focuses on Lisbon, Portugal. Roberto
Galano, Senior Vice President, Jones Lang LaSalle Hotels (London), reports:
Lisbon, the city of seven hills, lies towards Portugal's Atlantic coast and is one of the country's most popular
destinations, both for business and leisure visitors. During 1999 total visitor arrivals to the city
totaled 1.9 million, generating 4.2 million overnight stays. The market is dominated by international
travelers, accounting for 68% and 72% of visitors and overnight stays respectively.
These statistics represent a slight decline over the previous year, which hosted the Lisbon Expo and saw a boom in visitor
numbers and indeed hotel performance.
The city currently has 64 hotels graded two star and above, with the majority (41.7%) being in the four star category. There
are eight five star properties. Several quality hotels opened in time for the Expo including the Dom Pedro and the Madrid hotels.
The strong performance of the market in recent years has encouraged development
activity, with ten luxury (four star and above) hotels due to enter the market by 2004.
These 1,893 new rooms have the potential to increase existing supply by 20.8%.
Although it is unlikely that all projects will come on line.
There are also a number of hotels under refurbishment, including the Lapa, which is to
undergo a US$3 million investment program. The Sheraton hotel is also proposing to
refurbish its facilities to compete with the new quality supply due to enter the market.
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LISBON: NEW HOTEL DEVELOPMENTS (AT AUGUST 2000)
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PROPERTY, LOCATION, NUMBER OF ROOMS, DUE DATE
Carlton Lisboa, Palácio Valle, 198 rooms, Late 2001
Quality Hotel Green Plaza, Av. José Malhoa, 108 rooms, Mar-01
Hotel Parque dec Nacoes, Parque dec Nacoes, 300 rooms, Mar-01
Hotel da Junqueira, Antiga FIL, 180 rooms, Dec-01
Hotel Europa Palace, Av. António Serpa, 110 rooms, Mar-02
Palacete Sidonio Pais, S. Sebastiao de Pedreira, 150 rooms, Dec-02
Hotel Ópera, Belém/Junqueria, 255 rooms, 2002
Sana Park , Av. Fontes Pereira de Melo, 300 rooms, 2002
Hotel Palacio Sotto Mayor, Av Fontes Pereira de Melo, 92 rooms, 2002
Sana Park Hotel, Av Jose Malhoa, 200 rooms, Jun-04
Total New Rooms 1,893
Source: Jones Lang LaSalle Hotels; National Institute of Statistics
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The Lisbon Expo 1998 generated a significant amount of new development in the city,
including a major upgrade of existing conference and convention facilities. The Lisbon
International Fair was relocated to the Expo site, whilst the previous site has
been redeveloped into the Lisbon Congress Centre. These improved facilities are likely to
attract increased conference and convention demand in the future. The city
authorities are hoping that Lisbon will follow in Barcelona's footsteps, and
enjoy similar growth to Barcelona after the Olympic Games of 1992. In addition the Metro system
was upgraded and the airport has been undergoing an extensive refurbishment and
redevelopment program.
Lisbon's quality hotel hotels have a well-balanced business mix, traditionally dominated
by corporate demand, although the strengthening leisure market continues to account
for an increasing proportion of room night demand.
The quality hotel market last peaked in the late 1980s and performance plummeted
during the early 1990s due to the economic recession and increases to supply. As the
Lisbon market is such a small operating market, any new increases supply have a significant impact on trading conditions.
Quality hotel occupancy levels have historically been lower than other major European
destinations, restricted by the low level of leisure demand. However, with the
increasing proportion of leisure visitors, occupancy increased from 1996 to a peak of
73.6% during 1998. This 16.4% increase in average occupancy can largely be
attributed to the Expo during the year as occupancy fell again to 68.8% during 1999.
However, it should be noted that occupancy in 1999 still represents an increase over
1997, indicating the market is on an upward trend, which has continued in the first
six months in 2000 with occupancy reaching above 80% compared to mid 70% in 1999.
Hotel room rates in Lisbon bottomed in 1994 in line with the economic
recession as business related travel fell significantly. The market has achieved consistent increases
since then, again peaking in 1998 at ESC20,584, a 25.9% increase over the previous
year. Room rates recorded a decline in 1999 due to the unsustainable growth
the previous year, although again are 19.9% higher than the level recorded in 1997 at
ESC19,598. Room rates in 2000 (to June) are some 15% higher than the same period in
1999.
Hotel room yield growth has been accelerating since 1995 when the market began to
experience a recovery in average rates. Room yield recorded a phenomenal increase in
1998, at 46.7%, as both occupancy and room rates grew exponentially. Following
this growth, 1999 saw room yields decline by 11.0% to ESC13,489. However this drop has
been quickly reversed in the first half of 2000 with a 24% increase over the same
period in 1999, which ranks Lisbon amongst the best performing hotel markets in
western Europe.
The outstanding performance can be attributed to:
a) a relatively stable supply since 1998;
b) the improvements in airport infrastructure and volume of passengers (as a result of increased number of destinations
and frequency of flights) and
c) increased appeal of Lisbon as an international leisure destination
(particularly for short breaks) following the high profile of
marketing initiatives undertaken by the national tourist board.
Some concerns are attached to the number of new hotel projects under construction
or ventilated which could put significant pressure on the existing hotels in the
foreseeable future, given the
relatively small size of the Lisbon hotel market. It should also be noted not all
projects described in the list above are likely to be completed.
Additional competitive pressure to quality hotels will be generated by the rebranding of the existing 588-room Penta Hotel into a
Marriott next, following an estimated $15 million renovation programme of
