BTN News: Last year was a tale of two halves for Portugal’s hotel sector against a backdrop of economic uncertainty. Hotel revenues dropped slightly in the first nine months as overall economic challenges outweighed an uptick in arrivals by foreign tourists. This cyclical decline, while specific in its scope, exposes the intricacies that underlie the link between local economic conditions and global tourism patterns.
The National Statistics Institute said the number of foreign visitors was more than 6.2 million, a 3 percent increase through September from the same period of 2009. Nonetheless, the rise of incoming tourists was counterbalanced by a sizeable 6% fall in domestic travelers as the economic tightening forced Portuguese citizens to cut back on their travels. The drop in hotel revenues by 2 percent to 1.53 billion euros pointed out the tightrope that the tourism industry has to walk.
The Main Causes to Have Contributed to the Drop in Revenues
Portugal’s economy, in its worst recession in decades, is shrinking as it faces tough austerity terms under a 78-billion-euro ($102 billion) EU/IMF bailout that is due to end in mid-2014. Household budgets have been squeezed by the austerity measures, and as a result fewer Portuguese are travelling inside the country.
Hotels, meanwhile, are forced to lower the prices of their rooms to attract tourists in difficult economic times. This has been an effective strategy for attracting more international visitors – but the lower prices have also played a part in stripping Valley businesses of their 2013 revenues. The most glaring example of this took place during the summer tourism season, typically a peak time for hotel revenues, when those conflicting tides combined to create a languid financial state despite relatively healthy visitor figures.
The Economic Implications and The Future
Portugal Tourism is a Key Economic Sector Tourism is critical to Portugal, serving just under 10% of the national economy. The hotel sector span around 2 billion euros, a high not seen since the peak in 2008 and had the hospitality business cruising at full throttle for most of last year with record-breaking tourism. For Portugal, after a burden summing to more than half its GDP, this spike was essential. But the decline this year at least underscores that many colleges are indeed sensitive to what happens in the domestic economy and how they price their services.
As the number of foreign tourists has grown, the decline in domestic tourist numbers underscores the need for a balanced effort to support tourism revenues. As Portugal recovers economic ground, the hotel industry must continue to revise strategies designed to increase resilience and make the most of national and international markets.
Looking Forward
Therefore, Portugal’s tourism stakeholders should focus on innovative approaches to help counter the negative impacts of economic recessions. They will need to focus on value-add services, including expanding tourism offerings and pricing policy without making concessions against revenue. Ben Sharon, There is a test that the sector and its ecosystem will have to withstand, as it seeks to return to its place as a strong central pillar of the national economy in the years ahead.
