Algarve resorts: post-Covid strategies and challenges

Covid-19 has given overseas locaters even more appetite to move to Portugal. The big difference is that residential house buyers in resorts want properties in low density areas say pundits.

Undoubtedly, the Covid-19 pandemic was a short-term crisis for Portugal’s overseas residential tourism sector.
Property viewings usually became virtual as the airline industry all but ground to a halt, with many people, particularly the retired, understandably not wishing to travel, and exhibiting a wait-and-see attitude before investing in property.
That said, this certainly didn’t dampen down overall appetites to consider Portugal as a lifestyle destination for work relocation, retirement, or the purchase of a main or second home.
In fact, what emerged from a webinar organised by the Irish Portuguese Business Network (IPBN) in January on ‘Post Covid-19 Strategies and Challenges for Resorts’ is that prospective relocaters not only see Portugal’s Algarve as a safe and secure destination from a health point of view — partly because of the government’s hugely successful vaccination campaign — but also because the top-quality resorts in the holiday region are often in the countryside in low-population density areas, yet near enough to large urban centres for shopping and services.

Being flexible

Chitra Stern, Founder and CEO of Martinhal Family Hotels & Resorts, who owns the Sagres Beach Family Resort Hotel in the Algarve admitted 2020 and 2021 had been “tough” but “character building”.
“We had to ‘pivot’, be flexible and adapt. We’ve seen the market change in how it behaves, with more and more people looking to safe destinations to travel and move to, particularly villa resorts. People want villas and Portugal’s reputation as a highly vaccinated country is highly appreciated”, she says.
“We’ve experienced an upward trend of people moving here from the United States”, adds Chitra Stern who runs the United Lisbon International School which has pupils of 30 nationalities with 30% of the pupils from the US, Brazil and China.
João Costa, Director of Sales & Marketing at Ombria Resort, near Loulé in the Algarve, which will open this year, admitted the biggest issue for resorts now is “finding good staff and keeping them”.
Portugal’s Secretary of State for Tourism, Rita Marques admitted last year that many of those working in the hotel and resorts segment of tourism (up to 100,000) had left and not returned for different reasons. Most of the Portuguese hotels associations agree that literally tens of thousands of vacancies are available to be filled in the industry.
But in terms of overseas investor demand for property, this has only grown. “Covid has helped us move forward. Our product is different from others and caters to those relocaters looking for a slow-living lifestyle. Covid-19 has certainly create more demand for low density living”, he says.
Costa stresses that its not just about overseas people looking for high-end villas, but also a whole host of people, including digital nomads, who are attracted by the lifestyle, the weather, fast and free Internet, excellent healthcare and abundance of co-working spaces.
Michael Stock, Administrator at Quinta dos Vales, Wine Estate and Winery, Estômbar, Algarve also admits there were “lots of challenges” posed by the crisis, but realised Covid acted as an accelerant.
“We decided to use the time when we weren’t seeing so many clients to improve our offer with a more in-depth and collaborative experience. We offer rented and for-sale accommodation (it has 100 beds on the estate), but also offer them wine tourism and production since wine tourism is very much the focus or our business,” he says.
“We take wine lovers and get them involved in the whole process themselves, and they can even buy a small part of the vineyard to produce their own wine,” he explained, “turning wine lovers into wine makers”, adding that weddings — they normally have 20-30 per year — which had been put on ice over the Covid-19 period, would be an important driver in the near future.

Pent up demand

Gavin Scott, Senior Partner at financial and tax advisory Blevins Franks, explained how many people who owned second or holiday homes in the Algarve were “comfortable to stay in the Algarve during lockdown” because they realised they were “not only safe, but also enjoyed their time in Portugal”.
“People were starting to rethink their strategy for living by buying their main property in Portugal and retaining or buying a smaller one in their country or origin. People are also happy to work from Portugal, they realise its an attractive lifestyle, and we’ve been able to help them on practical matters such as the Non-Habitual Residence and Golden Visa schemes,” he says witnessing very positive feedback from people over the past 2 years.
Martinhal’s Chitra Stern said the crisis had reinforced the importance of “having courage in convictions and making things happen”.
“We opened a new school in September 2020, when Covid-19 was happening. I’m eternally optimistic and although we halved our business plans to conserve capital, we managed to meet our pre-pandemic plan despite the pandemic”, she says.
Chitra Stern agrees with Michael Stock that Portugal can really capitalise on its safe, sunny and stunning locations as a wedding destination after two years which saw the sector plummet in Portugal.
“There is a huge pent up demand for weddings from countries like India, which has a huge industry, and I think Portugal can really capitalise on the Indian market,” she explains, and both she and Scott stress that despite new sanitary regulations are not now such a big deal.
Corporate events too are returning to Portugal, while João Costa notes “more and more professionals have used the pandemic to resign from previous jobs, start their own businesses, and move to the Algarve”.

A holistic destination

But are the key drivers tax motivated or lifestyle? Gavin Scott says that UK citizens looking to buy property, and who are no longer eligible for the NHR status since Brexit, are now looking at the Golden Visa scheme since there are parts of the Algarve, particularly inland, away from large coastal urban centres, which do qualify.
Chitra Stern concludes that Portugal has got it all as a “holistic relocation destination”. “Life is holistic and the whole story makes sense here from a holistic point of view”; from the ease of setting up a business, the various tax incentives, the excellent public and private health care (health insurance is cheaper in Portugal than the US, for example), and the warmth of the Portuguese. “Successive governments have made things happen and we are all moving in the right direction”, concludes the owner of Martinhal Family Hotels & Resorts.