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For Chitra Stern, Portugal’s economic recovery is bringing an unforeseen twist.
When she and her husband opened their first hotel in a small fishing village on the southwestern tip of Portugal in 2010, they had no trouble finding workers to help run it in spite of its remote location. They visited a few hotel management schools, placed ads and were soon interviewing candidates for their Martinhal Sagres Beach Family Resort Hotel. With Portugal on its knees at the time and dozens of hotels on the verge of bankruptcy as the country sank into recession, finding high-skilled, affordable workers was a breeze.
Now, the 47 year old, who owns four hotels in the country with her husband Roman, says she just can’t find enough Portuguese workers.
“With the tourism boom, we now face a shortage of workers, not jobs,” Stern said.
As Portugal starts preparing for what might be a bumper tourist season this summer, people in the industry are beginning to worry about being able to cope with the influx of visitors. Already last year, Portugal’s hotels got a record 20.6 million visitors, about twice the country’s population. Helped by the tourist boom, the economy expanded 2.7 percent, the fastest pace since 2000. Unemployment fell to 8.1 percent in the fourth quarter of last year from a record 17.5 percent in 2013.
While the recovery in the job market has been good news for Portuguese workers, it has left some hotel owners frustrated in their search for staff. The crunch risks weighing on an industry that accounts for almost 17 percent of the country’s gross domestic product and one in five jobs, according to data compiled by the World Travel & Tourism Council.
“We can get directors but it’s people to fill the most basic jobs that we have trouble finding,” said Raul Martins, head of Portugal’s Hotel Association, which represents about 600 hotel companies.
Martins, who is also the chairman of the Altis hotel chain, estimates there’s a shortfall of about 40,000 workers for hotels. Low wages may be part of the problem—Portugal is western Europe’s cheapest country after Malta in terms of hourly labor costs, according to data compiled by Eurostat.
While hotel revenue and visitor numbers are at record highs, the average net salary for workers in hotels, restaurants and similar professions increased just 7.7 percent in the 2011-2017 period to 632 euros per month, according to Portugal’s national statistics institute. The minimum wage is 580 euros per month. Hotel employees on average make 1,035 euros a month, said Martins, citing a study by Portugal’s Hotel Association.
The hunt for hotel workers may worsen as dozens of new lodgings are expected to emerge in coming years.
Pestana Hotel Group, Portugal’s biggest hotel operator, said in January it plans to invest 200 million euros ($248 million) in twenty new hotels through 2020, with half of that investment to be done in its home market. The number of new hotels in Portugal increased 37 percent in the 2011-2017 period to 1,945 units, according to Deloitte’s Portuguese Hospitality Atlas.
Sun, sand and golf have always made Portugal attractive for tourists. The current tourism boom began in 2011 when political upheaval in other sunny destinations like Tunisia and Egypt prompted many foreigners to turn to the southwestern European nation instead.
Fueling the rush are budget carriers like EasyJet Plc and Ryanair Holdings Plc, which began setting up hubs in Portugal in 2012. ANA-Aeroportos de Portugal SA, which operates the country’s airports, said passenger traffic rose to a record in 2017.
“The low-cost airlines are responsible for all the growth in tourism in Portugal,” Michael O’Leary, chief executive officer of Ryanair, said at a press conference in Lisbon on Feb. 21. “We’ve created an entirely new market.”
Portugal wants more. The government is running an online campaign abroad to attract more visitors during both the high and low seasons. Eurico Brilhante Dias, the secretary of state for internationalization, says his administration is training unemployed workers to fill demand in the tourism sector.
Yet, in a country with no population growth, an increasing number of workers will have to come from abroad, said Stern, the owner of the Martinhal hotels. In February, Stern and her staff carried out presentations to dozens of hotel management students who were visiting Portugal from the U.S.
“The labor market is a big part of the economy that can’t just be switched on and switched off,” Stern said. “Portugal has done very well in terms of raising awareness but if we fail to deliver in terms of service we are destroying a lot of the good work that has been done.”
©2018 Bloomberg L.P.