Buying a hotel in Portugal

The Portuguese real estate market for small hotels (up to 30 bedrooms) has experienced notable growth and transformation in recent years, driven by a surge in tourism and strategic investments.

‍Market Trends and Locations
‍Portugal's tourism sector reached unprecedented heights in 2024, welcoming approximately 30 million visitors and generating €27 billion in revenue. This influx has spurred demand for diverse accommodation options, including boutique and small hotels. While major cities like Lisbon, Porto, and regions such as the Algarve remain prime locations for hotel investments, there's a growing interest in secondary destinations. These emerging areas offer unique cultural experiences and are becoming attractive spots for small hotel developments.

‍Average Daily Rate (ADR) and Occupancy
‍In 2023, the Revenue per Available Room (RevPAR) in Portugal's hotel sector reached €64.8, marking a 31% increase compared to 2019. This upward trajectory continued into 2024, with a 7% rise by July. The Average Daily Rate (ADR) saw consistent growth across all nine regions in the first half of 2024. However, significant increases in hotel supply have somewhat tempered occupancy rates in various destinations.

‍Transactions and Investments
‍The hotel investment landscape in Portugal has been vibrant. In 2022, the total volume of hotel transactions surpassed previous records, reaching €1.2 billion—double the amount from 2019. This trend reflects strong investor confidence and a robust market recovery post-pandemic.

‍Tourism and Flight Statistics
‍The number of foreign tourists visiting Portugal increased by 7.5% from January to June 2024, marking the best first half ever and indicating another potential record year for tourism. Over 8.8 million foreign visitors stayed in Portuguese hotels during this period, with nearly 2 million arriving in June alone, a 6.9% increase from the previous year.

‍Additionally, Portuguese airports saw a 5.6% rise in passenger numbers in June year-on-year, reaching 6.7 million.In summary, the small hotel sector in Portugal is benefiting from a thriving tourism industry, marked by increasing ADR and strategic investments. While traditional hotspots continue to attract attention, emerging destinations offer promising opportunities for investors and operators focusing on boutique accommodations.