Rita Marques, Secretary of State for Tourism Photo: MÁRIO CRUZ/LUSA

Interview: Portugal’s tourism industry – Picking up the pieces

Portugal’s tourism sector has been decimated by Covid-19. Secretary of State for Tourism, Rita Marques, says it’s a temporary setback. Her depart-ment’s plan to “Reactivate Tourism | Build the Future” aims to put Portugal back on top as Europe’s leading tourism destination by 2027.

When, in October 2019, Rita Marques was offered the outwardly glamorous post of what is perhaps one of the Portuguese government’s most sought-after top jobs, Secretary of State for Tourism, it must have been a dream come true.

Hard work, yes. Long hours, inevitable. But travel up and down the country and overseas, to the Portuguese island destinations, travel awards, boutique hotels and fine dining would all come with the job and be one of the perks of heading one of the most important positions in the government, laden with responsibility since tour-ism is a key pillar of Portugal’s economy, worth a staggering €18.4 billion in 2019, a record.

In terms of demand, the figures were impressive: over 70 million hotel night book-ings (+4.6% on 2018) and a breathtaking 27 million guests (almost three times the entire population of Portugal) and +7.9% on the previous year.

There was also galloping growth (+8.1%) in national guests compared to overseas holidaymakers (+7.8%), although foreigners were responsible for 71.2% of take-up compared to 28.8% nationals.

That year, revenues from overseas visitors stood at €18.4 billion — in fact, revenues for that and the two preceding years of 2017 and 2018 almost amounted to the €76 billion bailout Portugal had received from the troika of international lenders back in 2011.

It was all going swimmingly. By January 2020, what could possibly go wrong? Granted, these numbers were tall orders to live up to, certainly following in the foot-steps of her predecessor Ana Mendes Godinho who took much of the well-deserved glory.

But it was a dream job to crown a fast-track career for the engineer who, months before, had headed Portugal Ventures, the hybrid government-private investment venture capital outfit with an emphasis on tourism-leaning startups.

But sometimes a chalice is poisoned, and suddenly a dream job can turn into a nightmare, as Covid-19 all but wiped out one of the biggest drivers of Portugal’s economy.

And you suddenly go from being everybody’s friend to everybody’s scapegoat. This was revealed in front of a roomful of business leaders at a recent luncheon organ-ised by the prestigious International Club of Portugal (ICPT), when the ex-president of the Portuguese travel agents association APAVT, Vítor Filipe, founder of Travel Quality (TQ), told the minister just how annoyed he and his members were at the government’s support – or lack it – throughout the pandemic, which he said would force many independent agencies to close.

And the problem for the Secretary of State for Tourism is that the sector is not just about hotels and flights. It is about an entire chain of segments and sub-segments within the sector, containing countless companies involved in goods and services linked to tourism, both directly and indirectly, which employ tens of thousands of people, many of them not highly qualified and who would find it hard to find jobs in other areas.

It’s the car hire companies, the swimming pool cleaners, the bar and restaurant owners, the wedding organisers, the summer open-air concert promoters, the laun-dries that deal with hotel sheets and towels, and even down to the man who sells cream-filled doughnuts on the beach.

Being blamed, taking the flak and facing backlashes cannot be easy, even for the thickest of skins. One can only imagine it would be an easier job being Josef Stalin’s private secretary. A thankless task then.

On the same page
But then, Rita Marques has an amazing calm and collected detachment and genu-inely doesn’t seem at all phased by the situation which, after all, is beyond her con-trol.

“We have always been on the same page with our partners in tourism,” she states matter-of-factly.

“As the Secretary of State for Tourism, no matter what the circumstances are, our department cares for the tourism sector and we want what is best for its businesses. We share the same ambitions that most associations within the sector have,” she says.

Rita Marques admits the Covid-19 pandemic is a “never-ending story”, but, despite the difficult situation, she does have a good team, massive support from the Minis-ter of Economy, Pedro Siza Vieira, from other secretaries of state within the gov-ernment, and the Minister of Foreign Affairs, Augusto Santos Silva, and Minister of Internal Affairs, Eduardo Cabrita, sharing “a spirit of resilience and working togeth-er” to deal with issues as they have arisen.

