Portugal, Spain’s main competitor in the tourism sector, is a European benchmark for hotel investment, according to the latest report from Christie & Co. The consulting firm’s data on the hotel market analyzes the evolution of our neighboring country. “Despite its historical presence among the preferred choices of many European travelers for short breaks and vacations, the transformation of the Portuguese economy, its tourism industry and the rapid evolution of its offer, both in consolidated destinations and new areas, are positive factors that position the country in the ranking of hot spots for hotel investment and development,” indicates Pierre Ricord, Head of Consulting for Europe at Christie & Co.
The figures speak for themselves: Portugal recorded more than 77 million overnight stays in 2023, with demand exceeding 2019 by 10%. Revenue per available room (RevPAR) reached € 64.8, the highest level ever recorded, representing a 31% increase compared to 2019. This progression continues in 2024, with a 7% increase through July compared to the same period last year.
The country has exceeded €550 million in hotel investment during the first half of 2024. This money has not only been channeled into operating assets but also into repositioning for the renovation of supply, both in leading and secondary destinations. Another noteworthy factor is that “international chains have shown great interest in establishing their brand portfolios to attract global clients, from the economy segment to the upper scale,” explains Alberto Martín, Investment Director of the consulting firm in the Iberian Peninsula.
Looking ahead, the hotel industry is expected to increase its capacity by 10,000 rooms over the next four years, around 10% of the current supply.
Lessons for Spain
This very positive analysis means Spain should reflect on how to improve its offer.
The Christie & Co report provides some interesting ideas that could be applied in Spain. For example, Portugal is making a great effort at the public level to improve all its infrastructure in terms of intra-connectivity, international accessibility and energy optimization. This last point is vital because European tourists are valuing sustainability more and more. For several days in 2024, Portugal became the first country in the world to supply 100% renewable electricity. They are trying to make the experiment, applauded worldwide, an ongoing practice. In fact, clean energy already accounts for 61% of national electricity consumption.
As for the behavior of private investment, Portugal’s experience shows no region should be neglected. “The significant increase in supply in recent years has hindered the return of occupancy in many destinations,” notes Christie & Co. In addition, their consultants warn that the concentration of supply in specific areas may temporarily exceed demand, “causing some short-term disruptions.” Careful planning of regional tourism growth, with solid public-private partnerships for hotel development could, therefore, be key for to making Spain an attractive and challenging destination for hotel investment, on the same level as Portugal.
