Tourism will “stagnate” until new airport, hoteliers warn. Government “must encourage longer stays”

The long wait for the opening of Luís de Camões Airport in Alcochete and the serious constraints at Humberto Delgado will “stagnate” the tourism sector in Portugal for the next decade and a half , warn two hotel industry leaders. With the possibility of a temporary solution such as an airport in Montijo having failed, they are asking the Government to help private players with the main solution to alleviate the problem: encouraging longer stays.

“We are at a critical moment, because we are about to take a qualitative and quantitative leap, and there is a need for some decisions that involve the public sector more than the private sector”, Gonçalo Rebelo de Almeida, administrator of Vila Galé, the second largest national hotel group with 49 units in four countries, told ECO .

“We are essentially talking about large infrastructures or decisions related to our air carrier, which have a transversal impact on the entire country and these are much more dependent on the public than on the private sector”, he stresses.

The decision taken by the Government, in May last year, to build a new airport for the Lisbon region in Alcochete “had to be taken, that’s what it is”, says the manager, recalling that the solution still has a time horizon of 12 years, with the inauguration scheduled for 2037.

The administrator of the Vila Galé group warns, however, that the solution for the airport in Alcochete “ has challenges from a development point of view, not only in terms of the investment required for the new airport infrastructure, but also in terms of the ancillary infrastructure and, therefore, a third crossing of the Tagus, gas pipelines, energy reinforcement, the entire development of almost a new city on the other side”.

It is a sector that will stagnate over the next ten, 12 years and this means that we cannot increase the supply, on the one hand, because otherwise the same customers will be distributing for more, and we will lose the dynamic of trying to capture new markets, develop new destinations.

“ Lisbon’s capacity is completely exhausted ,” he warns. He admits that there are some adjustments that can be made that could still allow some growth in the number of passengers at Humberto Delgado, but they will not be enough to solve the problem.

“It is a sector that will stagnate over the next ten, 12 years and this means that we cannot increase the supply, on the one hand, because otherwise the same customers will be distributing for more, and we will lose the dynamic of trying to capture new markets, develop new destinations”, stresses Rebelo de Almeida.

Add one day to the average stay

Bernardo Trindade, president of the Portuguese Hotel Association and director of the PortoBay Hotels & Resorts group, also welcomes the decision to build the airport, but has some warnings . “A decision is always important, but let’s not kid ourselves, we are talking about an intervention, a new airport with its various implications, which will certainly take a decade and a half .”

“The country cannot be interrupted,” says the manager. “I would not like to return to the Montijo issue. Because the Montijo issue was not only faster, it was cheaper and it was already in operation,” he laments.

The average stay in Portugal is currently 2.51 days. And if we add one more day, we get to 3.51 days and for the same 31 million guests, we will go from 80 million overnight stays to 114 million.

Until the new airport opens, alternatives must be found. “And one of them, we have been relatively vocal from this point of view, is basically to run a campaign to increase the average stay ,” adds Trindade.

The manager shares that the average stay in Portugal is currently 2.51 days. “And if we add one more day, we go to 3.51 days and for the same 31 million guests, we will go from 80 million overnight stays to 114 million ,” he explains.

Gonçalo Rebelo de Almeida agrees with the strategy. “If we are unable to increase the number of people, we have to make sure that the people who visit us stay longer,” he argues. “There are some communication and promotion strategies to encourage people to stay, because it is the same place by plane, we do not overload the air capacity, but we increase the available income and, ultimately, after the point of view of other activities, the number of days that the tourist stays here is more important.”

How can the Government help with this task? “It can encourage, basically it is a partnership with private companies in the type of communication that is made about the product itself and the destination , showing it in a way that justifies staying for longer”, explains the manager of Vila Galé.

He emphasizes that American and Brazilian tourists already stay longer. “We will focus more on markets that have a tendency or propensity to stay longer, to the detriment of those that have a propensity to stay less time. That is another strategy.”

TAP: Strategic vocation to serve the country must be ensured

Bernardo Trindade, who was a non-executive director of TAP between June 2017 and June 2021, believes that the national airline can also help to alleviate stagnation in the tourism sector.

“Today we are talking about a problem of limitations at Humberto Delgado airport and who better than TAP can lead in Portugal alternatives that allow, in the time until the new airport is completed, the construction of small hubs that, in some way, fuel interest in Portugal ?”, he says. The Algarve, Porto and Madeira have airport infrastructures, they have reception capacity, “and if we can somehow use the TAP instrument to achieve this objective, I think it is something that can be considered”.

“From this point of view, the maintenance of its strategic vocation of service to Portugal must be absolutely assured ”, he explains, referring to one of the criteria he sees as crucial in the process of reprivatizing TAP that the new Government will now resume. “TAP is absolutely instrumental in addressing the concerns related to the sector. Firstly, the public perception of TAP today, in Portuguese society in general, is obviously much better than the one we had”, he adds.

“And this public perception and interest is perceived not only by the Portuguese, but also by the large aviation groups that are currently interested in TAP”, he adds, referring to the three candidates in the race for TAP – the German Lufthansa, the Franco-Dutch group Air France – KLM and IAG, the group that controls Iberia and British Airways.

“You might ask me, but does TAP need a robust balance sheet? It does, and it needs the entry of fresh capital, expertise in the aviation business, and a large aviation group can provide that.” Bernardo Trindade does not declare a preference for any of the candidates, acknowledging that they are all available to buy a stake, even if a minority one, but asks that the chosen buyer “ensure the connection to the country.”

The president of AHP stresses that TAP at Lisbon airport, and even with four airlines flying from the United States to Portugal, is responsible for 65% of the seats and 50% at Porto , sharing this responsibility with United. “This dynamic cannot be lost and, therefore, if we have an airport limitation that will only be resolved in a decade and a half, then we should use the instruments we have”.

“A campaign to increase the average stay is important and maintaining TAP to meet, let's say, this national objective of not losing demand by using other airport infrastructures could effectively be a way forward”, he concludes.

More interesting, in the end, than the concern of who is who [those interested in privatization], is what they want to do with the company and whether or not this will benefit or boost the growth in the number of tourists to Portugal.

Gonçalo Rebelo de Almeida also does not show any preference: “the three positions, in essence we are talking about the three major European aviation groups, so from the point of view of solidity it does not seem to me that they present any major doubts ”.

The administrator of the Vila Galé Group says that he does not know the accounts of the three groups in detail, “but from a strategic point of view it would be useful to understand what they want to do with TAP , because the fact that TAP has developed this strategy of connecting to Latin America, in particular to Brazil, and to the United States, has been positive for Portugal and it is interesting that it continues”.

“But what is really interesting, more than the concern of who is who, is what they want to do with the company and whether or not this will benefit or boost the growth in the number of tourists to Portugal”, he adds. “In the equation, we have to understand what they want to do. At a certain point, we are not interested in a solution in which they demobilize and there are fewer routes and fewer frequencies from Portugal ”.

(Gonçalo Rebelo de Almeida and Bernardo Trindade are interviewed in the next episode of the ECO podcast 'À Prova de Futuro', which will be published on Monday, June 16)