The Secretary of State says she has felt the support and cooperation of the various sector associations, including public entities such as the tourism bureau Turismo de Portugal, Turismo do Porto e Norte de Portugal and Turismo do Algarve, the Portu-guese Hotel Association (AHP), the Portuguese Travel and Tourism Agencies Associa-tion (APAVT), the Portuguese Association of Restaurants, Hotels and Tourism (APH-ORT) and the Portuguese Association of Bars, Discos and Entertainment Establish-ments (APBDA) to name just a few of the many associations that make up an indus-try whose members have been seriously affected by the sanitary measures and re-strictions set up to control the pandemic.

“We try and tackle the situations in a very precise way, calling companies and asso-ciations to get feedback in order to improve measures. Of course, we are well aware that the financial support and incentives that the government has provided were relevant, but we have to recognise that the sector has survived, companies have had to go to the bank to get stays on loans and even the staff working in the indus-try have made sacrifices to safeguard their jobs,” says Rita Marques.

“After a year now of the pandemic, I feel the sector is united, cohesive and eager to start working on fully opening up our tourism sector,” she said, after last year’s dis-aster in which companies linked to the sector lost an estimated €1 billion in reve-nues.

A €3 billion lifebuoy
To help mitigate these losses, the government recently announced public funding of around €3 billion as the main component of its plan to “Reactivate Tourism | Build the Future – Supporting Companies”, and this includes facilities to capitalise sector companies, reschedule bank loans and repayments, extending the grace periods on the repayments on existing bank lending in a support package that will be transver-sal across the sector.

Of course, the issue this year after a second lockdown between January 13 and March 31, a back-track on the phased reopening of the wider food and beverage outlet segments in late June as Covid numbers rose in Lisbon and Albufeira, and the UK’s decision to pull Portugal off its green list on June 6 after adding it on May 17, resulting in thousands of tourists having to either cancel their holidays in the Al-garve or rush home to beat a quarantine deadline, makes one wonder just how “ful-ly open” Portugal’s tourism sector can be.

And the situation got more difficult when Germany too decided on June 25 to join the UK in pulling Portugal off its green list. But Air France, on the other hand, upped its flights to Portugal by 25%, and from June 16, US visitors were able to travel to Portugal.

And while the president of the AHP, Raul Martins, called the UK government’s deci-sion an “unpleasant surprise”, hoteliers in the Algarve then faced cancellations from Portuguese tourists from Lisbon after restrictions on movement were put in place by the government, with João Soares of the same association in the Algarve saying: “This news was a disaster.”

Some in the sector feel Portugal may be facing a second lost summer season. But Rita Marques disagrees.

“Nothing is lost. The assets that have made Portugal internationally recognised as the best destination in the world and the best destination in Europe [World Travel Awards], are still here and we need to reactivate what we have,” she says, noting that the estimates for 2021 tourism figures are “higher than they had been in 2020”, pointing to improvements for Q3 and Q4.

At the end of May, Portugal’s Minister for Economy, Pedro Siza Vieira, unveiled an ambitious plan to support the development, growth and innovation of the wider sec-tor to 2027.

The essential tenants of the plan to Reactivate Tourism | Build the Future were also emphasised by Rita Marques at a Lisbon business lunch organised by the Interna-tional Club of Portugal in June, attended by overseas diplomats who use such events to get insights into government thinking and policy.

The plan foresees an investment of €6.1 billion for the Portuguese tourism sector, with the aim of exceeding revenues of €27 billion by 2027. Given that Portugal en-joyed record years in terms of tourist numbers and revenues in 2018 (12.5 million overseas tourists and 21 million national and international tourists combined), and in 2019 (27.1 million combined), despite the Covid-19 blip and the caprices of changes in travel destination fads and fashions, the government thinks this is doa-ble.

A four-pillar strategy
The government’s current strategy for tourism, which has been temporarily modified and adapted to meet the challenges of the pandemic, was actually laid down in 2017 as part of a 10-year plan to 2027.

The updated strategy rests on four pillars: supporting companies, promoting health and hygiene safety measures, generating business, and building the future.

The government made good headway in 2020 with the second tenet of the plan to Reactivate Tourism | Build the Future – Providing Hygiene Safety. Through sanitary measures, it launched the Clean & Safe campaign specifically developed for the tourism industry.
Nevertheless, despite the best efforts in the world, Covid-19 numbers soared out of control by January 2021, forcing a second lockdown.

One way of meeting the third tenet of the plan to Reactivate Tourism | Build the Fu-ture – Generating Business is diversifying into new markets, in addition to the tried-and-tested UK, Ireland, Spain, Germany and the Scandinavian countries.

