A study carried out by the movement “Oporto is not for sale” reveals that, among the 6,198 Local Lodging registrations in Portugal’s second largest city, 51.3% are enrolled by companies. The leading company holds 70 properties while there are 84 “AL” enterprises exceeding the legal limit of 7 registrations.
AMAL, the Algarve’s mayors’ group unanimously approved the introduction of a tourist tax for visitors staying in the region’s hotels and local lodging establishments. All municipalities in the region have committed to participating in the new charge. While the tax has yet to be set, it is expected that the final fee will follow the example of Lisbon where visitors pay €1 per night per person. Airbnb, the online reservation platform, helps to collect much of the tax and delivers millions of Euros to the city each year. Alternatively, the Algarve councils may follow the model of Oporto that has recently introduced a €2 per night per person levy. The region’s hoteliers’ association along with local lodging owners are expected to oppose the measure.
Each council plans to retain the money raised in their respective townships to be used “in favour of the development of the Algarve municipalities.” The stated purpose is to use the funds for “culture, combating seasonality and promoting the quality of the Algarve.”
The experience gained from Local Lodging over the years needs to be applied to the Tourist Tax concept. The shift from local statutes to national unity has lead to massive compliance, quadrupling the number of registered “AL” businesses over the past four years. Total registrations now surpass 60,000. Hopefully, the tourist tax concept will eventually embrace country-wide implementation rather than different rules and practices in each of Portugal’s 308 town councils. A comprehensive plan would eliminate local deviations which only create confusion and a sense of unfairness amongst visitors.
If a tourist tax were applied as occurs with “IMI” (Municipal Property Tax), where all municipalities reap the benefits proportionally, leaving tax collection from agents in the hands of the “AT” (Tax Authority), the outcome would increase local revenues while strengthening equity and harmony.
Last year, 152,000 homes were sold in Portugal, an increment of 25%. French and Brazilian are the foreigners who are buying more properties. The jump in demand also led to a substantial increase in prices: Lisbon up 37%, Oporto 29%, Madeira 24% and the Algarve 18%.
Based on the number of overnight stays last year (6.8 million) to be charged at 2 euros per night per person, the total anticipated revenue for the municipality is expected to reach 13 million euros. The city is preparing the process of applying the new tourist tax and anticipates implementing the new levy in January next year.
Innovation in the regulation of local lodging has made Portugal a case study. Short term holiday letting is an integral part of the current Portuguese tourism boom. Dilapidated heritage districts in Lisbon and Oporto have a new lease on life with private investment driving much needed restoration. As with any phenomenon of rapid and disorderly growth, distortions have emerged. But this should not be a pretext to kill the chicken that lays the golden egg.