January 14, 2019 / 3:58 PM / 7 days ago

Portugal's tourism boom halted by Brexit, airport problems

LISBON (Reuters) - Portugal’s long-running tourism boom is set to move decisively into reverse in 2019 due to capacity constraints at Lisbon airport and a drop in British visitors because of a Brexit-hit pound, Portugal’s biggest hotel group told Reuters.

FILE PHOTO: The CEO of Pestana Group, Jose Theotonio attends an interview with Reuters in Lisbon, Portugal November 28, 2017. REUTERS/Pedro Nunes/File Photo

Jose Theotonio, chief executive of the Pestana Group which operates 94 hotels, said he had already noticed a dip in British guests as they turn to markets like Turkey, Egypt and Tunisia where local currencies have depreciated more than sterling.

“I hope, at some stage, there will be good judgment and a deal is reached to avoid a ‘hard Brexit’,” Theotonio said in an interview. “But Portuguese hotels are going to have to adjust prices to keep the English market.”

He predicted lower revenues from British tourists this year in key resort destinations like the Algarve and Madeira as competition from eastern Mediterranean markets hots up.

Britons are the leading tourist visitors to Portuguese hotels, representing about 15 percent of the total 13 million.

Portugal has seen a surge in tourism in recent years, benefitting from security concerns over north African destinations and relatively low prices as it bounced back from its 2010-14 debt crisis.

Visitor numbers rose uninterruptedly for seven years to 2017, setting repeated new records, before sputtering last year.

Theotonio said tourism would also be affected by Lisbon airport reaching maximum capacity last year.

Despite years of lobbying, an agreement was only signed last week to build a new airport and expand the current one, but the new airport still depends on environmental approval and will only be ready in 2022 if it goes ahead.

“Our biggest concern today is the construction of the new airport. The hotel confederation is only talking about this and for good reason,” Theotonio said.

Between 2011 and 2017 Portugal’s tourism revenues doubled to 15 billion euros ($17 billion).

But in the first 10 months of 2018, tourist arrivals slipped 0.1 percent, with British tourists down nine percent.

Revenues from British visitors to Pestana Group hotels fell seven percent in 2018.

Still, Pestana’s hotel revenues rose 8 percent last year, supported by domestic demand, hotel openings, price hikes and the group’s geographic diversification.

Its revenues rose to 400 million euros last year from 394 million in 2017. Earnings before interest, tax, depreciation and amortization (EBITDA) reached 120 million euros from 114 million in 2017, Theotonio said.

He said the group made 70 percent of revenue at home, but expects this to decline to 50 percent in four or five years as Pestana expands abroad.

Writing by Axel Bugge, Editing by Andrei Khalip and Mark Potter

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