Travel agencies say they are “amazed” by the Portuguese vacation rush, and look forward to a historic year, while the rest of the Euro area faces the consequences of the latest waves of inflation.
“The Portuguese are treating themselves to vacations like never before” asserts Pedro Costa Ferreira, President of the Portuguese Association of Travel and Tourism Agencies (APAVT), in an interview with the daily Diario de Noticias. He reveals that in the first few months of this year, demand for travel was 20% up from 2023, which had already been the best year in a long time for the sector.
Although the current economic situation is “punctuated by rising interest rates, loss of purchasing power, political instability and wars,” travel agencies are exceeding all sales records. “Several million euros’ worth of bookings were sold at the Lisbon tourism fair. Summer is approaching and, apparently, bookings are being made early”, he points out.
“Travel, an investment”
Pedro Costa Ferreira says he is “astonished” by the Portuguese people’s great appetite for travel. Initially, the outlook for the year was rather cautious, aiming merely to match last year’s record figures, but expectations for growth have been far surpassed. “We can’t explain why this is happening, we can only point out that it is happening,” he adds.
It’s all the more surprising given that travel prices, like many products that suffer the consequences of inflation, have risen. Last November, Portugal hit record highs with an average cost of 127.1 euros per night for a room, up 30.8% on 2019 figures, as reported by Portugal’s National Statistics Institute.
“Despite the macroeconomic situation, it is likely that the Portuguese will continue to travel. At least as far as our typical customer is concerned, we’re convinced that they don’t see traveling as a cost, but rather as an investment,” explains Rui Pinto Lopes, head of tour operator Pinto Lopes Viagens.
What is the secret recipe of the Portuguese?
Is travel a “wellness” investment for the Portuguese? It could be. An analysis by the Bank of Portugal, published last week, shows that the country’s well-being index has risen over the last three decades, reflecting a greater weight of consumption in gross domestic product (GDP) and higher life expectancy.
The banking regulator’s economists explain that Portugal’s welfare index has risen by an average of 2.7% per year between 1995 and 2022, revealing a process of convergence with the European Union.
But they’re not the only ones: an increase in the welfare index has been recorded in all EU countries, with average annual growth ranging from 1.4% in Italy to 6.3% in Estonia, mainly due to an increase in consumption.
So, what’s the Portuguese secret? Between 2021 and 2023, Euro area countries experienced unprecedented levels of inflation: on average, +9.1% in 2022 and +5.2% in 2023, according to Eurostat. While most European economies are struggling to contain price rises, Portugal seems to have a head start: its annual inflation is set at 4.3% in 2023, compared with 7.8% in 2022.
A recent Ipsos study reveals that inflation is at the top of travelers’ concerns in every country. Nearly 47% of Europeans say they will not travel this summer for economic reasons (+6 percentage points vs. 2022), 51% of Americans (+6 pts) and 50% of Canadians (+9 pts). It would seem that the Portuguese have less to worry about…
