Portugal has established itself as one of the most strategic destinations for qualified investors in the world, especially for those wishing to invest in the Algarve and its tourism potential.
The country offers a unique combination of political stability, security, quality of life and a dynamic tourism sector market, which creates a favorable environment for the development of hospitality projects.
This article examines the opportunities for investing in the Algarve and why this region, together with the hospitality sector and the VIDA Fund, represent an excellent alternative for investors aiming for consistent returns and long-term growth.
Portugal’s hospitality sector: opportunities to invest in the Algarve
The hospitality sector in Portugal has shown substantial resilience in the post-pandemic period, surpassing pre-Covid-19 levels in terms of tourist arrivals from 2023 onwards. This recovery is due to factors such as the resumption of leisure and business travel and the expansion of key tourist destinations such as Lisbon, Porto and the Algarve.
Statistical data indicates significant growth in the sector’s main performance indicators. Revenue per available room (RevPAR) increased by 13% compared to 2019, while the average daily rate (ADR) grew in several regions: Lisbon (+8.9%), the Algarve (+17.5%) and Porto and the North (+7.7%). These results demonstrate the strength of the Portuguese hotel market and its ability to provide consistent returns to investors.
The implementation of strict sanitary measures, investment in new technologies to facilitate contactless check-in and check-out and the diversification of accommodation types are examples of how the hotel sector in Portugal has managed to adapt to the new scenario. In addition, the focus on sustainability and responsible tourism is attracting an increasingly aware public, who value environmentally friendly travel experiences.
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Serviced apartments: Emerging trends in the hospitality sector
An emerging trend in the hospitality sector in Portugal is the growth of serviced apartments, which have shown greater resilience compared to traditional hotels during the pandemic crisis. These types of accommodation benefit from the growing demand for extended stays and the increase in remote working. The business model of serviced apartments allows for greater profitability, with higher operating margins than conventional hotels.
In addition, the global market for branded residences has experienced remarkable growth of 170% in the last decade, and Portugal is in a privileged position to capitalize on this trend. The combination of modern infrastructure, strategic location and growing interest from international tourists makes serviced apartments an excellent opportunity to invest in the Algarve and diversify investment portfolios.
The growing preference for accommodation that offers a more residential environment is one of the reasons for the growth in serviced apartments. These apartments offer modern amenities, flexibility for short or long-term stays and often more space than hotel rooms. In addition, the fact that they can be used by both tourists and remote workers means that these developments have a more stable occupancy rate throughout the year, reducing the risks associated with seasonality, one of the main challenges facing the traditional hotel sector.
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Characteristics of the Algarve as a region hungry for investment in tourism
The region has a pleasant climate, with around 3,000 hours of sunshine a year, making it a highly sought-after tourist destination. The Mediterranean climate facilitates the development of outdoor activities and extends the tourist season, which is beneficial for the hospitality sector.
The Algarve also benefits from iconic tourist attractions such as Ponta da Piedade, Praia da Marinha and Benagil Cave, which attract tourists from all over the world. The city of Faro, with its well-preserved historic center, and the Ria Formosa Natural Park are other points that boost the region’s popularity.
Benagil Cave Region – Investing in the Algarve
Faro International Airport, located in the region, is one of the main gateways to the Algarve and has a modern infrastructure to accommodate the growing number of visitors. In 2024, the airport registered around 1.2 million passengers in the first quarter, an increase of 7.5% on the previous year. The main international connections are with the United Kingdom, Germany, the Netherlands, France and Ireland, which makes the Algarve easy to reach for European tourists.
In addition to the tourist attractions and transportation infrastructure, the Algarve has a network of tourism-oriented services that complement the visitor experience, including high-quality restaurants, luxurious resorts and golf courses of international standard. This combination of infrastructure and attractions makes the region a reference point for quality tourism in Europe.
Check out one of the VIDA Fund’s assets, located in the Algarve in Portugal, by clicking here.
Villas d’Água in the Algarve – VIDA Fund asset
Tourism data in the region
Tourism in the Algarve continued to grow in 2024, with the tourist accommodation sector registering 697,000 guests in the first quarter (+7.9%) and 2.6 million overnight stays (+8.2%). There was growth among both resident guests (+4%) and non-resident guests (+9.5%). Total revenue in the sector was 146.5 million euros, representing an increase of 16.9% compared to the same period in 2023.
The region has stood out for maintaining high occupancy not only during the summer high season, but also throughout the year, thanks to cultural and sporting events that attract tourists of different profiles. Tourism in the Algarve has also benefited from the growing popularity of remote working, with many visitors opting for extended stays.
Profile of tourists visiting the Algarve
The Algarve continues to be a popular choice for tourists from the UK, Germany, the Netherlands, Ireland, Spain, Canada and the USA.
The UK led the way in terms of overnight stays, with 661,000 in the first quarter of 2024 (+8%).
The growth in Irish (+36.3%) and Spanish (+23.2%) tourists shows the diversification of source markets.
The profile of tourists visiting the Algarve is diverse, ranging from families looking for a quiet vacation to couples and groups of friends wishing to explore the natural beauty and enjoy leisure activities.
The region also attracts golfers, due to the quality of the golf courses available, and wellness tourists, who visit spas and luxury resorts. The diversification of the tourist profile contributes to the stability of the sector and strengthens the Algarve’s reputation as a destination for different types of visitors.
Investment options in the Algarve
There are several opportunities to invest in the Algarve, especially in the hospitality sector. Venture capital funds focus on acquiring and revitalizing undervalued properties, similar to the VIDA Fund model.
These funds seek to transform assets into high-yield ventures, taking advantage of the region’s tourism potential and contributing to the creation of economic and social value in a sustainable way.
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The hospitality sector in the Algarve is expanding to include new types of accommodation and tourist experiences.
Investors can consider developing eco-resorts and sustainability-focused accommodation, which are proving increasingly popular with tourists looking for authentic and responsible experiences. There are also opportunities to invest in cultural attractions and leisure activities, which complement the tourist offer and increase visitors’ length of stay in the region.
Why should US citizens pay attention to investing in the tourism sector in the Algarve?
The Algarve is one of Portugal’s most promising regions for investing in the tourism sector, and US citizens should pay special attention to this opportunity.
The region attracts a growing number of international tourists and is recognized for the quality of its beaches, modern infrastructure and the variety of activities available, such as golf and cultural tourism. In 2024, the Algarve recorded a significant increase in the number of overnight stays and visitors, reinforcing its position as one of Europe’s most sought-after destinations.
For Americans, investing in the Algarve can be particularly interesting due to the cultural and linguistic affinity with Portugal, facilitating the investment process and interaction with the local public. In addition, the hospitality sector in the Algarve has shown consistent growth, with high occupancy rates and policies that favor tourism throughout the year.
American investors can benefit from the tax advantages and legal certainty offered by Portugal, as well as the possibility of obtaining a Golden Visa.
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The Algarve’s hospitality market is booming, with a growing demand for differentiated accommodation such as serviced apartments and boutique hotels, offering a fertile scenario for innovation and diversification of investments.
