Vítor Neto, President, NERA

Algarve companies stare at uncertain future

Portugal’s latest lockdown putting future of many companies at risk

Vítor Neto, president of Algarve business association NERA, spoke to the Resident this week about the struggles that entrepreneurs in the region are facing following the government’s “inevitable decision” to declare another national lockdown.

“Several companies have closed already, others are at risk and unemployment is rising,” Vítor Neto told us.

Many have stressed how the consequences of the pandemic have been even greater in the Algarve, a region which relies heavily on its usually booming tourism sector.

The huge dip in tourism activity last year coupled with the latest lockdown has created a devastating ‘cocktail’ for the region which specialists seem to agree may prove fatal to several businesses.

“The impact that the pandemic is having on the Algarve’s economy, especially the tourism sector, is very negative and follows the tendency of 2020. This new lockdown, which is inevitable due to the worsening of the pandemic, has only made the situation worse,” said Neto.

“The evolution of the tourism sector leaves little doubts,” he told us, stressing how everything from the number of overnight stays at hotels, revenue and flights at Faro Airport dropped between 75% and 80% in 2020 compared to the previous year.

The British market accounted for a large amount of the losses, as the number of British passengers at Faro Airport dropped around 1.7 million as did the number of British guests spending the night at local hotels (-5 million).

“Provisional calculations suggest that there may have been a €1 billion drop in revenue generated by British tourists,” said Neto.

Meanwhile, hotels and restaurants which account for 20% of the region’s businesses have been hit the hardest by the effects of the pandemic, as well as other companies whose services are often used by holidaymakers, from rent-a-car to transfer companies.

Said the association boss, businesses are struggling to pay wages, loans and taxes.

While Neto says that the government’s measures to support the economy are “insufficient and often hard to access”, he adds that they are still a “positive” move and that NERA is strongly encouraging entrepreneurs to make the most of them.

Nonetheless, “NERA will continue to demand new financial and fiscal measures to help guarantee the survival of companies and jobs”.

While the outlook for the near future may be bleak, the start of Portugal’s vaccination programme has provided a ray of hope to businessowners.

“It is without a doubt a sign of hope. But a ‘return to normal’ is still far off,” the president of NERA told the Resident.

“The tourism sector is dependent not only on economic factors but also on the ease and confidence with which people can travel. The vaccine is important, but it won’t be enough to overcome the crisis,” he said.

Still, he believes it will accelerate the recovery of the tourism sector by helping tourists feel more confident that they are visiting a destination that is “safe”.

“There are many challenges ahead, the timing is uncertain, but the recovery of the tourism sector is a certainty,” the president said. “The Algarve has the conditions to recover and move towards new success.”

What is NERA?
NERA is a Loulé-based association bringing together businesses and associations from all sectors of society, including commerce, agriculture, tourism and real estate.

While the idea to set up an association of this kind emerged in 1983, it was only six years later that it came to fruition, finally giving regional businesses a voice. NERA slowly became an example for other regions, which also started to launch their own regional business association.

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