Europe -  Lisbon

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Lisbon benefits from excellent links by road, rail, sea and air. Portela International Airport is just seven kilometres from the city centre and lies within the city limits. The Port of Lisbon is the busiest on the European Atlantic coast, and it has three berths for cruise ships. The city also has marinas for private boats at various docks, an expanding rail network and an underground (metro) system. Road access is also deemed excellent. Lisbon’s hotel market shows a fairly strong seasonality pattern due to a predominant leisure segment, given the more favourable weather conditions compared to many other European cities. The high season runs from April to July and resumes in September and October. Historically, Lisbon gained substantial recognition by hosting the Expo 98, the 2004 European Football Championships (the largest sporting event in Portugal’s history) and the EU presidency in 2007. A major inducer of demand is Rock in Rio Lisboa, one of the biggest pop/rock festivals in the world, with an attendance of roughly 350,000. The Web Summit and Fish & Flavours Lisbon are other key demand inducers.

Between 2014 and 2019, more than 4,400 hotel rooms were added to the market, and according to Turismo de Lisboa, Lisbon is expected to welcome 45 projects in the coming years, providing some 4,300 additional hotel rooms between 2023 and 2025. The city’s pipeline represents an increase of 17.4% of the existing room supply, with most of the new rooms in the upscale and luxury classes. Over the past 10 years, occupancy grew from the mid-60s to the mid-70s in 2019, reaching just below 80.0% in 2017, before reducing slightly over the next two years due to supply growth and more subdued visitor growth. Meanwhile, Lisbon’s average rate performance increased significantly over 2014-2019, growing at a compound annual rate of 7.9%. This resulted in an impressive RevPAR CAGR of close to 10.0% over the same period. During the COVID-19 pandemic, Lisbon’s performance was strongly impacted, with RevPAR shrinking to around 20.0% of 2019 levels in 2020 and 25.0% in 2021, a loss somewhat more pronounced than those of other gateway European cities. Lisbon’s 2022 RevPAR was back to pre-pandemic levels, mainly driven by a significant increase in average rate (18.0% above 2019), while demand volumes are still recovering (86.0% of 2019 levels).

The Lisbon hotel market is becoming increasingly liquid, with several major transactions taking place in 2021, including the 188-room B&B Lisbon Airport, the 130-room Exe Saldanha, the 90-room Diplomatico Hotel and the 59-room InterContinential Estorial. More recently, in 2022, three Lisbon properties transacted: the 92-room VIP Inn Miramonte Hotel for a reported €42 million (€583,000 per key), and the 72-room Martinhal Cascais and the 72-room The Fontecruz Lisboa Hotel for undisclosed amounts. Our 2023 European Hotel Valuation Index indicates that hotel values in Lisbon increased by 9.3% in 2022 over the previous year. While this still places values at around 95.0% of 2019 levels, this market remains competitively priced for a European capital city with good fundamentals and substantial value-add opportunities. It remains to be seen if the end of the Golden Visa, a decade-old programme designed to incentivise international investment into the country’s real estate (announced by the government in February 2023) could have an impact on investment appetite for the market.

Change In Value For Market: (€Euro)

Legend
Significant Value Increase: Greater than +10%
Moderate Value Increase: Between +3% and +10%
Stable Values: Between -3% and +3%
Moderate Value Decline: Between -3% and -10%
Significant Value Decline: More than -10%

For more information, please contact:

Sophie Perret, MRICS, MBA
Managing Director
[email protected]
  • +44 0 2078787722 (w)
  • +44 0 7725781037 (m)