Tourism in Lisbon: Innovation, New Trends and the Impact on House Rental Industrial Engineering and Management
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Tourism in Lisbon: innovation, new trends and the impact on house rental Luis Sánchez Riveiro Thesis to obtain the Master of Science Degree in Industrial Engineering and Management Supervisor: Prof. João Oliveira Soares Examination Committee Chairperson: Prof. Paulo Vasconcelos Dias Correia Supervisor: Prof. João Oliveira Soares Member of the committee: Prof. Carlos Lucas de Freitas November 2018 ii Acknowledgements I cannot begin to express my thanks to my supervisor professor João Soares for the support in my research. I would like to extend my sincere thanks to Luis Gil for his valuable and constructive suggestions during the development of this research work as well as recognize the assistance that I received from Isabel Gonçalves. Last but not the least, I would like to thank my family and friends who have supported me during this journey for without any of them this research work would not have been possible. iii Abstract In spite of the innumerable challenges of the recent years, in particular those related to security, the global tourism sector has grown steadily and uninterruptedly after the global financial crisis of 2008. Currently, the latest forecasts ensure that this growing trend will continue in the coming years. Following this trend, no further studies are needed to assess this phenomenon that can be seen in the streets of the Portuguese capital. In 2016, the city of Lisbon ranked second in the map of the regions of Portugal, according to the NUTS II, with regard to the number of overnight stays (14,8 million), the first place belonging to the Algarve region with 19 million. The growth rate was 9.9% over the year 2015 (INE, 2018b). The first part of this work includes the discussion of some of the conceptual dilemmas of tourism as well as the multidisciplinary nature of this phenomenon constituted by an extensive chain of values in which the most diverse activities that complement it complement each other, such as gastronomy, geography, languages, finances, accounting or administration. This also explains its multiplier effect with direct, indirect and induced impacts. Then, an analysis will be made that identifies the various factors that affect the growth of this industry, from the ones that promote it to those that hamper it and also a prospect with the innovations and new trends of the sector. Finally, additional analysis classifies tourism impacts according to their connection or not with economics aspects. The remaining chapters include the presentation and analysis of a case study on the profitability of different types of real estate leasing (traditional, student accommodation and local lodging) in some apartments located in different neighbourhoods in Lisbon. This analysis allows to prove the reason for the proliferation of the short-term rental modality, especially in the historical centre of the city, with the recovery of very degraded dwellings, but also with the well-known phenomenon of gentrification. Keywords: Lisbon; tourism; accommodation; economic profitability; short-term rental. iv Resumo Apesar dos inúmeros desafíos dos últimos anos, em particular no que respeita à segurança, o setor do turismo internacional sofreu um crescimento sólido e ininterrupto após a crise financeira mundial de 2008, apontando as últimas previsões para a continuação deste crescimento ao longo dos próximos anos, o que é particularmente evidente na capital portuguesa. Em 2016, a cidade de Lisboa ocupou o segundo lugar no mapa das regiões portuguesas, no que respeita ao número de dormidas (14,8 milhões), pertencendo o primeiro lugar à região do Algarve com 19 milhões. A taxa de crescimento foi de 9,9% face ao ano de 2015 (INE, 2018b). A primeira parte deste trabalho inclui a discussão de alguns dos aspetos conceptuais do turismo, assim como da natureza multidisciplinar deste fenómeno, constituído por uma extensa cadeia de valores na qual as mais diversas atividades que o integram se complementam entre si, como por exemplo: gastronomia, geografia, idiomas, finanças, contabilidade ou administração. Este facto explica também o seu efeito multiplicador com impacto a nível direto, indireto e induzido. De seguida, é feita uma análise que identifica os diversos fatores que afetam o crescimento desta indústria, desde os que a promovem até aos que a travam, e ainda uma prospeção sobre as inovações e novas tendências do setor. Nos restantes capítulos é feita a apresentação e análise de um estudo de caso relativo à rentabilidade de diferentes modalidades de arrendamento imobiliário (tradicional, alojamento para estudantes e alojamento Local) em alguns apartamentos localizados em diferentes bairros lisboetas. Esta análise permite comprovar a razão da proliferação da modalidade de alojamento local, sobretudo no centro histórico da cidade, com a recuperação de habitações muito degradadas, mas também com o conhecido fenómeno de gentrificação. Palavras-chave: Lisboa; turismo; alojamento; rentabilidade económica; Alojamento Local. v List of contents Acknowledgements ......................................................................................................... iii Abstract ........................................................................................................................... iv Resumo ............................................................................................................................ v List of Figures ................................................................................................................. viii List of Tables ..................................................................................................................... x List of Abbreviations and Acronyms ................................................................................ xii 1. INTRODUCTION ....................................................................................................... 1 1.1 Contextualization ............................................................................................................ 1 1.2 Objectives....................................................................................................................... 2 1.3 Framework ..................................................................................................................... 3 2. LITERATURE REVIEW ................................................................................................ 4 2.1 Tourism and conceptual issues ........................................................................................ 4 2.2 Tourism in the world ....................................................................................................... 8 2.2.1 Tourism in Portugal and in the region of Lisbon .............................................................. 10 2.3 Factors leading to the growth of the industry ................................................................ 17 2.3.1 Tourist motivation ............................................................................................................ 17 2.3.2 Barriers to travel............................................................................................................... 19 2.3.3 Tourism innovation and e-tourism................................................................................... 19 2.3.4 New trends in the tourism sector .................................................................................... 21 2.3.5 Sustainability .................................................................................................................... 22 2.4 Tourism impacts on the city .......................................................................................... 23 2.4.1 Monetary .......................................................................................................................... 23 2.4.2 Non-monetary .................................................................................................................. 24 2.4.3 Portuguese legislation on accommodation ..................................................................... 26 2.5 The city of Lisbon .......................................................................................................... 27 3. DATA AND METHODOLOGY ................................................................................... 31 4. CASE STUDY DEVELOPMENT .................................................................................. 33 4.1 Objective ...................................................................................................................... 33 4.2 General description ....................................................................................................... 34 vi 4.2.1 Alfama apartment ............................................................................................................ 35 4.2.2 Bairro Alto apartment ...................................................................................................... 35 4.2.3 Castelo apartment ............................................................................................................ 35 4.3 Global assumptions ....................................................................................................... 36 4.4 Investment analysis – comparison of the different locations and rental alternatives ....... 37 4.4.1 Common features ............................................................................................................. 37 4.4.1.1 Cost of acquisition .......................................................................................................