Growth

Hilton signs as Portugal attracts investors

Hilton announced plans to double its portfolio in Portugal with agreements to open three new hotels.

The news came as the country remained a target for investors, with its room stock moving up the chain scales, according to Horwath HTL.

At Hilton, Patrick Fitzgibbon, the company’s SVP, development, EMEA, said: “With more than 24 million visitors last year, Portugal is perfectly positioned to capture pent-up consumer demand as international travel returns. The new hotels represent a significant investment and we are working closely with exceptional partners to bring new properties to some of Portugal’s fastest-growing tourism destinations, including Hilton’s first hotels in the Azores and Cascais.”

Following a franchise agreement with Sabersal – Promocгo Turнstica e Imobiliбria, Hilton Porto Gaia will become the second Hilton Hotels & Resorts property in Portugal, joining Hilton Vilamoura As Cascatas Golf Resort and Spa.

The 58-room Legacy Hotel Cascais, Curio Collection by Hilton will sit in the historic heart of Cascais. It was due to open in summer 2023, under a franchise agreement between Hilton and Honest Talents, a subsidiary of Reformosa. It will become the third Curio Collection hotel in Portugal following the opening of the Boeira Garden Hotel Porto Gaia in 2019 and The Emerald House Lisbon, due to open in 2021. 

Hilton will make its debut in the Azores islands with the 101-room DoubleTree by Hilton Lagoa Azores, expected to open in early 2022.

According to WTTC, travel & tourism accounted for 16.5% of Portuguese GDP in 2019, increasing 4.2% from 2018. International tourism arrivals reached 24.6 million, 7.6% growth compared to 2018 and accounted for 8.7% of Portuguese GDP (if national tourism was included, this would rise to 15% of GDP). Tourism was responsible for 52.3% of service exports and 19.7% of total exports.

The UNWTO World Tourism Barometer registered a decline of 71.9% year-to-date of international tourist arrivals to Portugal in September, compared to the previous year. International tourism statistics also showed negative results, with total receipts and expenditure being down 54.4% and 43.8% respectively over the same period in 2019. INE Portugal confirmed that in the second quarter  2020 national tourism decreased by 59.1% and international tourism fell by almost 99%.

The country’s government implemented a series of measures to aimed at helping the tourist sector to revive, including €900m in support for tourism companies; €90m of financial support to tourism SMEs; an online consultancy programme offering technical advice to implement corrective measures; suspension of repayment of grants given to projects supported by “Turismo de Portugal”; a “Clean and Safe” label to promote the country as a safe destination; and €50m for a campaign to stimulate internal demand.

According to the latest hotel construction pipeline report from Lodging Econometrics, Portugal was fourth in the ranking with 123 projects and 14,329 rooms. Lisbon ranked fourth amongst the cities in Europe with 38 projects and 4,173 rooms.

Four-star hotels represented the largest share with almost 57% of the projects under development, followed by five-star hotels, with 28.3% revealing a trend towards investing in the upper upscale and luxury segments.

Luis Araujo, president, Turismo de Portugal, told Horwath HTL that cities would continue to be the main drive of Foreign Direct Investment, but that other regions were becoming increasingly appealing to investors because of the type of demand attracted to these destinations. The result, he said, was that “investors are starting to diversify their portfolio and looking to regions they wouldn’t look at five years ago”.

The study said: “There seems little doubt that there will be some opportunities for investors, this is part of the nature of economic crises, but any significant transaction activity is not expected until Q2 2021 at the earliest. Now is the time to make plans and be in a good position to exploit any opportunities that may arise.”

 

Insight: The Horwath HTL study reported that only 1.1% of the country’s hotel projects had been put on hold or cancelled, “a positive sign that confidence remains in the potential of the Portuguese market”.

And sentiment that we have seen across the Mediterranean, with Spain and Greece in particular confident that they can ride out the pandemic, supported by governments who have shown faith in the sector and its role in their economies.

Investors are lurking, looking to find bargains which may not be forthcoming. There are, despite this, still likely to be family businesses for whom the pandemic will be one straw too far. Pickings for those looking to get a foot in the door, both owners and brands alike.