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Spain was once a major tourism driver for the smaller Iberian country, but as Europe’s outbound market wanes, it is the Middle East that again steps in to generate interest and demand.

Portugal’s efforts to upgrade its tourism industry got a boost on Friday with the announcement of plans for a $121 million luxury resort whose backers say is the biggest tourism investment in a decade.

The project on the Alentejo coast south of Lisbon will be anchored by an Amanresort and spa, the high-end chain’s first in Iberia, according to Espirito Santo Group, a conglomerate whose Rioforte subsidiary is fronting the development.

The Herdade da Comporta resort on the Atlantic coast will also feature an 18-hole golf course and 51 second homes aimed at well-heeled German, Swiss and Austrian buyers, to be built in a joint venture with German real estate company Dahler.

Carlos Beirao da Veiga, Herdade da Comporta’s chief executive, said the announcement showed international business continues to bet on Portugal, which is deep in recession.

Tourism accounts for 9.5 percent of Portugal’s GDP and is central to the government’s efforts to revive growth and generate a current account surplus.

Tourism Secretary Adolfo Mesquita Nunes said Portugal needed to do more to fend off stiffening competition from the likes of Croatia and Turkey. It also had to show that Portugal has more to offer than its beaches.

“We are a strong player in the sun and sea market, but we have work to do to get a more diverse image of Portugal as a tourist destination,” Nunes told Reuters. City breaks as well as cultural, religious and sports tourism all offered potential.

The number of domestic tourists fell by double digits in 2012 and will probably drop another 3-5 percent this year as the recession drags on, according to Francisco Calheiros, president of the Portuguese Tourism Confederation.

This made it all the more important to lure more visitors from the rest of Europe. “Portugal gets only 1 percent of the German tourism market. I believe we can get to 2 percent or 4 percent quite quickly,” Calheiros said in an interview.

Reporting by Alan Wheatley and Daniel Alvarenga. Editing by Stephen Nisbet. Copyright (2013) Thomson Reuters. Click for restrictions.

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Tags: amanresorts, portugal

Photo credit: A couple walks to the beach during sunset at Lisandro beach on the Atlantic sea coast of Portugal, 40 km (25 miles) north of Lisbon March 20, 2013. Jose Manuel Ribeiro / Reuters

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