US tourists boost European economies

The Portuguese coastal city of Lisbon is experiencing a tourism boom, largely driven by American tourists, resulting in significant economic growth and increased tax revenue.

The sun-bleached Lisbon’s tourism surge boosted the economy by 8.2% in 2023, causing a 20% rise in tax revenue compared to pre-pandemic times.

Mayor Carlos Moedas has reduced local taxes and made public transportation free for young people and the elderly. The city is renovating its historic facades, planning a new airport, and introducing a high-speed rail link to Madrid.

Other countries in southern Europe, including Italy, Spain and Greece, are also experiencing a similar boom driven by US tourists.

The influx has spurred investments and raised room rates, with Americans making up a significant portion of hotel reservations. 

The engagement is revitalizing economies that have struggled with stagnation and debt crises since COVID-19 struck in 2020.

However, the rapid tourism growth has raised concerns about sustainability. There have been protests in regions like Spain’s Balearic and Canary Islands against mass tourism.

Economists warn Europe could get “beach disease,” where tourism crowds out other higher-value economic activities.

Rising rents and living costs are making it difficult for locals to afford housing, and the focus on tourism could hinder investment in higher-productivity sectors like technology and manufacturing.