With the tourism sector booming, especially after the pandemic, Portugal is consolidating its position on the world stage in terms of tourists coming to the country. In this context, the offer of hotel investment funds in Portugal follows the growing expansion of the segment.
In this article you’ll learn about the practices of these funds, how to apply for the Golden Visa Portugal, how to choose the best assets and the advantages of betting on tourism in the Iberian country.
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What is a hotel investment fund?
Hotel investment funds pool capital from different investors to acquire, manage and develop hotel properties.
When you invest in a hotel fund, you are essentially buying a stake in a portfolio of assets that can include hotels, resorts and aparthotels. The fund’s management is responsible for identifying and acquiring undervalued properties or properties in strategic locations, turning them into profitable ventures. This can involve renovating old hotels, optimizing operations or repositioning brands in the market.
The return on investment comes from different sources, such as the appreciation of real estate assets and the revenues generated by hotel operations, such as accommodation, food and events. The fund periodically distributes these profits among shareholders, according to the performance of the portfolio.
In Portugal, hotel funds are gaining prominence because they take advantage of the continued growth in tourism, the country’s economic stability and attractive tax policies for foreign investors.
In addition, many funds offer the possibility of qualifying for the Golden Visa Portugal.
Why invest in sustainable hotel funds?
Investing in this model of investment fund means being aligned with global trends in environmental and social responsibility. Hotel properties are often transformed by implementing sustainable practices, such as the use of renewable energies and the optimization of natural resources such as water and electricity.
In addition to minimizing their environmental impact, hotels that adopt these practices attract a growing audience of tourists who value accommodation experiences in line with their ecological concerns.
This consumer profile is willing to pay more for stays in establishments that are committed to the environment.
The appreciation of sustainable assets is also an important factor. Properties certified with sustainability seals, such as LEED, tend to have a higher market value and better long-term financial performance.
What’s more, these funds often benefit from tax incentives and easier access to credit, which boosts returns for investors.
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The relationship between investment funds and Golden Visa Portugal
One of the ways in which the Golden Visa Portugal is still active is investment through venture capital, and many tourism-focused assets are eligible.
The Golden Visa allows citizens from outside the European Union to obtain residency in Portugal, with the possibility of applying for citizenship after five years, with a one-off investment of €500,000.
Investment funds that fall within the Golden Visa requirements enable investors to make a financial return while enjoying the benefits of living, working and studying in Portugal. With the recent removal of direct real estate options from the program, investment funds, especially those focused on the hotel sector, stand out as one of the best alternatives for those seeking to obtain Portuguese residency through the Program.
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Criteria for choosing the ideal investment fund
It is essential to consider not only the track record of the management team, but also the growth potential of the regions where the funds are investing.
With cities like Lisbon, Porto and the Algarve experiencing strong growth in the supply of luxury hotels, investors should look for funds that have a clear strategy for acquiring and repositioning hotel assets, which guarantee solid returns over the long term.
In addition, it is worth checking the transparency and governance of the funds. Those that are regulated by authorities such as the CMVM (Securities Market Commission) offer greater security to investors, ensuring that the assets are managed according to the best market practices and with constant auditing to monitor performance.
Why invest in hotel funds in Portugal?
In 2024, the hotel sector continues to show enormous potential for investors in the country. Growth after the pandemic has been expressive, with the country reaching record numbers of tourists, which in 2023 surpassed pre-pandemic levels.
Data shows that in May 2023 there were 1.8 million international tourist arrivals, marking a complete recovery in the sector.
Trends for 2024 show a booming hotel market, with more than 11,320 new keys expected in around 130 projects by 2025.
Cities such as Lisbon, Porto and the Algarve remain the main centers of growth, and the number of tourists continues to increase, especially with the focus on luxury and wellness experiences.
The market is also increasingly attractive to foreign investors, with a post-pandemic recovery led by a growing number of European and American visitors. RevPAR and Average Daily Rate continue to rise, with Lisbon registering an increase of 8.9%, the Algarve 17.5%, and Porto 7.7%.
In regions such as the Algarve, ADR (Average Daily Rate) increased by 17.5%, demonstrating how luxury tourism and the demand for high-end accommodation are driving growth.
To find out more, visit the article on the potential of Portugal’s tourism sector.
Algarve is one of Europe’s most sought-after luxury destinations
Sustainability and revitalization in the hotel sector
Sustainability has become a central pillar in the hotel sector in Portugal, especially for investment funds seeking financial returns while also creating a positive impact.
The revitalization process involves transforming deteriorated properties into high-quality hotels and apart-hotels, ensuring operational efficiency and cost savings.
As well as contributing to environmental preservation, these actions make hotels more attractive to the public, especially tourists who prioritize accommodation that adopts sustainable practices. The commitment to sustainability also ensures alignment with global trends, such as green tourism, which continues to grow.
Security and returns when investing in hotel funds
In 2024, the Portuguese hotel market reached a stage of maturity that offers greater predictability for investors.
There are several regulated funds, such as VIDA Fund ‘s rigorous triple-checking system involving fund advisors, managers and depositary banks, ensuring that each investment is safe and well monitored.
In addition, the diversification of the funds’ portfolio, which can include hotels, apart-hotels and service properties, offers investors a greater margin of safety, mitigating risks by distributing capital across different types of assets. This integrated approach makes it possible to maximize returns while protecting investors from market fluctuations.
Examples of success: The case of the VIDA Fund
The VIDA Fund has stood out as a model of success in the hospitality sector in Portugal, combining the revitalization of undervalued properties with efficient management practices.
A notable example is the Villas d’Agua project in the Algarve, where a seaside resort has been transformed into a luxury development with 1 to 2 bedroom apartments, offering amenities such as a restaurant, spa, bar and a wellness program.
This intervention resulted in an expected return of 12% IRR, which reflects solid operating profitability, as well as the potential for appreciation over time.
Another success story is the Riviera, in Gaia, near Porto. The fund acquired a poorly managed hotel during the pandemic and repositioned it as a vibrant development with strong tourist appeal, including a rooftop bar, two restaurants and a spa. This project also projects an IRR of over 11%, highlighting the effectiveness of the VIDA Fund’s repositioning strategy.
These projects offer significant annual returns, with a total return of 2x on invested capital expected at the end of the fund’s seven-year cycle.
How the VIDA Fund qualifies for the Golden Visa Portugal
By investing the minimum amount of €500,000, and only once, the investor can qualify for the Golden Visa and, after five years of residence, apply for Portuguese citizenship, including family.
In addition, the fund provides complete management of the process, ensuring that all legal requirements are met, easing the path to obtaining European citizenship.
Management team: A distinguishing feature of VIDA Fund
VIDA Fund ‘s management team is made up of specialists with decades of experience in the hotel and financial sectors.
With a proven track record of success in global projects, the team leads with an integrated owner-operator approach, which ensures efficient asset management and maximizes return on investment.
