Industry Events

Portugal in the spotlight at R&R

As the host country for this year’s edition of R&R, Portugal was often in the limelight during the conference which took place in Lisbon over 9-11 October.

“Portugal is one of the most competitive tourism destinations in the world” and “is a shining example of recovery after the pandemic,” remarked Nuno Fazenda De Almeida, secretary of tourism, commerce and services, who kicked off the proceedings on Tuesday morning. He noted that tourism is very important for Portugal, as it accounts for 20 per cent of exports and 9.5 per cent of jobs.

Fazenda De Almeida furthermore added that the first seven months of 2023 were the best ever in Portugal for overnights, guests and tourism revenue. In fact, tourism revenue so far in 2023 is up by 35% on the 2019 figure which was the previous record year.

 

Developing Destinations

Speaking in a panel, entitled, “Developing Destinations: From Vision to Experience”, Francisco Moser Hospitality, CEO Arrow Global Portugal, stressed the importance of location, noting that the group’s investments are mainly concentrated in the Algarve and in Vilamoura, in particular. He explained how Arrow is upgrading the resort to make it a true “five-star destination”, which includes an equestrian centre, a marina, that is being expanded, as well as retailing. The group also recently acquired the Dom Pedro hotels and golf courses. Moser is open to franchising hotels with major brands so as to benefit from the loyalty programs and to reduce dependence on tour operators. This should result in prolonging the season and achieving higher occupancy and ADR.

Meanwhile, Jordi Vilanova, Vice President, at Mercan Properties, which owns hotels throughout Portugal, emphasised the importance of “cross-feeding” (connectivity) between the various locations; thus, the destination per se is less crucial. The increasing importance of overseas markets, like Asia and North America, where the average length of stay in Portugal is 6-8 days, as opposed to the European source markets that developed with LCC’s, is “a game changer”, according to him. For example, Portugal can offer incoming Americans historical attractions, in addition to golfing and beaching.

 

Diverse opportunities in Portugal

Portugal offers the opportunity to develop a broad variety of hospitality concepts, ranging from hostels to upscale hotels; this has attracted the interest of both domestic and foreign investors. Speaking on a panel, entitled, “Developing Assets to Serve Alternative Travel Requirements”, Bernardo D'Eça Leal of Lisbon-based Independente Hotels & Hostels said that the group’s ambition has been “to bring locals and travellers together”, as well as to mix the different age categories.

While older customers spend more, the presence of younger cohorts is what makes a bar or restaurant ‘cool’, according to him.  Thus, Independente Príncipe Real offers 11 hostel-style dormitories, along with 22 suites. More recently, in May 2023, the group opened a property in the luxury destination of Comporta, which, while graded one-star, offers four-star comfort and charges 4-star prices. D'Eça Leal explains that the hotel chose to be graded one-star in order to avoid having to comply with the requirements of being graded 4-star, such as providing 16-hour-a-day room service.  The group has also opened another property in Comporta – a four-star hotel, which targets families with daily rates of €350-€400, thus undercutting the luxury hotels which charge €900, according to D'Eça Leal.

 

Alternative lodging attractive

Alexis Delprat, CEO of Luxembourg-based Tabah Capital Holdings SCS, who spoke on the same panel, said that he was first attracted to the Portuguese property investment market in 2013 by the relatively low real estate prices. His fund subsequently purchased one hotel and developed four others.

With the onset of Covid, Tabah Capital’s strategy changed, as the group’s focus shifted towards other forms of lodging, such as co-living and PBSA (purpose-built student accommodation), which, according to Delprat, was only in its ‘infancy’ in Portugal in 2018-2019. Finally, at the end of the Covid period, Tabah Capital developed a large 500-unit property in Porto which is split between student accommodation and co-living. He noted that this type of lodging “compared to the hotel industry per se, even the midscale, is more resilient with a steady wave of Gen Z and students coming every year”.

 

Portuguese experiences

Speaking on a panel entitled, “Monetising the Intangible: The ROI on Experience”, Margarida Almeida, CEO & Founder of Amazing Evolution explained that offering experiences enables a hotel group to prolong the season and to achieve higher ADRs and profit margins. She cited the group’s Algarve Race Resort, which offers motor racing as an attraction.

Meanwhile, Gonçalo Rebelo De Almeida, CEO Vila Gale Hotels, noted that creating experiences is essential for ‘new’ destinations, as opposed to mature destinations like Vilamoura or Lisbon. He cited the example of the Vila Galé Nep Kid Hotel in Alentejo, where only guests with children are allowed to stay. He also mentioned some of the group’s hotels which offer wine experiences in Alentejo or in the Douro region, as well as the horse-themed Vila Galé Collection Alter Real - Equestrian Resort Spa, in Alentejo.

 

Targeting Gen X and Baby Boomers

While there is a lot of focus on serving Gen Z and Millennials in the hospitality business, it should not be forgot that Gen X and Baby Boomers generally have higher discretionary spending power. Speaking in a session entitled, “It's Not All About Gen Z: Capturing the Senior/Later Living Market”, Luis Pais, Director at Sostate SA, described the group’s luxury boutique lodging brand, Valverde Living, designed to appeal to moneyed older guests. The group’s properties “have less than 50 keys and the front office staff “are the PA’s (personal assistants) of the guests”, notes Pais, who said that the Lisbon flagship, located on the Avenida da Liberdade, the most upscale area of Lisbon, achieves an ADR of over €500 which assures the property’s profitability in spite of its small size. The group’s 21-key luxury boutique property, the Valverde Santar Hotel & Spa opened in central Portugal in August and there is another one in the pipeline in Sintra.

Macy Marvel, 24 October 2023

 

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