“We have been extremely active in long-haul markets in 2019. The American market has been growing by 20%, but we have also seen growth in the Canadian and Chi-nese markets,” explains Rita Marques.

“This diversification helped Portugal for several reasons. First, it helped counter a problem which had plagued Portugal’s perception overseas as just being a ‘sun, sea and beach’ destination (with some golfing holidays thrown in at the upper end of the market), which meant that, when the summer season was over, the sector suf-fered.”

The strategy worked. By 2019, Portugal had the lowest seasonality index rate out of all the southern European countries. “July, August and September are important months, but we work the low season not only because of golf, but also taking ad-vantage of long-haul travel, from October to February, because countries like Brazil have holidays in these months,” she says.

Valuing natural assets
A second strand to Generating Business is the strategy to diversify tourism within Portugal and in different regions and cities in the country, not just Lisbon, Porto, the Algarve and the archipelagos of Madeira and the Azores.

The government invested heavily in tourism attractions through a specific pro-gramme run by Turismo de Portugal in order to meet demand. The programme ‘Val-orizar’ – meaning “to value”, in this case the interior –, invested, for example, in ex-tensive wooden walkways through natural beauty spots.
One example is the 8km Paiva Walkways which wind their way along the west bank of the River Paiva in Arouca, Aveiro, and cut through one of the most lovely and dramatic landscapes in Portugal.

“We invested a lot on tourist attractions in the interior of Portugal to respond to the growing demand from both national and international visitors. Since the pandemic, these have proved popular attractions. Covid created new trends as people wanted to avoid heavily populated areas, and instead sought the wide-open spaces of na-ture and the countryside. Portugal was able to capitalise on this, as we had already invested in these attractions prior to the pandemic,” explains Rita Marques.

It has also meant investing in Portugal’s historic cities like Viseu, Braga, Bragança, Évora and Beja by making them more dynamic, not just in harnessing their history, but also through regional gastronomy and cultural events. This proved a spectacular success when the birthplace of the Portuguese nation state, the city of Guimarães, was European Capital of Culture in 2012.

The programme Valorizar has around 800 projects that have been approved by Tur-ismo de Portugal, with non-repayable cash grants originating from direct revenues from that entity, while more than €100 million has been invested since 2018 in such projects.

Helping companies to adapt
The government is to launch the programme Adaptar 2.0, which is an updated ver-sion of the initiative Adaptar 1.0, to support sector companies during the pandemic. Aimed at micro-companies and SMEs, the programme has around €50 million to help businesses adapt and modernise their commercial establishments in terms of staff, management, supplier organisation and their interior spaces to the new sanitary and social-distancing rules.

A way of combatting seasonality is by making Portugal a business destination for congresses, summits, conferences, company team-building incentive trips and, of course, in the realm of culture and sport by hosting international events. In fact, the government has set aside a specific fund to invest in events (€50 million for com-panies that put on events and €42 million in outright grants for cultural events) to attract the public to different cities.

“We do believe that the priorities are there; they have been refined, updated to take into account the current circumstances, but we now need to boost the programme so that the targets that we have defined until 2027 can be achieved,” explains the minister.

Rita Marques reiterates: “Our goal is to reach the level we had set in 2017, by 2027. In 2017, we had projected a tourism revenue growth rate that would achieve €27 billion by 2027 and that has not changed. The crisis may have set us back on our goal, but our plan is to get to this level and, if possible, even exceed it.”

The development bank
From the €6.1 billion investment total, the largest portion of €4 billion will be held by Portugal’s new development bank, Banco Português de Fomento, which will direct €3 billion in aid to support companies with a view to fostering both productivity and jobs, and €1 billion for capitalisation, thereby meeting the first of the essential ten-ets of the plan to Reactivate Tourism | Build the Future – Supporting Companies.

Apart from recapitalising sector companies, this amount will also include a public guarantee to refinance and reschedule loans and extend loan repayment grace pe-riods, as well as a credit line backed by government guarantees to meet cash-flow needs, all of which aim to kick-start Portugal’s tourism sector and get struggling companies back on their feet.

The aid package will be distributed across the wider economy linked to tourism and those segments which have been most affected.

The Secretary of State says that, regarding employment figures and statistics on company closures, the numbers are fairly positive. “There are clear signs that, be-cause of our joint efforts, most companies and the jobs that depend on them were saved.”

