Portuguese Guests Outpaced Foreign Visitors in May as Tourism Growth Eased to 2.8%

Portugal's tourism machine is still expanding, but the engine driving it has quietly changed. In May, the country's hotels, guesthouses and licensed short-term rentals logged 3.3 million guests and 8.0 million overnight stays, according to the Instituto Nacional de Estatística (National Statistics Institute, or INE). Both figures were records for the month — yet the growth rates, 3.9% and 2.8% respectively, mark a distinctly gentler climb than the double-digit surges of Portugal's post-pandemic boom.

The more telling number is who is filling the rooms. Overnight stays by residents jumped 7.6% to 2.1 million, while stays by non-residents — the foreign visitors long treated as the industry's lifeblood — rose just 1.1%, to 5.9 million. Portuguese travellers, in other words, are now doing most of the growing. Revenue held up better than volumes, with total takings of €755.7 million and room revenue of €575.1 million, up 5.8% and 4.8% — a sign that operators are pushing rates even as guest numbers plateau.

Old markets soften, new ones surge

Among the ten largest source markets, the standouts were Brazil, up 9.3%, and Germany, up 8.6% — a useful counterweight as some traditional European feeder markets flatten. Geographically, the concentration remains extreme: the Algarve (26.3% of overnight stays), Greater Lisbon (23.6%) and the North (19.1%) together accounted for 69% of the national total. But the fastest growth is happening away from those anchors, with the Alentejo up 10% and the North up 6.7%, hinting at a slow spread of demand into less-trodden regions.

That dispersal is not accidental. Portugal's marquee destinations are increasingly pushing back against the crush of visitors, from Sintra barring tour coaches from its historic core to tighter rules on short-term lets. The sector is also reshaping around its air links, whether that is TAP restoring long-haul routes or the looming question of who ends up owning the flag carrier. And the tourist euro is quietly rebuilding public finances, feeding the tourist-tax revenues behind swelling municipal surpluses.

What This Means for Expats

• Running an Alojamento Local? Watch the mix: With foreign demand flat and domestic demand rising, hosts who market only to overseas guests may be missing the segment actually growing. Portuguese weekend and summer travellers are increasingly worth courting.
• Rates, not crowds, are where the money is: Revenue is outpacing guest numbers, meaning the market rewards quality and pricing over sheer volume. A well-positioned property can still raise prices without emptying.
• Consider the fast-growing regions: The Alentejo and North are outpacing the saturated Algarve and Lisbon. Expats weighing a tourism-linked business or a second home may find better runway inland and up north.
• Expect tighter local rules: As destinations move to manage congestion, licensing and access restrictions for short-term rentals and coaches are only likely to multiply. Factor regulatory risk into any tourism venture.

The mid-2026 snapshot is of an industry maturing rather than stalling: still growing, still profitable, but no longer riding the automatic post-Covid rebound. For a country where tourism underpins a large slice of GDP and employment, the shift toward domestic demand and higher-value guests may prove healthier — and more durable — than another year of record foreign arrivals.