Portugal praised for hotel investment appeal
The country continues to outperform in terms of expanding opportunities for hospitality investors and operators
State backing and Portugal’s impressive tourism volumes are contributing to a hospitality investment boom in the country, according to leading experts.
David Bóveda, hotel asset manager at Global Asset Solutions, says: “Portugal’s government has made a concerted effort to back tourism in recent years, with a new visa regime, tax incentives for investors and investment in infrastructure, including a new airport in Lisbon and a high-speed train line between Lisbon and Madrid.
“This focus has paid off and the country is one of the most attractive destinations to overseas visitors in Europe, bringing with them international investors eager to capitalise on this active market.”
The investment market is being boosted by a supply pipeline in the country, with over 11,000 rooms at different stages of construction or planning, according to Global Asset Solutions data. This growth is across the seven regions of the country, although largely concentrated in Lisbon, the North and the Algarve. The capital is leading development drives, with nearly 5,000 rooms under construction or in the planning phase. This after Lisbon saw a 14.8 percent supply growth in 2023 alone.
All of this is contributing to a more liquid market, further attracting international capital, Bóveda added. “Last year was record breaking for tourism in Portugal and the country is set for another strong year in 2024,” he said.
International names
Lisbon’s dynamic pipeline of rooms is led by big names, with some 73 percent of incoming stock branded by international groups. Accor and Meliá respectively account for 9.2 percent and 8.0 percent of the new keys. There is also an interesting lean towards the upscale, with the likes of luxury lifestyle hotels the Andaz Lisbon, Six Senses Lisbon (the second in the brand after Six Senses Douro Valley) and Kimpton Lisbon expected to launch between 2025 and 2026.
This latter hotel is just one of nine new properties that IHG Hotels & Resorts (IHG) is planning for the country, adding to its portfolio of 20 open hotels across seven brands. The company has recently revealed contracts to add almost 1000 rooms to its Portuguese pipeline, including Hotel Indigo Albufeira, Hotel Indigo Faro, as well as six Holiday Inn and Holiday Inn Express branded properties from its Essentials collection, spread across the country. IHG has said that Portugal is a key priority market for IHG and has seen tremendous growth in recent years.
Willemijn Geels, Vice President, Development, Europe, IHG Hotels & Resorts, commented: “It is wonderful to see Kimpton Lisbon, Hotel Indigo Faro and Hotel Indigo Albufeira added to our luxury and lifestyle presence in Portugal, alongside the continued strong momentum of our Essentials Collection throughout the market.
“It is great to be able to nurture new and existing relationships with owners in one of our key markets. We are confident on the growing number of opportunities across our portfolio in Portugal, as consumers and owners maintain a strong appetite and interest for IHG brands.”
Big ambitions
It is also notable that operators and investors are committing to a range of cities and destinations beyond the capital, including historic Évora and a slate of Algarve resort towns.
Southern Portugal, in fact, is in the grips of significant market consolidation as international investors expand their holdings.
UK-headquartered private credit and real estate specialist Arrow Global has been building a Portuguese strategy since the firm’s inception in 2005. In recent years, the firm has focused on the Algarve resort of Vilamoura, a popular holiday destination distinguished by a large marina, golf courses and a casino, plus sandy beaches. As well as owning the marina, equestrian centre and a significant land bank there, last year Arrow took aim at five golf courses in the resort and a portfolio of hotels, namely Dom Pedro Portobelo, Dom Pedro Marina and Dom Pedro Vilamoura.
For John Calvao, fund principal at Arrow Global, the firm’s approach reveals a long-term commitment to sustainable investment rather than a profit grab. “Our strategy is principally centred around the refurbishment, repurposing, and redevelopment of existing properties rather than new builds,” he says. “By revitalising assets, we contribute to sustainable urban development while preserving the character and history of the locations in which we operate.
Continuing investor enthusiasm is a big part of the market’s overall dynamism and there are new new investments in areas of the Algarve that are away from the traditional tourist areas, such as the €50 million São Brás de Alportel project. Highgate has also announced investment and rebranding of properties in Algarve and then Hard Rock Hotels will be debuting in Portugal, in the Algarve in 2026.
Todd Hricko, Senior Vice President and Head of Global Hotel Development for Hard Rock International, said: "We are thrilled to extend the unparalleled Hard Rock hotel offering to the beautiful country of Portugal in 2026. This new development will extend the enhanced entertainment experience our guests know and love to another part of the world, while incorporating the country's amazing culture."
It’s clear that Portugal is emerging as a leading contender in real estate investments and is showing a global appeal and allure for investors worldwide.