The fourth pillar, Building the Future, is a long-term strategic one, which, whilst de-pending a lot on what is being done in Europe regarding establishing mobility and travel through the European Digital Covid Certificate, also has a much greater ambi-tion to define a tourism strategy for 2030-2050 within a European context.

The Portuguese presidency of the European Council, which ended at the end of June, launched this challenge and it is hoped that it will be passed by the Council.

The British market
The British market is the most important one in terms of tourism revenues for Por-tugal, in a long love affair among British tourists with the Algarve across all econom-ic income brackets, and this has been a constant for Portugal’s main holiday region since the mid-1970s. The market represented 2.5 million hotel nights in 2019.

The minister declined to be drawn into speculation that the UK, after seeing plane-loads of tourists heading for the Algarve (around 30,000 from May 17), buckled under pressure from local tourism lobbies to “holiday at home”, with a UK-wide gov-ernment-backed tourism campaign launched around the same time to inspire peo-ple, particularly the young, to holiday in the UK rather than abroad.

“This is a question for the British government, but I was more surprised rather than disappointed that Portugal was removed from the green list. Other EU member states were equally surprised. I was in Greece when I received the news and I was with the Greek, Spanish and Maltese tourism ministers and they were surprised since they have very low Covid numbers and were meeting all of the UK’s own standards and regulations,” says Rita Marques.

“This was not good, not only for the governments, but also the tour operators and companies. We understand that we have to look out for our citizens, but we work in a sector that relies on free mobility of people and goods, and that means the rules for opening up the markets need to be known. We were surprised because, at the time, we had met the standards that the British government defined,” she adds.

Working other markets
Overall, in terms of positioning Portugal internationally, Rita Marques says that, while the UK market is very important, the country, the government and its partners have been working on many other overseas markets for many years.

“We’ve never stopped working with other markets that are very dear to us and have a very strong relationship with Portugal’s Algarve and Madeira. We had been mar-keting them significantly even before this pandemic arose. Ten years ago, the Brit-ish market was dominant in the Algarve and is still massive, but our dependence on British holidaymakers has been decreasing steadily year after year,” stressed Rita Marques.

However, the Secretary of State stressed that this did not mean the number of nights spent in accommodation was decreasing. “The stays per night are still in-creasing, but the numbers of other nationalities – the French, Italian and Dutch hol-idaymakers – are increasing at a faster rate.”

“Ten years ago, the pie chart was dominated by the UK market. Today, while the UK slice is smaller, the pie is now much bigger as we have been growing in terms of the number of nights stayed, particularly regarding other European nationalities,” she explains.

Much of Portugal’s success in attracting new overseas markets is partly down to marketing and being discovered over the past decade, and partly down to new routes being introduced by low-cost airlines such as easyJet, Ryanair and others.

“Apart from Germany, France and Italy, we have also been reaching out to our neighbour Spain from where tourists come by car. All the markets, including the UK, were growing until 2020, and whilst it is true that the British really do love the Al-garve holiday experience and it is a perfect fit with a lot of repeat custom, we do need to diversify,” says Rita Marques.

In June, easyJet opened up a new hub at Faro airport with three dedicated aircraft based there, and despite the decision by the British government. “That day, even after Portugal had been removed from the green list, eight flights arrived from the UK.

“The aim is to keep Portugal competitive and keep business coming in, and this also means that Portugal must market itself well in its target markets,” she says.

Still, she emphasises that even in the pandemic year, Portugal was recognised as the best tourism brand in Europe, so “obviously we are doing something right, we’re looking forward and we will continue to spread the word and send out the correct message, showcasing the best we have to offer in terms of the competition, which will be stiff in this phase of reopening up the sector”.

Not surviving, but thriving
“Everybody is talking about the sector surviving after the pandemic, but I want to see us thriving and setting an example of how a country can develop all of its tour-ism assets, both town and country, beaches and mountains, lakes and rivers and in all areas: business, golf, events and congresses, sand and sea, highlands and na-tional parks. After all, we have so many assets to show for a small nation and that’s why we are the only country in Europe that has launched a specific plan and budget for tourism to harness those assets and provide reasons to visit Portugal and its contrasting regions all year round,” concludes the Secretary of State for Tourism, Ri-ta Marques.

Article first published in Essential Business Magazine – www.essential-business.pt