Interview with Prof. Hugo Pinto, By Andrew Coutts

How do you value the residential tourism product within the context of the Algarve economy?

Prof. Hugo Pinto, CES - University of Coimbra

Prof. Hugo Pinto, CES - University of Coimbra

Residential tourism is one of the crucial areas to the future development of the Algarve as its tourism sector, as everybody knows, is the dominant economic activity in the region. Its socioeconomic weight cannot be neglected. In the Algarve, residential tourism encompasses traditional tourist options associated with the sun and sand, rural sites but also the new urban tourism wave in the city centres.

In the Tourism National Strategic Plan 2020, it was identified as a key product for Algarve. In the Tourism National Strategy 2027, living is considered one of the strategic emergent assets for the Portuguese tourism. Also in the preparation of the regional Smart specialisation strategy (RIS3-Algarve), a document that was a requirement for assessing European Structural and Investment Funds during 2014-2020, the residential tourism was seen as an opportunity that could help the creation of critical mass, one of the big limitations when it concerns the investment decision in any innovative activity in this region.

Residential tourism has been crucial in the past, bringing many people to stay in the Algarve. Compared to the “average” tourist, residential tourists create deeper roots within the territory, they are more loyal to the destination. They are also keen in bringing their knowledge, ideas, projects and contacts, stimulating innovation and new ventures with partners in the region. Residential tourists often work as ambassadors in the region abroad. Residential tourism is also instrumental for urban regeneration and has been one of the key sources of revenue for municipalities, associated with property taxes. Many areas that were decaying can now be vibrant again thanks to the expansion of residential tourism.

  

What constraints do you consider exist to the product contribution increased value and weight in the economy?

Residential tourism is an interesting economic activity. Nevertheless, it has problems that may need attention from public policy and its key stakeholders. I will indicate three that seem relevant to me and its solution could help its positive influence.

The first problem regards two interrelated phenomena: growing speculation and gentrification of cities. The fact that is becoming evident that there is no housing available in the city centres for “typical” residents is problematic. Algarve has always been an open region. The problem is that we may reach a level where, if there is no regulation, the houses will end up going to people that do not spend much time or even none here. The acquisition is just a speculative investment. Portugal is one of the countries that most easily attract these investments today, who take advantage of the tax benefits that are given to foreigners. This does not benefit the community nor the regional economy. Soon, if it is not controlled, many places, like historical neighbourhoods, that attracted the residential tourists will have lost its appeal and authenticity. Exactly what attracted the residential tourist in the first place. We need to pay attention to the right balance between the number of traditional tourists, residential tourists and full-time residents.

A second aspect for me is limited utilization. I will explain what I mean. A residential tourist uses its house only in a fraction, often very small, of the year. That creates emergent problems in terms of the provision of public goods. An example, any neighbourhood with nobody there for months will create additional risks regarding security and related expenses. The Algarve and other regions want residential tourists but nobody likes the feeling of entering ghost towns.

The third issue regards the governance of residential tourism. Residential tourists are stakeholders of the region. They are not only passing by; they do not vote here but they should have a word to say in policy-making. They need a collective voice. A possibility is the creation of a dedicated body that aggregates the vision of residential tourists, that create interaction among its associates or members and the local authorities, planning and policy, promotes the region in other locations and his capable of attracting more talent, resources and ideas to the Algarve.

 

 

What role should sustainability have in the future of the economy?

Sustainability is crucial for the future of any economy. In fact, it is so vital that the economy will have no future if society, the local communities, politicians and tourists do not pay attention to this issue. Considering the environmental dimension, it is fundamental to respect the carrying capacity of the region in its many activities. I feel that often in Summer Algarve is close to overcoming this threshold. This may be extremely dangerous has some resources may not be renewable. An example regards wildlife. Many people want to see with their eyes and touch with their own hands but we need to consider that many ecosystems are fragile. See what is happening with the sea horse communities in Ria Formosa. Considering the social dimension, residential tourists desire many different things. Experience the real Algarve. Interact and learn with local knowledge. To be in a safe place. Inequality is problem for all that. We should not stimulate residential tourism as fortified ghettos. We want tourists that are embedded in the socioeconomic fabric of the Algarve. Third. The economic dimension. If we do not respect and degrade the environmental quality of the region, if we do not protect local ways of living and assure that locals can be residents, soon the Algarve that we know will be completely gone. And with that the interest of tourists and investors. Prices of property will fall. Bad for business. And negative for the region as a whole.

The 2008 crisis showed a sad picture of the Algarve. Now that the turmoil is far it seems impossible to accept that the GDP fall and the unemployment growth figures were real. Today the crisis is overcome, the Algarve recovered its tourism dynamics, helped by many positive but exogenous factors. I am not sure if the stakeholders in the Algarve learn everything it should and is needed to pursue a true change in its economic structure. What will happen to Algarve when the next crisis arrives?

 

Can the Algarve emulate the hi-tech hub evolution of Lisbon and Porto – how to complement or compete?

No. The Algarve cannot emulate Lisbon or Porto for many different reasons. Nevertheless, I am sure that, at is scale, this region can be very attractive to talent and business, even in hi-tech sectors generating innovation for specific segments of the global value chains. The residential tourism can be a catalyst for this, for example, stimulating the sophistication of key enabling technologies as energy or ICT.

One reason for not emulating other cases of success regards the specificities of the Algarve’s innovation ecosystem. In Lisbon and Porto there is no huge problems regarding critical mass. Bigger cities stimulate agglomeration economies that drive innovation. Both public and private sectors have a large number of organizations that compete and cooperate with each other. In the Algarve the public research side is dominated by the University of Algarve. This Higher Education Institution is central to the development trajectory of the region in the last forty years but it is only one. More and diverse S&T players are needed in the region. Regarding innovation intermediaries, there is only a relevant actor, the technology transfers office of this public university. Many other actors are needed to guarantee that the cycle of innovation, from knowledge creation to market, is conveniently covered.

The economic fabric is dominated by tourism-related services. Tourism can be a high value added sector but unfortunately that is not what happens in the Algarve. Even if it has improved and diversified its product in the last years. Firms are also less engaged in traditional innovative activities, such R&D or patenting, when compared with other Portuguese regions mainly because the industrial sector almost disappeared from the region in the last half century. Knowledge intensive-business services have difficulties to prosper for different sorts of reasons.

Also a word for the government, taking into consideration the different levels of decision-making, national, regional and local, bureaucracy and administrative burdens remain excessive. Public officers are afraid to make simple decisions as law and regulations are often unclear and changing constantly. It is needed that the State creates stability for private actors to decide well. The State can steer the strategic collective vision for regional development. In that particular issue, I believe that the CCDRs, even if often pushed by requirements of the European Structural and Investment Funds, developed a very relevant contribution in Portugal. Probably in this point the problem is the lack of implementation of the strategies. Finally, a word to governance. The fact that Lisbon and Porto have this size-effect, it reduces control and power over the entire ecosystem by single actors. I think, here it is only my very personal opinion, that much of the immobility of the Algarve results from lock-in effects that a few but influential individuals and organizations create to guarantee the maintenance and reinforcement of their own status quo. Break these deadlocks and collectively we will be able to get closer to Algarve’s full potential, as one of the best regions to live and work, with a vibrant, advanced and resilient economy and excellent quality of life.