Tourism in Portugal: how the country has reinvented itself

When the troika* came to Portugal in 2011, 13% of hotels still didn’t have a computer or website – an astonishing figure given the tech trends in the travel industry and the size of the sector (then worth €8.146 billion a year).

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The austerity measures introduced in 2011 put a brake on economic growth. But three years later, in 2014, Portugal’s economy began to recover. The tourism sector enjoyed a particular boom, and took crucial steps to secure its own future and that of the country as a whole.

Portugal went from being a frequent subject of woeful headlines in the financial press to a travel destination with record-breaking figures for overnight stays, visitor numbers and revenue. Tourism is now the biggest sector of the Portuguese economy, accounting for 8.2% of national GDP in 2018 (2% higher than in 2014) and generating €16.6 billion in revenue a year, more than double the figure seven years previously. This meteoric rise is attributable to the way the country has embraced recent travel and tourism trends.

Drivers of innovation

By combining its rich heritage and historical attractions with trailblazing innovation, Portugal has been able to grow its visitor numbers – up to 27.4 million in 2018.

This development has not been without its critics. In Lisbon, the increased visitor numbers led to congested roads, rising rents and overcrowding in some historical districts. In response, the number of apartments that could be privately rented to tourists was capped at 25% of available properties.

The Tourism 4.0 strategy was developed to harness the full potential of the boom. It aims to take advantage of hospitality trends, promote the founding of new companies and help existing companies (mainly SMEs) to modernise.

The strategy is coordinated by the Ministry of the Economy, the Secretary of State of Tourism and Turismo de Portugal. This year, a budget of over €1.5 million is available to support 450 startups.

The main initiatives are the Tourism Innovation Centre (Centro de Inovação do Turismo), the Tourism Digital Forum and the Fostering Innovation in Tourism programme (FIT). Turismo de Portugal has built up a partner network with 40 incubators to promote new startups and help them to have a presence at international trade fairs.

Several more initiatives are currently in the pipeline, including the Madeira Startup Retreat (which gives eight selected startups the opportunity to participate in a two-month programme with €4,000 of funding), Tourism Up, From Start to Table, Lisbon Challenge Fall and Tourism Explorers.

Vila Galé: an example of best practice

Few industries have embraced digitalisation like the hotel industry. One example of good strategy in this sector highlighted in the KPMG report Customer Experience Excellence is Vila Galé. The hotel chain’s use of digital technology is most visible in the way it communicates with its guests, but the biggest changes have been internal. The company has introduced paperless processes for everything from invoice approvals to leave rotas, and staff can now log maintenance issues (such as doors or rooms that need repairs) on their smartphones. “That’s meant we can respond to incidents more quickly and effectively,” explains manager Gonçalo Rebelo de Almeida. Consequently, there has been a “sharp fall” in the number of incidents reported by guests.

Vila Galé wants to simplify things for guests too. For example, the hotel is introducing a new customer portal, Vila Galé My Stay, that consolidates a variety of different processes. Guests can use the tool to check in, check out, order room service, make spa bookings, view bills and menus, manage do-not-disturb notices and contact reception. “Prior to check-in, guests receive an email with login details and a website address where they’ll find everything they need. This service helps make their stay even more relaxing,” explains Gonçalo.

The company is taking a similar approach to the interface used by its staff. “We now have a page where staff can view shift and leave rotas. There’s another page where they can submit suggestions. We’re developing the individual elements into customer and staff portals with a common visual layout.”

There have been several phases to the digitalisation process. At one point, the company was working on the development of a mobile app, though this was abandoned when it was realised that guests didn’t want to download an app just for the occasional stay at the hotel. Instead, the company developed a responsive website and switched to a Web app format.

Vila Galé also decided to introduce a custom enterprise resource planning system (ERP for short) to help with internal admin. The system was developed by the startup Infraspeak, one of the companies selected by Turismo de Portugal to handle international marketing.

Vila Galé is just one of many examples of the increasing use of digital technology in the Portuguese tourism sector. Other trends include robotic processing automation solutions: for example, to report faults and help ensure repairs are carried out more quickly, allowing staff to spend more time looking after guests and less on routine maintenance tasks. This is something that the Pestana Hotel Group has invested in. Other companies (for instance, cruise catering businesses) have experimented with the Internet of Things and biometric recognition.

Infographic of how the tourism in Portugal has evolved over the last five years

Development of tourism in Portugal

Startups are leading the way

“Tourism in Portugal is in a completely new phase compared with ten years ago,” according to Djalmo Gomes, co-founder and CEO of the startup Live Electric Tours. Launched in 2017, the company offers tours in electric cars equipped with specially developed livestreaming technology. “The demand is huge. In 2017 and 2018, Portugal was named the World’s Leading Destination two years in a row at the World Travel Awards. So there’s an appetite to get to know Lisbon better,” Djalmo explains. He was one of many Portuguese to return home from abroad to start a business and capitalise on trends in the tourism industry. “Today, Lisbon is worth more than just a visit. Lots of entrepreneurs come and then stay. One key factor has been the growth of the Web Summit, which has made companies see entrepreneurship as a form of innovation.”

A digital tour through Lisbon

A grant from Tourism Explorers, one of the Turismo de Portugal programmes, propelled the startup to success in 2017. “It made us realise that the product had the support needed to succeed on the market,” explains Djalmo. At that point in time, “there wasn’t yet a quick, eco-friendly way for tourists to familiarise themselves with the city while simultaneously being plugged into social media so they could share the experience”. The service is aimed at tourists on a city break who want to get to know Lisbon in two days without being dependent on public transport, tour guides or expensive private travel services. The fleet comprises 16 Renault TWIZYs with a GPS audio guide and a camera so that the journey can be livestreamed on social media.

The Portuguese Secretary of State of Tourism and Turismo de Portugal supported the company, which received €700,000 from Portugal Ventures and a prize at the StartUp Europe Awards, in order to showcase an example of innovation in the sector. Djalmo believes that more traditional companies “are waking up to digitalisation”. For instance, museums in inland Portugal are increasing the number of interactive exhibits they offer.

Explore Portugal via app

João Moedas, CEO of CityGuru, believes that Portugal can set itself apart by focusing on tourist experiences. His startup has developed a kind of Uber for tour guides. Visitors can use the app to find nearby tour guides who are available to do a tour within the next ten minutes. “It’s a perfect fit for the on-demand economy,” explains João, who like Djalmo returned to Portugal from abroad a few years ago. He believes that thinking about experiences and life outside the hotel room has been an important trend in the tourism sector, but only a few companies have really understood it so far. “The experience of visiting a place is about more than the hotel you stay at. What holidaymakers remember isn’t the bed they slept in but the experiences and cultural life out on the streets.” That’s what Portugal is seeking to reinvent.

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