Singapore: Hotel Market Market Report - March 2019 MARKET REPORT Portugal Hotel Market Overview MAY 2021 Portugal: Hotel Market Overview Market Report - MAY 2021 Executive Summary Abstract The Portuguese economy has been dragged down by The coronavirus pandemic is first and foremost a health the coronavirus pandemic, driving Portugal’s largest GDP crisis with an inevitable social and economic impact. In decline in more than half a century. GDP fell by 7.6% the case of Portugal, one only needs to take a look at the in volume to 202.7 billion euros. However, this figure is general statistics to conclude that tourism has undoubtedly slightly lower than the Government’s estimates, which been one of the most affected sectors. projected a decline of around 8.5%. In fact, it is necessary to go back to 1993, when there were This demonstrates the robustness of the Portuguese 23.6 million overnight stays, to find lower tourism records economy and the favourable impact of the policies adopted in the country. and public subsidies granted by the governmental entities. It was predictable and inevitable that the positive trend in In 2020 the domestic market contributed 13.6 million tourism seen over the last decade would be disrupted in (-35.3%) and foreign markets 12.3 million (-74.9%) 2020. However, the most optimistic forecasts foresee a overnight stays. gradual recovery from Q3 of the current year. As a result of the reduction in activity, the hotel industry Key Facts only received 6.5 million guests and 14.5 million overnight Tourism demand: stays in 2020. In this context, overall revenues in hotels 2019: 15.4% of GDP decreased by 68.6%. 2020: -35 / -55% vs previous year Balance of payments December 2020: The main source markets remained much the same 46% reduction in exports as previous years with the United Kingdom, Germany 40% reduction in imports and Spain holding the top positions and representing respectively 16.3%,14.6% and 14.5% of market share. 2020: 56% decrease commercial flights 69.4% fewer passengers Source: INE Portugal www.horwathhtl.com 2 Portugal: Hotel Market Overview Market Report - MAY 2021 Guests & Overnight Stays Since 2015, Portugal has seen significantly more international guests over national guests. This has been altered by the pandemic, leading to a reversal of this trend in 2020. Overnight stays from incoming markets Although all major markets registered decreases above 65%, and despite mobility restrictions, quarantines and local lockdowns, the principal tourist incoming markets remained at the top of the ranking. Overnight stays in tourist accommodation establishments Guests in tourist accommodation by NUTS II region 80,000,000 9,000,000 70,000,000 8,000,000 60,000,000 7,000,000 50,000,000 6,000,000 49,051,832 40,000,000 5,000,000 30,000,000 4,000,000 20,000,000 12,332,512 3,000,000 10,000,000 21,107,132 13,635,588 2,000,000 0 2019 2020 1,000,000 National International 0 Norte Centro AM Lisboa Alentejo Algarve RA Açores RA Madeira Source: INE Portugal 2015 2016 2017 2018 2019 2020 Source: INE Portugal Overnight stays in tourist accommodation establishments by main issuing markets – 2020 4% Russia 106,868 6% 16% Denmark 135,406 United Kingdom Ireland 187,954 Germany 7% Sweden 198,235 Canada 220,430 Spain Poland 227,693 Switzerland 245,814 Fra nce Belgium 313,468 11% Netherlands USA 334,064 15% Italy 441,983 Brasil Brasil 709,439 Netherlands 812,938 Italy F ra nce 1,349,135 14% Spain 1,787,556 Germany 1,806,502 United Kingdom 2,013,925 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 Source: INE Portugal www.horwathhtl.com 3 Portugal: Hotel Market Overview Market Report - MAY 2021 Hotel Sector Figures Hotel Overnight Stays, 2015 - 2020 In 2020, globally and as expected, the hospitality sector was 45,000,000 heavily punished by the suspension of its activity leading to 40,000,000 an overwhelming reduction in guests and overnight stays. 35,000,000 30,000,000 The 14.5 million overnight stays in 2020 represent a very 25,000,000 sharp loss felt in all hotel categories. 20,000,000 15,000,000 10,000,000 In percentage terms and in comparison with 2019, in 2020 5,000,000 most of the hotel categories reveal similar performances. 