Tourism as a Driver of Economic Development in Portugal

Tourism is one of the most dynamic economic activities in Portugal, positioning itself as the largest exporter of services in the country and showcasing persistent growth levels over recent years. In 2017, tourism activity in Portugal broke all records: more than 20 million guests and over 57 million overnight stays were recorded, marking a momentous achievement for the sector. The same is true for receipts, which exceeded EUR 15 billion for the first time, having risen by 19.5% from 2016, the fastest growth since 1998. Additionally, the tourism trade balance surpassed EUR 10 billion for the first time.

Portugal’s ever-expanding tourism industry is showing
growth not only during the traditional high seasons but year round: the seasonality index fell from 38.7% in 2015 to 36.5% in 2017. The highest growth rates in terms of guest numbers were registered in the Azores (+16.8%), Centre (+13.2%), and Alentejo (+12.8%). In order to ensure the promotion of all Portugal’s regions, Turismo de Portugal has been hard at work implementing several programs and platforms.

The top five markets to Portugal are already well known: the UK, Germany, Spain, France, and the Netherlands. However, market diversification is a vital strategic commitment that has been reinforced through concerted actions to promote and assist destination marketing. In 2017, the markets that registered the highest growth, reaching record numbers, were China (+41%), Brazil (+39%), Poland (+36%), and the USA (+35%).

The excellent results of the tourism sector underline its key role in the national economy, already representing 12.5% of the national GDP. It also has an important role in national exports: tourism is the country’s largest exporter of services (50.1%), having increased by 18% in absolute value in 2017.

These are the results of a carefully thought-through 10-year strategy, Tourism Strategy 2027, which focuses on a joint effort from public and private agents and is sustained by a framework of five strategic priorities aimed at:
• Valuing the territory
• Boosting the economy
• Enhancing knowledge
• Generating connectivity
• Promoting the destination

Tourism Strategy 2027 aspires to position Portugal as one of the most competitive and sustainable tourism destinations in the world — a place to visit and invest in, where one can study and live comfortably. With these objectives in mind, three areas of action are vital for the consolidation of tourism as a driver of national development: i) training, ii) innovation, and iii) entrepreneurship and investment attraction.

Within the scope of training, the strategy focuses on the qualification of human resources with skills suited to the requirements of a market in constant flow. In practical terms, we want to double the level of educational qualifications in tourism from 30% to 60%. To this end, Turismo de Portugal has developed a program in its network of 12 tourism schools called Tourism Training Talent (TTT), which is focused on people’s talents, the development of soft skills, innovation, and the internationalization of tourism professionals. The TTT program is aimed at enhancing the skills of both students and professionals, adapting their training to new market trends, opening the schools to the community, and
encouraging entrepreneurship.

It is worth mentioning that TTT was awarded first prize in the Innovation and Public Policies category of the 14th edition of the United Nations World Tourism Organization awards. The project was considered an example of capacity building for future generations of human resources of the sector, and the program is being considered by countries such as Colombia, Croatia, Kazakhstan, Morocco, and Romania for possible adaptation in their markets. Innovation and entrepreneurship are decisive factors for the success of any industry, and this is also true for tourism. To leverage Portugal’s status as a global hub of digital innovation, Turismo de Portugal has defined a pioneer initiative, called Tourism 4.0, to support travel and tourism startups, fostering entrepreneurship and the innovation ecosystem in the country. In 2018, Tourism 4.0 monitored 15 incubation programs in which 350 startups participated.

As an organization and country, we seek to encourage a culture of disruption in companies that aim to develop new business ideas, thus our ambition of nurturing startups that may impact on tourism. The vibrant relationship between Turismo de Portugal and startups with initiatives focused on entrepreneurship, innovation, and enhancing a very active entrepreneurial tourism ecosystem resulted in a case study by the intergovernmental body, the Organisation for Economic Co-operation and Development.

Regarding the investment attraction, we are focusing on a set of financial and tax incentives to foster business development. Portugal was ranked 29th by the World Bank in its 2018 Ease of Doing Business ranking. Platforms and programs are available to support investment. This is the case of Invest in Tourism, a platform that promotes and discloses business opportunities in the sector, aiming at upgrading and rehabilitating properties that are currently vacant or inactive that display potential for tourism activity. Directed specifically at those who are interested in investing in tourism, the platform collects and presents objective and updated information and represents a single contact and advice point for investors, promoters, and local agents.

Another example is the Revive program, an interesting incentive to invest in tourism. A number of unused historical buildings, the majority in a poor state of conservation and owned by the State, are put for concession to national or foreign private entities. This is materialized by a public tender that obliges the properties’ rehabilitation, preservation, and conservation on behalf of the State, which maintains ownership. The objective is to preserve and enhance national heritage through rehabilitation and guarantee the properties’ sustainability, bringing to life underused or abandoned spots that are then made available for public enjoyment.

Living in Portugal is another platform aimed at attracting investment. This website gathers relevant information from multiple sources for foreign citizens who intend to live in Portugal, ensuring that administrative formalities inherent in the process of purchasing a house in Portugal and establishing residence and tax residency in the country are properly understood and complied with. The platform also contributes to the competitiveness of Portugal by promoting an appealing image of the country.

All these initiatives and programs have the purpose of consolidating the role of tourism as a main driver of the Portuguese economy, with the capability of creating a multiplier effect and leveraging a significant role for Portugal in the international economic landscape.

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