Factors affecting Foreign Direct Investment in the Accommodation Sector

Despite the many theories that suggest an explanation for international trade and why certain countries attract Foreign Direct Investment (FDI) more than others, researchers are unanimous in affirming that FDI is influenced by pull factors (specific characteristics of the host country) and by push factors (specific characteristics of companies and of their home country). This study aims to identify the key factors influencing FDI in the Portuguese tourism sector. With this purpose, a theoretical model was developed which was validated through semi-structured exploratory interviews and questionnaire surveys applied to foreign investors exploiting accommodation units in mainland Portugal. Fifty three questionnaires were considered valid, representing 63.9% of the universe of foreign investors in Portugal (accommodation sector). The results obtained indicate that Portugal’s geographical location, its image/brand as a tourist destination and the Portuguese tourism offer are considered the key factors influencing FDI. This study also identifies that the main barriers to FDI are bureaucracy, tax burden and Portugal’s current economic situation.