12/02/2018
Red Hills news
61 New Hotels Will Open in 2018, Half in Lisbon and Porto
23 remodelled/renovated hotels will also reopen this year, according to the Portuguese Hotel Association. In all, 4,770 rooms will be added to 2017’s total.
Streets and hotels filled with tourists are cheering investors. In 2017, 29 new hotels were inaugurated in Portugal, while another twenty were reopened after undergoing remodelling. This year, the pace is increasing: 61 new units are expected to open along with 23 reopenings after expansions or renovations, the Portuguese Hotel Association (AHP) reported.
“4,770 rooms will be added to 2017’s total. The dimensions are increasing. 2017 had an average of 60 rooms per unit, while the hotels in 2018 will have 90 rooms [including the remodelled units]. [This development] is very important because we can then bring in large events and congresses, which need scale,” Cristina Siza Vieira, the president of AHP, stated.
The largest number of inaugurations will take place in the regions of Lisbon and Porto. Of the 61 that are planned, 29 will be in the Metropolitan Area of Lisbon, and of these, 25 are in the city itself. The new hotels include, for example, the new Meliá hotel on the Av. Fontes Pereira de Melo; the Exe and Eurostars hotels, both in Parque das Nações, and the third The Beautique Hotel, which will open on the Rua da Madalena. The North/Porto region will become home to fourteen new units during 2018. One of them will be the Vila Galé Braga, which opens in May; another will be the Pestana A Brasileira, which will open to the public in March, in downtown Porto. According to AHP, ten hotels will begin operations in the centre of Porto alone.
“2018 will be a solid year for the Pestana Hotel Group, with new hotels in several national and international destinations. We’re highlighting our commitment to quality through the internationalisation and growth of the Pestana Collection Hotels brand in Amsterdam, Madrid and Porto,” José Roquette, who is responsible for the Pestana group, stated. The group will present its investment plans on Wednesday.
Four and five-star hotels account for the majority of the new projects since they are both the most sought-after by guests and the most profitable. “The difference between a four- and a five-star hotel is huge. Five-star hotels require a higher initial investment and have much higher operating costs.” Of the 1,669 existing hotels in 2016, no less than 417 had four stars.
Why are hotels growing in size? “I don’t think it relates to the boom,” Cristina Siza Vieira said, associating the larger scale with “urban rehabilitation” which is taking over large cities such as Lisbon and Porto, and “involves interventions over city blocks,” as for example, the Sana group is executing at the Av. Fontes Pereira de Melo, in Lisbon.
Much like 2017, many of the investments in 2018 are being made by new national operators and by foreign brands and groups that “are going shopping in Portugal” and are promising to compete with traditional Portuguese investors such as Pestana, Vila Galé, Turim and Hoti – whose plans also include new units. This is the case, for example, of the Spanish group Barceló, which participating in the public tender for the hotel concession at the Santa Apolónia Station in Lisbon.
“Portugal is continuing to experience growth in tourism, with the country becoming well-known, and visitors reporting high levels of satisfaction,” Rebelo de Almeida, Vila Galé ‘s CEO, stated. But the executive also expressed some doubts: “It will be harder to achieve double-digit growth [in 2018]. Hotel prices are not as resilient, destinations like Turkey, Egypt or Greece are getting more demand and some constraints exist, like air transport to Lisbon.”
AHP also believes that 2018 will see further growth, after record numbers of visitors, overnight stays and hotel revenues in 2017. But it warns against excessive optimism. “[Hotel] investment costs are very high at the moment.”
Buying land for construction or buildings for refurbishment has an enormous price tag. Property prices have risen vertiginously, and while hotel prices have also increased, they haven’t gone up fast enough,” Ms Vieira stated, adding that “the return on hotel investments remains very slow. Demand is growing, but hotels need some time to establish themselves,” and some caution is needed as new operators enter the market and competition grows fiercer.
