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Portugal's hospitality sector thrives but braces for financial storm ahead

A record year for visitors masks deepening cracks in Portugal's hospitality industry. With costs climbing and crises looming, businesses demand urgent lifelines.

,   and  Administrator
2 min read
The image shows a restaurant with red awnings on the side of a street, surrounded by buildings with...
The image shows a restaurant with red awnings on the side of a street, surrounded by buildings with windows, railings, doors, lights, boards with text, plants, and other objects. There are tables and chairs outside the restaurant, and a few people walking on the road. The restaurant is located in Madrid, Spain.

Industry Voices Concern, Governor Downplays Risks

Portugal's hospitality sector thrives but braces for financial storm ahead

The governor's outlook stands in stark contrast to the assessment by Ana Jacinto, who, while acknowledging that 2025 was a record year for overnight stays—with tourism remaining a key growth driver, albeit slowing—highlights mounting worries. The Portuguese Hospitality and Restaurant Association (AHRESP) has raised alarms over soaring costs, compounded by pressure from the Middle East crisis, which is squeezing margins in an already fragile sector.

"There is a great deal of apprehension because we don't yet know the conflict's full impact," says Ana Jacinto, underscoring the uncertainty looming over the summer season—a traditionally peak period for the industry, even as tourism's seasonal fluctuations become less pronounced. The AHRESP secretary-general warns that the sector fears rising jet fuel prices and potential fuel shortages for aviation in the coming months could dampen demand.

"Our prices started from a very low base," she notes, and while adjustments have been made, businesses face clear limits on how much they can pass on cost increases, particularly given that "labor taxes remain extremely high." The result is an increasingly precarious balance: activity persists, but under growing strain.

AHRESP is urging the government to expedite promised support, arguing that the sector is suffocating and can no longer shift rising costs onto consumers without risking unsustainable pressure. The association has requested an increase in non-repayable aid. "Since this measure was negotiated, the situation has only worsened. We don't yet know the exact figures," Jacinto emphasizes. Liquidity support is critical, she adds, while the sector has spent months pushing for tax relief, including a VAT reduction from 13% to 6%.

Meanwhile, the governor of the Bank of Portugal paints a different picture. "The numbers speak for themselves," he asserts, pointing to historically low non-performing loan ratios in the restaurant sector (2.1%).

Santos Pereira notes that profit margins "have remained relatively stable in recent years, close to pre-pandemic levels." He also highlights continued job growth and a net increase in business creation over closures, citing Informa D&B data: 4,991 new businesses were established in 2025, compared to 1,307 failures. He does, however, concede that net business creation in the restaurant sector slowed last year.

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