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Portuguese hotel industry not dependent on domestic market

By CHRIS GRAEME [email protected]

The crisis in the Middle East and plummeting hotel prices nationally have resulted in a massive increase in the number of foreign tourists coming to the Algarve, Portugal and Madeira.

Foreign tourists represent two-thirds of all hotel bookings in Portugal, Madeira and the Azores, according to the National Statistics Institute (Instituto Nacional de Estatística).

The INE has confirmed that in May the number of Portuguese staying in hotels in Portugal had fallen by 10.6% compared with the same period the year before – a million less than in May 2010.

However, foreigners staying in Portugal on holiday made up the shortfall in demand with a staggering growth of 17.6% compared to 2010.

In total, the hotel sector in Portugal registered 3.6 million bookings for beds, representing an increase of 8.2% on the same period in 2010.

“The conclusion is obvious: tourism as an economic activity is not a sector which is very dependent on the internal market,” stressed the President of Portugal’s Institute for Tourism Development (IPDT), António Jorge Costa, who added that tourism represented 14% of national exports.

Portugal is also cashing in on a wave that is sweeping world tourism, in that there has been an increase in the number of international tourists.

According to the latest statistics from the World Tourism Organisation, which were published at the end of June, tourism had fallen in the Middle East and North Africa because of the ‘Arab Spring’ and Portugal has picked up some of the slack from these revolts.

For example, Madeira has been doing particularly well because of the current instability in rival Middle Eastern markets.

“In the Mediterranean when one country enters in crisis, the others stand to gain,” explains António Trindade, CEO of Porto Bay Hotels & Resorts, which in 2010 registered a record occupation rate of around 81.1%, a trend that is expected to continue in 2011 when projections are up to 90%.

High take-up in May and the months that followed have revealed that Madeira has succeeded in consolidating its position as a summer destination, but has not yet succeeded IN recovering its once good winter occupation rates.  

And despite the current economic crisis sweeping the western world, the arrival of international tourists in Portugal and many other tourist destinations around the world continues to rise at an average of 4.5%.

The main source markets for tourists to Portugal continued to be the United Kingdom, Germany, Spain and France.

For three consecutive months, demand from the United Kingdom has been strong (34.6% up on 2010).

The second market which most grew in 2011 has been Brazil (up 22.8%), reflecting an increase in Brazilian purchasing power due to its strong economy.

According to the Algarve Hotel & Tourism Development Association (AHETA), the “United Kingdom has saved the Algarve’s tourist season this year as domestic figures slacked because of the crisis”.

AHETA’s president, Elidérico Viegas, confirmed that the “current climate of austerity has been offset by an increase in tourists from the United Kingdom because of the instability in Egypt and Tunisia”.

In terms of numbers compared with 2010, the Algarve has already seen an increase in British tourists by 13%, which is compensating for a fall in national demand.

And the expectations for the rest of July and August are expected to soar by between 5% and 6% compared with 2010.

The problem, AHETA says, is that this increase in tourism numbers is not being translated into an increase in actual receipts.

“Because we suffered a decline in demand in 2010, which was a poor year, prices have been much lower which, in turn, has been one of the reasons why demand has now shot up again,” said Elidérico Viegas.

“In June, for example, the hotel sector in the Algarve registered an increase of 2.5% in occupation rates but a 3.5% decrease in receipts,” he said.

António Jorge Costa believes that judging by the recent figures, there are considerable grounds to be optimistic about this summer’s tourism performance.

“We’re predicting a total global receipt from foreign tourists in the region of €8 billion by the end of 2011. If our predictions are correct, this means an increase in the sector by around €400 million.”