The Algarve is one of Portugal’s most popular tourist regions, accounting for approximately 30% of overnight stays in the country.

Known for its mild climate and 3,000 hours of sunshine annually, it first rose to prominence in the 1960s as an upscale alternative to the Mediterranean.

Today, it remains a favourite for retirees and second-home buyers from Northern Europe. The region is also considered one of the world’s leading golf destinations, hosting 31 of Portugal’s 75 golf courses. Strict development controls have preserved much of the coastline, distinguishing it from other overdeveloped European resorts.

Source: HVS Research

Economic Indicators – Portugal

Source: International Monetary Fund (IMF), April 2025

Tourism Demand

Apart from the pandemic years, demand in the Algarve has remained remarkably stable. In 2024, international bednights exceeded pre-pandemic levels, reaching more than 16.0 million compared to 15.9 million in 2019. While domestic demand has slightly declined in recent years, the surge in international visitors largely compensated for this shift.

A key driver of this growth is the expansion of flight connections between the USA and Portugal. While Lisbon and Porto have already benefited from increased air links, the Algarve is poised to follow suit. Beginning in 2025, United Airlines will operate four weekly flights between Newark (New York) and Faro from May to September, a highly anticipated development expected to boost further the region’s growing popularity among US travellers.

Golf continues to be a crucial segment for the Algarve, particularly valuable for extending tourism beyond the peak summer months, despite its price sensitivity. Another emerging trend is demand from sports teams, particularly football clubs that choose the Algarve for winter training camps, drawn by its mild climate and high-quality infrastructure.

This segment is especially beneficial for hotels during the low season, as teams typically opt for full-board stays and make use of meeting facilities, keeping multiple hotel departments active during an otherwise quiet period. Recognising this opportunity, an increasing number of hotels are now investing in professional-grade sports facilities to better attract this market.

Increase in US Flights Drives Bednight Growth (000s)

Source: HVS Research

Hotel Performance

The Algarve has demonstrated a consistently stable level of demand over the years. Although the region was significantly impacted by the pandemic, the recovery of the Algarve as a destination was rather swift.

Domestic demand fluctuated very little throughout the pandemic, and international demand rebounded quickly, with already 89% of the international stays regained in 2022. By 2023/24, the total number of bednights in the region had returned to pre-pandemic levels.

This rapid recovery is reflected in occupancy rates, which stood at 57% in 2019 and had already reached 55% in 2022 before climbing to 58% in 2023 and 59% in 2024. This all-time-high performance was partly influenced by a temporary reduction in supply, as several hotels were undergoing renovations.

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