Tourism represents a key industry in the Portuguese economy. In 2004, Portugal received more
than 12 million tourists with tourism representing approximately 8% of the GDP. Tourism also plays an
important role in the Portuguese employment marketplace since more than 10% the population is
employed in tourism-related sectors. Located in the south of Portugal, Algarve belongs to the top 20
travel destinations worldwide with the local economy relying mostly on the tourism-related activities.
Despite the exceptionally favourable conditions for tourism (quality beaches, warm climate, hospitable
and friendly community and multiculturally-attuned), Algarve has recently experienced some difficulty
in maintaining its position as a preferred travel destination. Compared to 2004, the number of tourists
entering Algarve decreased by 0.8% with lodging demand decreasing by 4.8% (AHETA, 2005).
Although several external factors could be mentioned as passive reasons for this occurrence, the current
condition of tourism in Algarve is much the result of emerging new holiday destinations that offer
lower prices and, in some cases, higher quality facilities (AHETA, 2005).