0 Significantly, the lower categories (three, two and one star 2015 2016 2017 2018 2019 2020 5* 4* 3* 2/1* hotels) experienced overnight stay increases compared to Source: INE Portugal the previous year. Hotel Guests and Overnight Stays, 2019-2020 Hotel Overnight Stays 2019 ***** **** *** **/* 19% 49% 22% 10% 45 000.0 40 000.0 2019, 41 824.8 35 000.0 Hotel Overnight Stays 2020 30 000.0 25 000.0 20 000.0 2020, 14 530.1 ***** **** *** **/* 15 000.0 2019, 17 655.7 Overnight Stays 17% 48% 24% 11% 10 000.0 5 000.0 2020, 6 510.5 0.0 2019 Guests Source: INE Portugal 2020 Guests Overnight Stays Source: INE Portugal www.horwathhtl.com 4 Portugal: Hotel Market Overview Market Report - MAY 2021 Total Hotel Revenue, 2015 - 2020 3,500,000 2,976,234 3,000,000 2,792,152 2,606,951 2,500,000 2,190,726 2,000,000 1,848,945 € '000 1,500,000 935,948 1,000,000 500,000 0 2015 2016 2017 2018 2019 2020 Source: INE Portugal Hospitality Indicators (KPIs) Portugal KPIs Even though total revenues for hotels ended up almost 2019 2020 % Variance collapsing in 2020, we must not ignore the fact that Occupancy 47.3% 24% -49% this indicator had been growing since 2015, reflecting ADR €89.2 €78 -13% the positive evolution of the sector and the excellent performance of the hotel industry. RevPar €49.4 €22.6 -54% Source: INE Portugal Once tourism and travel revives, and taking into account the pre-pandemic “good shape” of the sector, we are confident these figures will gradually improve. Hospitality Indicators Snapshot (KPIs), 2017 - 2020 100.0 € 60% 90.0 € 50% 80.0 € 70.0 € 40% 60.0 € 50.0 € 30% 40.0 € 20% 30.0 € 20.0 € 10% 10.0 € 0.0 € 0% 2017 2018 2019 2020 ADR € RevPar € Occ % Source: INE Portugal www.horwathhtl.com 5 Portugal: Hotel Market Overview Market Report - MAY 2021 Hospitality Indicators (KPIs) Occupation Rates (by NUTS II Region) Occ % Portugal 35.0 Region Occ % 2020 30.0 Portugal 24% RA Madeira 25.0 Norte 20.0 Norte 22% 15.0 Centro 19.6% 10.0 5.0 AM Lisboa 22.9% RA Açores 0.0 Centro Alentejo 25.5% Algarve 27.1% RA Açores 19.4% RA Madeira 30.8% Algarve AM Lisboa Alentejo ADR (by NUTS II Region) ADR € Portugal 100.0 Region ADR 2020 90.0 80.0 Portugal €78 RA Madeira 70.0 Norte 60.0 Norte €70.2 50.0 40.0 Centro €65.2 30.0 20.0 10.0 AM Lisboa €78.6 RA Açores 0.0 Centro Alentejo €89.6 Algarve €91.8 RA Açores €61.8 Algarve AM Lisboa RA Madeira €65.8 Alentejo RevPar (by NUTS II Region) RevPar € Region RevPAR 2020 Portugal 30.0 Portugal €22.6 25.0 RA Madeira Norte Norte €19 20.0 15.0 Centro €15.3 10.0 AM Lisboa €23.3 5.0 Alentejo €26.7 RA Açores 0.0 Centro Algarve €29.9 RA Açores €14.7 RA Madeira €22.6 Algarve AM Lisboa Source All: INE Portugal Alentejo www.horwathhtl.com 6 Portugal: Hotel Market Overview Market Report - MAY 2021 Conclusion • An increase in demand for destinations less driven by However, given the regional tourism dynamics existing mass tourism (for example Alentejo) and with a greater prior to the sanitary crisis and as a result of the constant appeal for demand generators associated with nature, efforts to mitigate the pandemic impact, a firm expectation tranquility and safety; of recovery is anticipated, as reflected in the OECD and • The Algarve saw higher demand during the summer European Commission forecasts. period, either as a result of the opening of air corridors, or by domestic demand during the holiday months; This expectation results from the recognized resilience of • RA Madeira due to its insularity and its positioning as a the sector and also from Portugal’s international image as a more secure and less massified destination has been the sustainable and safe tourist destination. region that benefited the most; • Due to their central location, the regions of Lisbon and the North suffered the most, as did the Azores, which was heavily penalized. Portugal GDP Forecasts, 2021 - 2023 Source: Horwath HTL Research www.horwathhtl.com 7 Authors: Horwath HTL At Horwath HTL, our focus is one hundred percent Philip Bacon MRICS, FCA on hotel, tourism and leisure consulting. Our services Senior Director - Valuation cover every aspect of hotel real estate, tourism and Planning & Development leisure development. Our clients choose us because we Horwath HTL Spain have earned a reputation for impartial advice that will [email protected] often mean the difference between failure and success. +34 663726880 Each project we help is different, so we need all of the experience we have gained over our 100-year history. We are a global brand with 49 offices in 39 countries, who have successfully carried out over 30,000 assignments for Irene Santos private and public clients. Consultant Horwath HTL Spain We are part of the Crowe Global network, a top 10 [email protected] accounting and financial services network.