Portugal’s hospitality sector: A leading destination for global investment
With its resilient economy, strategic location, and globally recognised tourism appeal, Portugal has emerged as one of Europe’s most attractive destinations for hospitality investment. Backed by sustained visitor growth, supportive public policies, and rising interest from international capital, the country offers a unique blend of stability and opportunity for developers, operators, and institutional investors alike.
Portugal’s Hospitality Investment Landscape
Portugal’s hospitality sector continues to experience robust and sustained growth, supported by investor-friendly government policies, regulatory stability, and a thriving tourism industry.
This strong foundation has positioned the country as one of Europe’s most attractive markets for international investors seeking resilient returns and long-term opportunities in the tourism and hotel segments.
Major global investors – including Davidson Kempner, Invesco, and Arrow Global – have already invested in Portugal’s hotel market, underlining its international credibility, appeal and momentum.
In a country with a longstanding tradition of tourist apartments, the ongoing diversification of the hospitality offer is noteworthy. Sub-sectors such as serviced apartments and branded residences are gaining ground - not only from an operational perspective, but also from an investment standpoint. These segments offer more flexible business models, attractive yields, and rising demand from international travellers and institutional capital.
Branded residences, in particular, enable investors to finance developments through pre-opening sales – reducing upfront risk and accelerating returns. The number of internationally branded projects in Portugal is expected to rise steadily in the coming years, in line with rising global demand for premium, experience-driven hospitality assets.
Portugal’s hotel sector typically accounts for 25 to 33 per cent of total commercial real estate investment – a significantly higher share than in most other European countries. This reflects the sector’s strength and the confidence it inspires among both institutional and private investors.
Favourable yields
Yields on hotel management agreements in Lisbon (6.00) and Porto (6.25) compare favourably with other key European cities such as Madrid (5.75). The same applies to leases: Lisbon yields 5.5, Porto 5.75, and Madrid 5.
Duarte Morais Santos, Hotel Director at CBRE, said: “Even with the fluctuations in ten-year bonds and interest rates, these yields have been pretty stable over the years due to the number of transactions and market opportunities being rather limited and so the appetite is staying pretty high.”.
Some German institutional investors have exited the market, making way for Spanish and Portuguese family offices, as well as Portuguese pension funds - he added.
Development Pipeline and Market Activity
Hotel pipeline growth of five per cent in Lisbon and the Algarve over the next two years aligns with the growth trend observed over the past 14 years.
“We are seeing a bit more supply coming into Porto, but there is still a long way to go,” said Santos.
Diego Alvarez, Director of Development at IHG Hotels & Resorts, noted that the group currently operates 24 hotels in Portugal, with a pipeline of 12 more.
“Over the past three years, we managed to open eight new hotels, and we signed 16 new deals over the past year, which has been a record for us, and we are extremely proud of it. We are also expanding our presence in secondary locations. The government is doing nice things in terms of promoting these locations as well. Cities like Braga, Évora, and Beja.”
Pestana Hotel Group, the largest multinational hotel group of Portuguese origin, currently operates 12,000 hotel keys in 16 countries. Tomás Gonçalves, Director of Development, highlighted a recent milestone: “For the first time ever since we started in 1972, we reached zero net debt and because of that, we have the capacity to grow and to find new projects, mainly in European cities and also in the US. Portugal is a good country to invest in, still, when compared with other countries.”
This achievement reflects Portugal’s growing reputation as a stable and scalable base for international hotel operators and investors. Pestana’s global expansion, rooted in Portuguese operations, showcases how the country serves as a launchpad for growth – leveraging competitive costs, skilled talent, and high-performing assets.
Growing international tourism spend
Elisabete Félix, Director of Business Development at Turismo de Portugal, said: “Last year I said 2023 was our best year ever. But today, I can proudly say that 2024 was even better.”
In 2024, tourism strengthened its position as one of Portugal’s most significant export activities, representing 9.7 per cent of national GDP and approximately 20 per cent of total exports.
The tourism sector generated €27.7 billion in receipts - an 8.8 per cent increase over the previous year.
“And if you look at the past seven years, you will see an impressive 77 per cent growth,” Félix added. “We welcomed 31.6 million guests and recorded around 80 million overnight stays in 2024, more than two-thirds of which were international tourists.”
National hospitality performance reflected strong demand, with average room occupancy at 66 per cent and RevPAR at €77, led by top-performing regions such as Lisbon, the Algarve, and Madeira.
Félix also noted that while the UK, Germany, France, and Spain remain top inbound markets, there has been remarkable growth in visitors from the United States, Canada, Brazil, and Australia – highlighting Portugal’s global reach and brand appeal.
Robust connectivity and Business Infrastructure
Rui Boavista Marques, Director of Portugal Trade & Invest, highlighted Portugal’s strong economic fundamentals, including above-average GDP and export growth compared to many European countries, making it an attractive destination for foreign direct investment.
He cited an OECD report indicating that Portugal has a more open regulatory framework and fewer trade and investment barriers than the OECD average.
Portugal is also a leader in green investment, with 61 per cent of its electricity generated from renewable sources in 2022 - compared to the EU average of 38 per cent, as Marques further noted.
In terms of connectivity, Portugal acts as a key gateway to Europe and a global interconnection hub, with around 20 submarine cable hubs located in the Lisbon area, linking Portugal to the rest of the world.
This infrastructure further enhances Portugal’s positioning as a business and tech hub. Marques noted that IT and software sectors in particular have attracted international firms, reinforcing Portugal’s growing status as an innovative-driven economy.
As global investors continue to seek stable, high-performing markets, Portugal stands out for its consistent tourism growth, mature hospitality infrastructure, and investor-friendly environment. From strong yield performance and international brand expansion to green energy leadership and robust digital connectivity, the country offers a well-rounded and future-focused investment proposition. With government support, growing global demand, and untapped opportunities beyond the main cities, Portugal is not just a gateway to Europe – it is a strategic platform for long-term value creation in the hospitality sector.
All quotes taken from the panel session ‘Portugal: Exploring the Destination’s Hospitality Investment Potential’ at IHIF EMEA 2025.