Tourism boss says State Budget 2024 “unambitious”

The president of one of Portugal’s most important tourism associations, the Confederation of Tourism of Portugal (CTP) has slammed the Portuguese government for its lack of ambition regarding the State Budget for 2024, dragging it heels over a decision for a new airport site, and for scrapping the Non-Habitual Residents and Golden Visa schemes.

In his closing remarks to the VII Residential Tourism and Resorts Conference organised by the Portuguese Association of Residential Tourism and Resorts (APR) at the Orient Foundation in Lisbon on November 9, Francisco Calheiros summarised the year by saying that 2023 had been an excellent year for tourism, with August enjoying growth in overnight stays in both hotels and resorts.

However, he warned of Portugal’s current political instability, which was added to difficult and challenging geo-political and economic circumstances overseas that brought “nothing positive for Portuguese businesses and the economy”.

Francisco Calheiros also took the opportunity to criticise the government for its lack of ambition regarding the State Budget for 2024 by which he meant lowering IRC and VAT taxes for businesses and families, as well as the government’s decision to scrap investment attraction schemes such as the Non-Habitual Resident and Golden Visa programmes.

He also called on the government to quickly resolve the current instability caused by last week’s political crisis in which the Portuguese Prime Minister, António Costa resigned, and the President of the Republic had called snap elections for March 10 next year as a result of the fallout from possible corruption involving green hydrogen and lithium deals.

“It is urgent that the country has a State Budget, and must not stop the portfolios of investments currently underway, given that many of them have a direct or indirect relationship with tourism activities,” he said referring to projects benefitting from investments from the RRP (Recovery and Resilience Package) and other EU funding.

“In these unsettled times, I know that we have once again been able to show our resilience, and thanks to the efforts of all those in the tourism sector, tourism continues to be a driver for the Portuguese economy”, he said.

And continued by saying that “voices had been raised” at the start of the summer in an “unfair manner and without any knowledge of the reality” that this year the tourist industry could suffer a fall.

But the reality, he said, was that tourism continued to show a strong performance, and Portugal continued to be highly sought after, offering a diversity of products and quality offer, which without a doubt helped to support the national economy.

Francisco Calheiros pointed out that the residential tourism sector was proof of the market’s strength and resilience; a market that had been facing stumbling blocks to growth because of the uncertainty created by the government’s ‘More Housing’ policy, which had had strong impacts on residential tourism; namely on how it affects investor confidence.

“The Golden Visa and NHR tax regimes had had a vital impact on attracting FDI to Portugal, but scrapping these instruments such as the ARI (Authorisation of Residency for Investment or Golden Visa) has caused the cancellation of residential tourism projects worth millions of euros, with a great impact on the Portuguese economy”, said the President of the CTP.

And expressed the hope that with a new government – possibly a centre-right PSD government in coalition with conservative nationalist parties Chega and IL -, the decision on the NHR and ARI might be reversed.

“I hope that 2024 will in general be a positive year for residential tourism, which is a healthy activity, spurred by very focused entrepreneurs providing world-class products.”

According to the latest data from Portugal’s statistics body INE, in September Portugal accommodated 3.2 million visitors, and posted 8.2 million overnight stays; a growth of 9% and 7% respectively on September, 2022.

“If we look at the year from January to September, there was an increase of 3.2% in overnight stays in tourism accommodation in Portugal, following on from the best year for tourism in Portugal in 2022 since 2019.

But would it be the same in 2024? “I hope so. But we also have to face the reality of a year that has been full of uncertainties both nationally and internationally, particularly for managing our companies. We have to evaluate these situations, and their impacts on our members, and for the economy as a whole. We know that it is difficult to get a return on our investments when contextual costs such as energy and fuel, with interest rates continuing to go up, and inflation remaining stubbornly high and not going down, with the resulting economic stagnation of our main market countries,” he said.

The situation in Portugal too was not easy with the Portuguese having less money in their pockets, with some negative impacts on events and mini-breaks in Portugal.

“Even so, given the economic situation, we had a great year for tourism with the end of the year also being very positive with good take-up rates”, he said.

But the problem for 2024 was “achieving greater growth” despite positive outlooks which the sector may not be able to achieve, and “we all know why – the lack of a new airport that we have all been waiting for over 60 years”, said Francisco Calheiros.

“We are a month away from learning the decision of the Independent Technical Commission for their opinions as to pros and cons of each site.

“But I need to stress that the government needs to decide because this is a mostly a political decision, and the improvements announced for Lisbon’s Humberto Delgado International Airport will not solve the facility’s lack of capacity,” he added.

“If we continue to not have a new airport, next year tourism companies will have to take into account the little support for growth in the State Budget which lacks ambition when we look at the country’s need for growth”, he said.

This lack of measures from an unambitious State Budget was impeding more private investment and more growth, as well as necessary measures to make Portugal’s companies more competitive through capitalisation, investment, and a more competitive tax regime.

“We need to reform the State, reducing IRC tax for companies, and have less indirect taxes for families. Even so, tourism has resisted and continues to be the activity that most contributes towards our economy, that has created jobs and has most contributed towards raising salaries in Portugal,” concluded Francisco Calheiros, President of the Confederation of Tourism of Portugal. (CTP)