Portugal’s room stock is shifting towards the luxury segment as hotels are repositioned and new brands enter the market, according to Global Asset Solutions’s Portugal Hotel Market Outlook 2024.

The success of Portugal’s hotel market was driving transactions, with portfolio deals rising in prominence as investors sought a foothold in the country.

David Bóveda, hotel asset manager and co author of the report with Jordi Izquierdo, said: “Portugal’s government has made a concerted effort to back tourism in recent years, with a new visa regime, tax incentives for investors and investment in infrastructure; including a new airport in Lisbon and a high-speed train line between Lisbon and Madrid.

“This focus has paid off and the country is one of the most attractive destinations to overseas visitors in Europe, bringing with them international investors eager to capitalise on this active market.”

Cross-border investment in the country’s hotels reached a record high of €188.5m in 2022, a figure that was surpassed in the first seven months of 2023 at close to €262m.

Notable deals have included the purchase of 18 hotels and three golf courses by a consortium led by funds advised by Davidson Kempner Capital Management, and comprising operating partners Highgate and Kronos.

Portugal was expecting significant growth in its hotel supply, with over 11,000 rooms in different stages of construction or planning, dominated by Lisbon, which reported 14.8% growth in supply in 2023, including over 4,600 rooms under construction or in the planning phase. Of the country’s total pipeline, 73.0% will be branded, with Accor and Meliá accounting for 9.2% and 8.0%, respectively.

Projects underway in Lisbon included; the Andaz Lisbon, ME by Meliá Lisbon, Six Senses Lisbon and Kimpton Lisbon.

Bóveda concluded: “Last year was record breaking for tourism in Portugal and the country is set for another strong year in 2024. With more supply coming online and much of it in the luxury sector, specialist asset management will be critical for investors seeking to make the most of this opportunity.”