the number of hotels stands at 30%, while penetration by room count is 49%, indicating that chain hotels tend to be larger than their independent counterparts.

The average size of a chain hotel in Portugal is 119 rooms, slightly down from previous years, reflecting the rise of boutique and lifestyle hotels.

Investment Trends:

Experts predict that 2022 could be a record year for hotel investment, potentially reaching €1.5 billion by year-end. International investors are increasingly active, with companies like Azora investing €276 million in Portuguese hotel assets over the last 24 months.

Conclusion

Portugal’s hotel industry is experiencing a robust recovery, with strong growth in both domestic and international hotel chains. The ongoing development of new hotels, particularly in Lisbon, Porto, and the Algarve, coupled with significant investment from international players, underscores the sector’s resilience and future potential.