Portuguese Tourism Enters a New Phase: Less Growth, More Value

What this means for the Algarve and property investors

Portuguese tourism is closing a historic cycle and entering a new phase. The latest figures confirm what many operators have already felt on the ground: Portugal continues to break records, but growth is becoming more conscious, more demanding, and more sustainable.

In 2025, tourism revenues are expected to exceed €30 billion for the first time, representing around 10% of national GDP. With over 84 million overnight stays and 32 million passengers, tourism continues to outperform the wider economy. This is very positive news — but it also brings new challenges.

Growing less, but growing better

After several years of rapid expansion, the sector is now moving into a phase of more moderate growth. The focus is shifting from volume to value: higher-quality experiences, a more professional tourism offering, and better balance with local communities.

Data from the most recent summer season reflects this change, with growth of around 2% in both guests and overnight stays. Growth remains positive, but it is no longer explosive — and that is not necessarily a bad thing. A more mature market brings higher operational standards, increased scrutiny of guest experience, and a clear need for professional management.

Infrastructure is setting the pace

One of the main structural constraints on tourism growth in Portugal remains Lisbon Airport, where limited capacity is restricting the conversion of demand into actual visitor flows.

However, this limitation has created opportunities elsewhere — particularly in the Algarve.

The Algarve as a case study

The Algarve has become a clear example of this redistribution of demand. By October, the region recorded a 7% increase in tourism revenues, largely driven by Faro Airport and the launch of new international routes, including connections to the United States and Canada.

These markets are bringing a different type of visitor:

• Longer stays
• Higher average spending
• Less dependence on peak summer months

Beyond the traditional sun-and-beach appeal, demand is growing for golf, nature, gastronomy, and wine tourism, reinforcing the Algarve’s position as a diversified, higher-value destination. Not long ago, the challenge was attracting airlines — today, airlines are actively seeking the Algarve.

What to expect in 2026

Industry consensus points to 2026 as a year of consolidation. Rather than uncontrolled growth, the focus will be on a more mature tourism model — more profitable per visitor and less seasonal.

For property owners and investors, the message is clear: success is no longer just about demand, but about how well that demand is managed.

Location quality, professional management, guest experience, smart pricing, and effective positioning will continue to be the key differentiators in property performance and long-term value.

Westmark Real Estate’s perspective

At Westmark Real Estate, we closely follow these shifts in tourism and the Algarve property market. We believe this new phase creates strong opportunities for investors focused on quality, sustainability, and long-term returns.

As tourism evolves, so does the property market — and the Algarve remains firmly at the center of that transformation.