2022: An Historical Year For The Algarve

Defying the most optimistic forecasts, 2022 is proving to be a fantastic year for tourism in the Algarve. The recovery of touristic activity in the region was faster than we expected and above all the expectations of the reference institutions (WTTC, ETC and Turismo de Portugal).

We are having the best year ever in terms of income, with an increase in revenue that made it possible to mitigate the enormous impact of the last two sad years and to face the increase in production costs, due to inflation.

From January to October, total income from tourist developments reached 1.43 billion euros, representing a growth of 15.3% compared to the same period in 2019. If we look at the accumulated overnight stays in the same period, we realize that this value is still 8.7% below the same overnight stays in 2019, which leads us to conclude that the Algarve, more than in volume, is above all growing in value, recovering even faster than its most direct competitors. Golf has also played an important role in boosting this recovery, especially outside the high season. From the beginning of the year until October, the number of laps has already increased by 3.82% compared to the same indicators as in 2019 and the forecast is that this positive performance will continue until the end of the year.

At the origin of this encouraging recovery is a set of extraordinary factors. Right from the start, the so-called “revenge consumption”, a phenomenon that occurred on a European scale and which instilled in people a greater predisposition to travel and consume, after two years of restrictions imposed by the pandemic. This desire was encouraged, not only by the high number of reservations postponed during the pandemic period, but also by the increase in family savings that this context provided. Here, the Algarve managed to capitalize on the reputation and image of security that the country and the region were able to reinforce at that critical time, as well as consolidate recognition as the Best beach and golf destination in Europe. Another, more recent factor is the scourge that we all want to end as quickly as possible – the war in Ukraine, which has motivated people to seek destinations far from the risk zone.

It should also be noted on the supply side that the efficient response of Turismo do Algarve to this rapid recovery was only possible thanks to the resilience shown by companies in the region, the support that the state granted to the tourism sector and the intense effort to restore airline connections for the destination. On the demand side, as a result of the trust shown by airlines, tour operators and tourists, the Algarve has already recovered the connectivity and flows that allow external markets to access the region. On the other hand, the diversification of reasons for visiting the Algarve that we have been operating in recent years, also allowed products such as culture, nature, business, nautical and sports tourism to contribute, in a more evident way, for the booking increasing in periods of lower demand and in the interior territory. In a region where, over time, many writers found inspiration to write their novels, other niche segments, such as weddings, have also favoured this boom in touristic activity. Looking ahead, it is with some expectation and increased confidence that we see the challenges and opportunities that lie ahead.

We are alert to the impact that inflation will have on this sector (on consumers, companies and workers) and have been following the evolution of the economic situation in our main markets, the confidence indices of consumers in the Euro zone and collecting feedback from tour international operators. The reduction in purchasing power and the general increase in prices are particularly sensitive aspects for family destinations such as the Algarve. We are also apprehensive about the social tensions that may arise from strikes at airports and airlines in our main source markets, which are becoming more and more frequent, and appear to be a major reason for instability.

In an expected scenario of a decline in international travel by tourists from the most important external markets for our tourism – namely the United Kingdom, Germany and the Netherlands – and in view of the uncertainty installed in some destinations in southern Europe (in terms of the behaviour of offer prices) and North Africa and the Middle East (in terms of social tension and security), we believe that the perception of stability and a better value for money ratio that is attributed to the Algarve compared to these competitors will be decisive for we can continue to attract demand.

We also see a potential opportunity in the transatlantic markets – USA, Canada and Brazil -, which have shown a growing interest in the Algarve in recent times, favoured by the exchange rate advantages that, currently, the currencies of these countries have against the Euro. Conversely, the fact that long-distance travel is currently more expensive for Europeans can also benefit our destination. We anticipate that these tourists will give priority to trips within the continent itself, concentrating their demand mainly in southern Europe.

Our prospects for the upcoming months therefore remain positive. We see that there is trust on the part of international tour operators and airlines, which is reflected in the offer of the greatest connectivity ever for the Algarve this winter. We recently launched a new promotional campaign that presents our destination as an appealing choice for those who want to escape the harsh winter and the expected increase in energy bills, especially in central and northern Europe. We are inviting these tourists to spend their energy in a more interesting way in the Algarve, where they can enjoy the sun, the mild climate and the various outdoor activities that can be done here throughout the year. We believe that this context can also generate a greater flow of visits to the region in the low season.

We therefore expect a very lively winter and we are confident that the Algarve will be able to close the year with historic revenues.