Tourism – looking to recovery

When Rita Marques was offered the outwardly glamorous post of what is perhaps the Portuguese government’s most sought after top job, tourism minister, 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 come with the job and compensate heading one of the most important positions in the government, laden with responsibility since tourism is a key pillar of Portugal’s economy, worth a staggering €18.4Bn in 2019, a record year.
In terms of demand, the figures were impressive: over 70 million nightly hotel bookings (+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 €18.4Bn — in fact revenues for that and the two preceding years 2017 and 2018 almost amounted to the €76Bn bailout Portugal had received from the troika of international lenders back in 2011.
It was all going so well. By January 2020 what could possibly go wrong? Granted, these numbers were tall orders to live up to, certainly following in the footsteps of her predecessor Ana Mendes Godinho. 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 turned into a nightmare as Covid-19 all but wiped out one of the biggest drivers of Portugal’s economy — tourism.
And you suddenly go from being everybody’s friend to everybody’s scapegoat. This was revealed in front of a room full of business leaders at a luncheon organised by the prestigious International Club of Portugal (ICPT) this week when the ex-president of the Portuguese travel agents association APAVT, Vitor Felipe, 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 a 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, who 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 hire car companies, the swimming pool cleaners, the bar and restaurant owners, the wedding organisers, the summer open-air concert promoters, the laundries that deal with hotel sheets and towels and even down to the man who once cheerfully sold cream-filled doughnuts on the normally packed Algarve beaches.
Being blamed, taking the flack 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.
So let’s look at the numbers for 2020 to get an idea why. Hotel and tourism accommodation saw 10.5 million guests and 26 million nightly stays, falls of 61.3% and 63% respectively according to data from Portugal’s National Statistics Institute (INE).
Accommodation nights stayed by locals were 13.6 million, a fall of 35.4%, the lowest value since 2013, according to the INE. As for nights booked by foreigners, these scratched just 12.3 million, a fall of 74.9% (they had increased 3.8% in 2019), the lowest figures since 1984 or if you believe the Portuguese hotel association AHP, quite probably the worst result since records began.
While all of Portugal’s regions suffered (Alentejo -59.3%, Centre -69.3%), Lisbon -81.9%, it was the falls in nighty accommodation stays in both the Algarve and Madeira which represented a disaster in terms of revenues (-81-2% and -80.6% respectively).
Not wanting to downplay the dreadful affects of the pandemic, the secretary of state for Tourism decided to look forward and focus on more structural areas that needed improving in the sector.
At the ICPT luncheon, Rita Marques said that Portugal still had some way to go to fight the seasonal nature of tourism and reiterated that the country had to be sold “not just as sun and beach destination but also a destination for business and other events and golf”.
“We believe that Portugal can get out of this (crisis) with a head start” she said pointing to other areas of tourism, such as corporate events and team building incentives. Lisbon was recently elected the best city to host events, followed by Cascais and Porto,” said Rita Marques on Wednesday.
The minister also suggested that golf had a particularly important role to play in keeping regions like the Algarve alive all year round, pointing out that many hotels close to golf courses and resorts were open between October and May.
Rita Marques emphasised the importance of attracting long-haul passengers to stop-off in the city, as well as marketing Iberia as a destination, meaning taking advantage of the high number of tourists who land at Spanish airports.
Regarding the urgent matter of building a new Lisbon international airport to meet the overcapacity of the city’s current and inadequate facilities, she stressed that the matter had to be “dealt with a soon as possible.”
“We will do everything we can to get a new airport, but while we don’t have it, we cannot be held hostage to just one solution,” she said.
Rita Marques once again outlined the Strategy for Tourism 2027 which was defined in 2017 and has a budget of €6Bn earmarked for the sector, as well as a target of 80 million overnight stays in tourism establishments over 10 years and projected revenues of around €20Bn.
The Strategy for Tourism 2027 defines several goals, two being encouraging all-year-round tourism growth and broadening the range of tourism products for the holidaymakers who come from Portugal’s main tourist markets.
The tourism sector was severely undermined in 2020 and may be for much of 2021 which, according to the Portuguese hotels association AHP led to bookings in the country’s holiday region of the Algarve falling 85% to May 2021 compared to 2019, made all the worse by the United Kingdom’s decision to pull Portugal off the green list of travel destinations not requiring a mandatory 10 days quarantine on return.
The result of all these issues, including two lockdowns, has meant thousands of companies are now seriously undercapitalised.
According to the secretary of State, the government tried to negotiate an extension to the bank moratoria with European authorities until September, but the pleas fell on deaf ears.
“We are working on Plan B with the idea of rescheduling company debt while safeguarding public guarantees on loans while stretching out the periods of repayments,” she said.
The message is that despite the disaster of the past 18 months, Portugal does have the right conditions to get back on its path to growth.
The government’s plan ‘Reactive Tourism and Build the Future’ is not just based on structural reforms for the sector, but aims to increase its overall competitiveness.
“We think that the strategy that we designed back in 2017 is still relevant and opportune. We have the conditions to believe that all of the goals we have reached since then can be reinforced and we have an ambition to achieve levels of tourism revenues to 2027 that we had outlined a few years ago,” she said.
And while the overall fundamentals of that 2017 strategy essentially remain the same, and although a funding plan to kick-start tourism may be symbolic and may not represent enough, it does represent a turning of the page away from disaster towards recovery, and to that end the government has earmarked around €2.6Bn to help the sector. At least it is a help. The rest lies with the vaccines, the infection numbers and a little help from God.