What different strategies did the owners use, in order to maintain good relationships with (possible) guests but keep some cash coming in during COVID-19?

Dilemmas of small accommodation businesses in the Algarve: Surviving COVID-19’s tourism standstill

What different strategies did the owners use, in order to maintain good relationships with (possible) guests but keep some cash coming in during COVID-19?

During the COVID-19 pandemic, worldwide tourism came to a standstill. The impact was particularly pronounced in the Algarve, the southernmost region of Portugal, where tourism plummeted from just under 50 million bednights in 2019 to approximately 12 million the following yearβ€”a decline of nearly 75%. Global travel restrictions halted international tourism, while two lockdowns in Portugal, spanning two months in spring 2020 and from November 2020 to March 2021, severely impeded domestic tourism. Additionally, intermittent partial lockdowns during this period allowed for limited tourism in specific locations, subject to stringent regulations.

The global impact of the pandemic varied across different demographics. While the virus could affect anyone, and the measures implemented affected everyone’s lives, the repercussions were not uniform among distinct groups. Not surprisingly, research on the effects of disasters suggests that more privileged social categories, including factors such as race, gender, education level, income, health, and housing, were better equipped to cope with the crisis’s aftermath. COVID-19 was characterized as a ‘syndemic pandemic,’ highlighting the interconnectedness of inequality and the disease’s impact. The health and financial consequences were more severe for certain groups than for others.

Figure 1. The wetland between the land and the sea on the east side of the Algarve
Credit. Author

Tourism and Algarve’s economy

Tourism serves as the primary engine driving the Algarve’s economy; with high demand for sun, sea, water sports, as well as golf on one of the 39 courses (in an area of approximately 5000 km2). The tourism sector is complemented by foreign residents who choose to reside in the Algarve either on a full-time basis or for extended periods throughout the year. This aligns with the concept of ‘lifestyle migration‘, characterized by the movement of relatively affluent individuals seeking an enhanced quality of life in a new location. Motivations for relocation often include the climate, laid-back lifestyle, and a change in scenery.

As of 2020, 23.6% of the Algarve’s population comprised foreign nationals, many of whom can be classified as lifestyle migrants. While lifestyle migration patterns were initially dominated by retirees, there is a growing segment of individuals who are venturing into entrepreneurship, earning them the designation of ‘lifestyle migrant entrepreneurs‘. This shift allows them to pursue a change in lifestyle while still generating income. Unlike other migrants in the later stages of life, these individuals, despite having come from relatively prosperous economic backgrounds, are not yet positioned to retire from work fully.

Throughout the pandemic, we conducted interviews with twelve Dutch lifestyle migrants living in the eastern, more rural part of the Algarve. These individuals all managed small-scale tourism accommodation businesses. Our focus was on understanding the economic repercussions they faced and how they navigated the challenges posed by the COVID-19 pandemic and its associated measures and restrictions.

Profiles of the entrepreneurs

The Dutch business owners had diverse life stories; they originated from various regions in the Netherlands and made the move to the Algarve at different life stages. With the exception of one, they all moved as couples. Their properties varied in size, ranging from accommodating four guests to hosting up to 26. Seeking a slower pace of life combined with favourable climate, rural landscapes, and proximity to the sea were common motivations for their relocation.

Guest flows

The economic impact of the pandemic manifested in various ways. Guest flows were significantly disrupted, particularly as the properties heavily relied on Dutch visitors. This narrow market led to a sudden halt in bookings and widespread cancellations, with one owner estimating bookings and income in 2020 to be around 30% of previous years.

However, half of the properties had guests who ended up staying for an extended period of time. For example, one of the guests had a serious heart condition who did not want to return to the Netherlands: they felt safer in the rural Algarve. In another property, two of the three guests extended their stay, which helped the business through the first lockdown.

The properties were affected in different ways. Two of the properties were going to open for guests for the first time when the pandemic hit. They used the extra time to prepare. One property reported that they did not have a decreased flow of guests. Some of the properties saw a shift in the origins of their guests.

Origins and rurality

Notably, only two properties had Portuguese websites when the pandemic struck. During the first lockdown, others translated their websites and expanded advertising efforts to more international platforms. Situated in rural areas with spacious grounds and separate apartment entrances, the properties attracted guests seeking quieter alternatives to bustling hotels. In the summer of 2020, most guests hailed from nearby Spain and Portugal. Owners also extended hospitality to stranded travellers, offering parking spots for campervans in addition to lodging.

Yes, the big companies all gave vouchers. But they can, they have back-ups. We are a small business, it is different for us. Some guests understood, for others I had to change the policies – after endless email sessions. And to some we gave vouchers, to some we paid everything back.

Karijn Nijhoff

Cancellations and vouchers

In the early stages of the pandemic, the EU mandated refunds for all bookings. While airlines and larger companies implemented voucher systems for cancelled trips, smaller businesses faced greater challenges. Owners grappled with balancing business survival and customer satisfaction, with responses varying from full refunds to negotiating solutions. Some properties implemented voucher systems, aiming to maintain goodwill and secure future bookings.

Surviving dark clouds

Contrary to broader research discussing the heightened marginalization and precariousness experienced by immigrant communities during the pandemic, the Dutch lifestyle migrants in this study faced a different reality. Despite significant economic impacts, their relative privilege and rural location buffered them from the worst consequences. Large, rural properties allowed for quick adaptation, attracting guests from diverse locations and ensuring a steady cash flow through flexible strategies. While clouds loomed over the sunny skies of the Algarve, these Dutch small business owners weathered the storm with resilience, experiencing the pandemic’s effects differently from other migrant communities and small business owners.

The relative resilience of these small businesses, even in times of crisis, means that they can make a valuable and stable contribution to the rural tourism landscape of the Algarve. However, our research also reveals that local governance could do more to attract and support such migrant entrepreneurs in setting up and running their businesses, as well as provide more clarity in bureaucratic procedures.

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Journal reference

Nijhoff, K., & Torkington, K. (2023). Clouds in the normally sunny sky? The effects of the Covid-19 pandemic on Dutch lifestyle entrepreneurs in the Algarve. Geografiska Annaler: Series B, Human Geography, 105(4), 409-427. https://doi.org/10.1080/04353684.2022.2112739

Dr. Karijn Nijhoff works as a senior researcher with the research group Urban Social Development at The Hague University of Applied Sciences in the Netherlands. In her work, she examines patterns in international migration, concentrating on the labour market position of international migrants. She has investigated entrepreneurship among recent refugees in the Netherlands and the position of Polish labour migrants in the Netherlands. In her most recent work, she explores the participation and integration of intra-EU migrants in various countries.

Dr. Kate Torkington is an Adjunct Professor at the University of the Algarve, School of Management, Hospitality, and Tourism, and a researcher at CiTUR - Centre for Research, Development, and Innovation in Tourism (Portugal). She is currently leading a research project on tourism-related lifestyle migration entrepreneurship in rural areas. Her research interests include language practices in tourism and migration contexts, migrant identities and place identities, politics of place, discourses of and about tourism, sustainability practices in tourism, rural tourism, and sustainable development.