Hotel investment has rebounded strongly from the Covid-induced slowdown, as the total volume of transactions for 2022 surged past the previous record year of 2019 to reach a total of €1.2 billion - double that of three years previous. And Q4 of 2022 saw the highest quarterly sales volume ever – amounting to a total of almost €900 billion. Furthermore, Q2 2023 saw quarterly sales volume up over 60 per cent year-on-year, amounting to a total of €273.7mn. Hotel transactions are increasingly portfolio deals and concern properties outside of the capital city, either in Madeira or elsewhere in the county.
Incoming investment has become an increasingly important source of funding for Portugal’s hotel sector. Indeed, total cross-border investment in the country’s hotels set a record in 2022, reaching €188.5mn, a figure already surpassed during the seven months of 2023, when net incoming investment totaled almost €262mn.
Hotels are opening at a rapid pace and there is a solid pipeline of new development projects. Growth in Portugal’s hotel sector should be further boosted by remote working, due to the country’s extensive co-working capacity, warm weather, affordable cost of living and excellent air connections to major EU capitals.
Major hotel transactions over the past two years
Over the past two years, there have been several significant transactions in the Portuguese hotel market - which have been driven by foreign investors.
- The Paris-based investment group, Extendam, announced the purchase of the 62-key four-star l’hôtel M.Ou.coin Porto on 20 July 2023; the hotel features a conference room with seating capacity of 300.
- New York-based Davidson Kempner and Highgate, along with Madrid-based Kronos, purchased 18 hotels in Portugal on 4 January 2023. Simultaneously, HG Portugal launched its portfolio of the 18 hotels which span the Algarve, Lisbon, Porto, and several other markets in in the country. This comes as Highgate, alongside Davidson Kempner Capital Manager and Kronos, acquired the Portuguese investment manager ECS Capital. The portfolio includes Hilton and IHG-branded hotels, as well as several independent hotels, such as Cascade Resort, Salgados Palace, and Sao Rafael Atlantico. Additional assets include lifestyle boutique hotels, urban full-service hotels, waterfront luxury resorts and large convention facilities.
- In May 2022, Spanish investment fund manager, Azora, expanded its footprint in Portugal, acquiring the 500-room Pestana Blue Alvor resort in the Algarve, from Pestana. The purchase was the fourth deal for Azora’s European Hotel & Leisure Fund, and its fourth acquisition of a resort in the Algarve.
- At the end of November 2021, Thessaloniki-based Domes Resorts took over the management of the 192-room five-star Lake Spa Resort in Vilamoura in the Algarve. The property had been acquired by Blackstone’s Hotel Investment Partners (HIP) in January 2020.
Newly opened hotels in Portugal
Some 25 hotels have opened in the country so far in 2023, many of which are small properties of less than 30 rooms. Some of the larger hotels include: the 89-key four-star Pestana Rua Augusta Lisboa;the 68-key, four-star Rochavau Hotel (Algarve); the 152-key four-star MASA Hotel & Spa CampoGrande Collection in Lisbon; the 90-key Next Level, Lisbon; and the 67-key four-star Independente Comporta in Grândola, south of Lisbon.
Recent major chain openings
On 22 June 2023, the 700th B&B Hotels property, a 95-key three-star hotel, opened in Guimarães, just northeast of Porto.
Marriott’s five-star Renaissance Porto Lapa Hotel opened at the end of May 2023, offering 163 keys of which four are suites. “Porto is an alluring destination with a thriving wine and culinary scene,intriguing sightseeing, with history and culture around every corner – making for an exciting debut for Renaissance Hotels,” said Jennifer Connell, global brand leader, Renaissance Hotels, and vice president, distinctive premium brands, Marriott International.
In March 2023, the five-star Hyatt Regency Lisbon opened in the district of Belém, offering 204 keys of which 105 are suites.
The 87-key Ivens Hotel Lisbon, a part of Marriott’s Autograph Collection, opened in the autumn of 2021, as the second Autograph Collection property in Lisbon (the Fontecruz Lisboa being the other one).
The 67-key Emerald House Lisbon, Curio Collection by Hilton opened in mid-January 2022 in the city’s historic district. Simon Vincent, executive vice president and president, EMEA, Hilton, said, “We are thrilled to be bringing the Curio Collection by Hilton brand to Lisbon for the first time – one of Europe’s most historic cities which has become an increasingly popular leisure destination over the past few years.”
Development pipeline in Portugal
As of February 2023, there were some 66 high-end hotel projects (10,000 keys) in the pipeline, according to the THP database. Of these developments, the upscale segment accounted for 70 per cent (46 projects) and the luxury segment 30 per cent (20 projects), respectively.
Significant branded projects
A first Andaz
In late October 2020, Hyatt Hotels signed a management agreement with Feuring Hotel Lissabon GmbH & Co. KG for the first Andaz hotel in Lisbon, expected to open in 2024. The opening will mark the second Hyatt-branded hotel in the capital, following the Hyatt Regency Lisbon in 2022.The central building will offer 169 guest rooms, with the surrounding four buildings providing private suites.
A third Curio Collection by Hilton
The 58-room Legacy Hotel Cascais, Curio Collection by Hilton will open in May 2024 and is under franchise agreement with Honest Talents, a subsidiary of Reformosa, one of Portugal's leading property developers and managers. The property will become the third Curio Collection hotel in Portugal, following the opening of the Boeira Garden Hotel Porto Gaia in 2019.
A Vignette and a Crowne Plaza for Lisbon
IHG Hotels & Resorts signed for two locations in Lisbon in December 2022, including: the 121-room Convent Square Hotel Lisbon – Vignette Collection, which opened recently, and the 227-room Crowne Plaza Caparica Lisbon, that is scheduled to open in 2024; both properties are conversions.
Hard Rock coming in 2026
In late July, 2023, Hard Rock Hotels announced its planned entry into Portugal, scheduled for 2026, in partnership with Mercan Properties. The 275-key Hard Rock Hotel Algarve will be located in Portimão and construction is due to begin in 2024.
Nobu coming to Lisbon
In late May 2023, Nobu Hospitality announced plans for its The Nobu Hotel and Restaurant Lisbon, the first stage of the group's planned expansion into Portugal.
Macy Marvel, 14 August 2023