The Socioeconomic Impacts of Tourism on Local Communities in Portugal

In recent decades, Portugal's tourism sector has grown exponentially, evolving from a relatively small industry to one of the primary drivers of the nation's economy. It now accounts for around 20% of Portugal's GDP and has grown to be a significant economic component over time (“Portugal’s Travel and Tourism Sector Set for Record Growth in 2024”). With over 1.1 million jobs and €54 billion in revenue in 2023, the tourist industry is a significant economic driver (“Portugal’s Travel and Tourism Sector Set for Record Growth in 2024”). Furthermore, 2023 saw a 9.2% increase in foreign visitor expenditure (“Portugal’s Travel and Tourism Sector Set for Record Growth in 2024”). Tourism has increased in big cities like Lisbon and Porto, but these gains are also associated with drawbacks, such as growing housing costs and instability within society.

The creation of job opportunities has been the biggest direct benefit of tourism to Portuguese towns. The industry has grown to be a major employer, especially in large cities and coastal areas, such as in Lisbon and in the Algarve. Locals have secured employment in a variety of service-related industries, including hotels, restaurants, and tour companies. The travel and tourism industry in Portugal gained around 36,820 workers between 2022 and 2023, a 9.53% increase, underscoring the industry's ongoing recovery and significance to the country's economy (“Number of Unemployed Has Tripled in Tourism-driven Algarve in May Alone”). Many Portuguese workers benefited greatly from this employment growth as Portugal is in tenth place in the ranking of youth unemployment, which remains about 18%, above the community average (“Strong reduction” in youth unemployment”). By May 2020, unemployment in Portugal had risen significantly, with nearly 409,000 people without jobs, marking a 34% increase compared to the previous year (“Number of Unemployed Has Tripled in Tourism-driven Algarve in May Alone”). In the Algarve, a region heavily reliant on tourism, unemployment spiked from 9,153 in May 2019 to 27,675 in May 2020, reflecting the severe impact of the coronavirus crisis on seasonal employment (“Number of Unemployed Has Tripled in Tourism-driven Algarve in May Alone”).

Tourism has also stimulated local entrepreneurship, with many residents establishing small businesses catering to visitors. From traditional craft shops to food establishments and accommodation services, these enterprises have created additional income streams for local families. The multiplier effect of tourist spending has benefited adjacent sectors, including agriculture, transportation, and retail, creating a more dynamic local economy. This sector also saw approximately 86,000 companies operating nationwide, further highlighting its importance to employment and business activity in the country (“Number of Unemployed Has Tripled in Tourism-driven Algarve in May Alone”).

However, the tourism boom has also generated significant challenges for local communities, particularly in terms of housing accessibility. In Lisbon alone, the number of Airbnb listings increased by 345% between 2015 and 2019, reaching over 22,000 properties (Marques). In Lisbon and Porto, average rental prices increased by approximately 25% between 2015 and 2019, while local salaries only grew by 5-7% during the same period (INE). This disparity has forced an estimated 15% of long-term residents to relocate from historic city centres to peripheral areas (“A Lisbon Story: Short-term Rental Platforms and the Housing Market”). The housing crisis has particularly affected lower-income families and elderly residents, with nearly 30% of their income now going toward housing costs (Marques).

As for tourism's influence on Portuguese cultural identity. With more money supporting cultural initiatives and heritage protection, tourism has, on the one hand, helped to preserve and revitalise local festivals, crafts, and customs. Since 2015, investment in cultural preservation has grown substantially, with over €100 million directed towards maintaining historical sites and traditional practices (“Top 7 EU Initiatives That Are Transforming Tourism in Portugal”). This has enabled local communities to sustain and promote their heritage, turning it into a valuable attraction for visitors. Traditional festivals and crafts have also been revitalised, providing new opportunities for cultural enrichment and sustainable livelihoods. Nonetheless, in Lisbon's historic centre, around 40% of local shops were replaced by tourist-focused businesses between 2010 and 2019, displacing traditional enterprises and reshaping the cultural landscape (Guimarães).

The interaction between locals and tourists further reflects a dual effect: while cultural exchange has introduced communities to new perspectives, many residents feel a sense of displacement, particularly in areas where tourist numbers overwhelm local populations. This complex interplay underscores the need for a balanced approach to tourism that preserves authenticity while fostering sustainable cultural and economic benefits. Both cultural exchange and resident relocation are shown by interactions between locals and visitors, emphasising the need for sustainable and authentic tourism.

Furthermore, in 2019, the travel and tourism sector accounted for 17.8% of Portugal's total greenhouse gas emissions, higher than the European average, although it remains a critical part of the national economy, contributing nearly €38 billion ("WTTC Data Reveals Portugal’s Travel and Tourism Sector’s Climate Footprint"). The industry has made progress in separating economic growth from emissions in spite of these pressures. The sector's emissions climbed by only 4.1% yearly between 2010 and 2019, despite the fact that its economic production grew at an average annual rate of around 5% ("WTTC Data Reveals Portugal’s Travel and Tourism Sector’s Climate Footprint"). Additionally, Portugal's energy mix's proportion of low-carbon energy grew somewhat, while the country's tourist industry's dependency on fossil fuels declined ("WTTC Data Reveals Portugal’s Travel and Tourism Sector’s Climate Footprint"). Although there are still obstacles to overcome, especially in popular destinations like the Algarve where the growth of tourism aggravates climate-related problems like heat waves, water scarcity, and coastal erosion, these initiatives show a national commitment to making tourism more sustainable ("Tourism in Portugal").

In conclusion, Portugal's economy currently relies heavily on tourism. Significant advantages have resulted from it, including the creation of jobs, entrepreneurship, and cultural revitalisation; yet, it has also brought about difficulties, such as increased housing costs, social dislocation, and environmental problems. With areas like the Algarve experiencing water scarcity and coastline erosion, the sector continues to be a major source of greenhouse gases despite initiatives to lower emissions and advance sustainability. To guarantee that tourism keeps boosting the economy while preserving the environment, cultural integrity, and general well-being of the community, it is essential that these issues be addressed with regulations that maintain a balance.