Tourism: 12.5% of GDP

How important is tourism as a strategic activity for the Portuguese economy in supporting GDP growth, service exports, and direct and indirect job creation?

Tourism has been making a contribution to the economy in several ways. Today, it represents 12.5% of the total GDP, more than 50% of service exports, and almost 20% of goods and service exports, and it has been growing steadily for the last three years. In 2017, we registered growth of 9% in terms of tourism arrivals, breaking the mark of 20 million tourists, and a 19.5% increase in revenue, following a rate of 15% in 2016. Tourism is certainly expanding, and we see that expansion especially during low season and to more undiscovered regions such as Algarve, Lisbon, and Madeira. The highest growth rates were recorded in the regions of Alentejo, the central zone of Portugal, and the Azores. We know that the future is challenging; however, the sector looks extremely promising at the moment. Many Portuguese companies are investing in tourism and diversifying their activities; in addition, many external agents see Portugal as a country with an attractive tourism sector for investments.

What are some of the most important institutional capacity-building mechanisms that you take locally to promote the dynamism of Portugal’s tourism industry?

Turismo de Portugal is the leading organization in the tourist sector in our country. We follow specific values within our organization and employ about 600 people. We support the Portuguese tourism private sector with, for example, specific funding projects, training with a country network of 12 educational institutions, from which around 3,000 students graduate every year. The unemployment rate in Portugal is currently lower than 8%, and tourism created 55,000 jobs in 2017 alone, so there are now 350,000 workers in this sector. We also have a department that advises investors in Portugal and takes care of all tourism-related statistics. Additionally, we focus on developing tourism products so that they can be even more attractive. We work closely with all regions, city councils, and trade associations to help them develop their products either by investing in specific marketing actions or by working directly with them to attract tour operators, travel agents, or newspapers.

How do you allocate your budget to prioritize areas that bring the most benefit and do you work closely with regional tourism promotional entities?

We are one of the main players funding tourism promotion and we work with them especially in three areas. The first one has to do with accessibility, so tour operators, travel agents, and airlines can get to know our infrastructure. The second has to do with international marketing with actions such as familiarization and press trips. For example, in 2017 we had around 33,000 international news articles on Portugal. The third part has to do with structuring the product, which is a basic part of a destination-selling strategy. Our focus is to develop joint strategies of branding through international fairs, workshops, and roadshows in the 21 tourism outbound markets where Turismo de Portugal has a representation. Our 21 offices are our “armed forces“ abroad. They lead the internationalization of the Portuguese tourism sector and are responsible for our international operations.

What have been some of the crucial differentiating factors behind Portugal’s record tourism arrival numbers in 2017 and 2018?

There is a set of factors, and the first has to do with connectivity. The investment that has been made in terms of attracting airlines and tour operators and promoting the country as a whole is delivering results. The second has to do with the positioning of Portugal with well-informed actions. In this regard, the attraction of large events has been extremely effective. For example, we will host the Eurovision Song Contest in Lisbon with 40,000 people and the third annual edition of Web Summit, with 70,000 visitors. We will also have 60,000 people from all over the world gathering in Lisbon for the Aga Khan Foundation as it is moving its office to Portugal. In 2017, we have supported around 66 conferences and congresses focused on diverse fields. Portugal is already on the top 10 International Congress and Convention Association (ICCA) event organizers in the world, and Lisbon is 12th. All this has given the country huge visibility and has helped attract visitors from many countries. The US is our biggest growth market. We have also seen a 40% increase in visitors from China and Brazil. Our strategy is also based on diversifying markets without forgetting that our biggest source markets, such as the UK, lie in Europe.

Can you elaborate on the new strategy to increase sustainability and your priorities, especially regarding the housing market?

The government launched a new strategy for the coming 10 years and started by gathering information from both national and international stakeholders. The most recurring topics were sustainability and people, which were at the end the foundation for our strategy. We want to grow and have room to grow. The goal is to reach EUR26 billion in revenue and EUR80 million overnight stays in 2027 in a sustainable way by diversifying the regions and travel periods. That also means sustainability in terms of society and environment. There are government bodies at different levels working to find the right balance of citizens, tourism workers, and tourists, and currently 90% of the companies that work in tourism have efficient measures regarding waste management, efficiency, and water. There is increased interest and better connectivity. That is why it is easier for someone from the US, for instance, to come to Lisbon. That leads to both national and foreign investors to consider Portugal. However, fiscal and incentive measures are being taken to tackle negative impacts on locals. It is a matter of working together, understanding the problems, and preventing problems in the long term rather than in the short term.

What would be your final personal message to encourage people to come and discover Portugal?

You cannot skip Portugal. We do not only say this because of the landscapes, gastronomy, and beautiful heritage buildings and number of UNESCO sites in our country. Visiting Portugal is a 360-degree full experience. There are things that set us apart from other countries. We are the third-safest country in the world and have the second-largest and best road system in Europe; furthermore, 60% of our population speaks a second language. People who come either as a visitor, investor, or student fall in love with the country, especially with the people.