Domestic Travel and Higher Guest Spending Boost Portugal's Tourism Revenues

Revenue from Portugal’s tourism sector keeps climbing even as visitor growth shows signs of plateauing. Higher spending per guest, a surge in domestic travel and healthier room rates are cushioning hotels against softer demand from traditional international markets.

Momentum in the Numbers

September closed with 25.3 million guests and 65 million overnight stays since January, both modestly higher than a year ago. The headline, however, is the €5.7 billion in accommodation revenue already collected—an expansion of 7.6 % that comfortably outpaces volume. Analysts say the widening gap between money and head-count reflects pricier rooms, longer average stays and stronger demand for upscale and boutique properties.

Where the Nights Are Spent

The Algarve still rules the summer calendar, commanding 29.8 % of all third-quarter stays. Greater Lisbon follows with 20.6 %, while the North edges up to 17.5 %. Island destinations rely more heavily on foreigners—Madeira draws 79.5 % of its nights from abroad and the Azores 76.6 %—yet both are seeing a gentle rise in Portuguese holidaymakers encouraged by competitive airfares and fresh promotion of off-season hiking, surfing and gastronomy.

Home Crowd Takes the Lead

Portuguese residents clocked 5.8 % more overnight stays in the first nine months, crossing the 19.9 million mark and compensating for a tepid 0.7 % uptick among non-residents. In July–September alone, domestic nights advanced 5.5 % against a near-flat foreign performance. The result: the share of external markets slipped to 67.8 %, its lowest contribution since 2022. Greater Lisbon remains the most overseas-dependent region at 83.2 %, yet hoteliers from Évora to Viseu report fuller weekend occupancy thanks to city-break packages targeting local families.

Shifting International Landscape

Germany is the lone large market still adding volume, up 3.1 % in the September snapshot and 0.9 % year-to-date. The United Kingdom retains top position but delivered 6 % fewer nights in September, while the United States cooled slightly after two roaring summers. Travel economists attribute part of the slowdown to a stronger euro, thinner flight schedules from long-haul hubs and travellers testing Mediterranean alternatives. Nevertheless, Portugal is drawing newer sources—Canada, Brazil and a smattering of Asian countries—that together lifted their combined share above 9 % for the first time on record.

The Price of Doing Business

Inflation has eased toward 2 %, yet labour and energy bills keep margins tight. Average Daily Rate reached €151.3 in the third quarter and RevPAR climbed 4.1 % to €106.5, gains that offset rising payroll costs driven by a nationwide push for higher hospitality wages. Owners are leaning on dynamic pricing software to balance occupancy with profitability and mitigate forex swings that can make Portugal look pricey to pound- or dollar-denominated tourists.

Fresh Capital and Tax Sweeteners

Government programmes such as Crescer com o Turismo and Transformar Turismo are injecting €50 million in grants and soft loans into sustainable projects across low-density areas. A reduced 16 % corporate tax band for the first €50,000 in profit, plus an 120 % deduction on staff health-insurance expenses, is designed to keep smaller guesthouses afloat. Meanwhile the regions have their own carrots: the Algarve’s water-efficiency fund, Madeira’s 5 % IRC regime under the International Business Centre and the Azores’ Construir 2030 incentives that cover up to 60 % of micro-hotel investments on the remotest islands.

Looking Toward the Finish Line

Forecasts diverge on just how high the year will finish. The independent IPDT consultancy is eyeing 33 million visitors and €6.5 billion in lodging income for 2025. Government officials talk of a 9 % revenue jump that would push annual tourism receipts close to €29.4 billion, while the WTTC, partnering with Oxford Economics, believes the wider travel economy could touch €62.7 billion, or 21.5 % of GDP. Even the most cautious scenario implies another all-time record, provided winter flights remain intact and hotel owners keep controlling costs.

Why It Matters

For the average resident, these figures translate into more year-round jobs—already an estimated 1.2 million people depend on tourism—yet also into pressure on housing and public services. Municipalities from Porto to Faro are again debating limits on new alojamento local licences, even as revised national rules ease restrictions for primary-residence rentals. Balancing the economic windfall with community well-being will shape the industry’s next growth cycle, and by extension, Portugal’s standing as one of Europe’s most resilient visitor economies.