Portugal Hotels & Chains Report 2021

By Philip Bacon MRICS, FCA on November 12, 2021


A very warm welcome to this latest country edition of the Hotels & Chains report which provides a snapshot of a fascinating moment in hospitality. Will we see the direction of the industry change forever?

When we wrote the last edition, we had no idea that global events would cause such chaos in a market that had seen unprecedented success in 2019. Needless to say, the events of the last 20 months have thrown the ownership and performance of the hotel industry into sharp focus, exacerbating friction between owners and operators, putting pressure on lenders, making development debt something of a mirage and laying waste to the best-laid plans of many giants in the industry.

International hotel chains and brands have turned their attention to Portugal focusing primarily on Lisbon and Porto as the main urban destinations. The pipeline is almost exclusively centred on 4* and 5* hotels improving the overall positioning of the country’s hotel supply.

Key Points

  • International presence on the rise
    Even though the market is still dominated by domestic players such as Pestana Hotel Group and Vila Galé Group, international players are year on year gaining more presence. The number of international hotel brands has increased and more than doubled its number of 2018, but still represent 51% of the total chain hotels.
  • Increased quality of the hotel supply
    Upscale, upper-upscale and luxury hotels represent 78% of the total existing branded supply in Portugal (18% growth vs 2018) – 60% correspond to 4* and 4* superior hotels and 18% to 5* and 5* luxury properties. Budget and economy hotels continue to be scarce, having, nevertheless, slightly increased and midscale properties have reduced their presence from almost 38% in 2018 to 18% currently.
  • Focus of new markets
    Lisbon and Porto are the top cities where new hotel developments are being built, this is no big surprise as these are also the principal destinations welcoming tourists. Algarve and Madeira still dominate the sun and beach destinations; however, investors are now focusing more on unexplored territories such as the area around Comporta in Alentejo which may bring new international hotel chains into the market.
  • Brand affiliation in the pipeline
    Hotels affiliated with international brands (for example Room Mate Hotels, Radisson Red Hotels and Meliá Hotels & Resorts) account for 57% of new projects in the pipeline compared to 23% associated to national brands such as Vila Galé Hotéis and Turim Hotels. Upscale, upper-upscale and luxury hotels represent 83% of new projects in the pipeline, reinforcing the quality of the hotel supply.

For a Portuguese language version of this report, please see here

Philip Bacon

About the author

Philip Bacon MRICS, FCA pbacon@horwathhtl.com