How to Start a Guesthouse or B&B in Portugal

Thinking of opening a small guesthouse or B&B in the Algarve? You’re not alone. Portugal — and especially regions like Lagos, Tavira, and Carvoeiro — has become a hotspot for lifestyle buyers and semi-retirees looking to combine property ownership with a tourism income stream.

Whether you’re planning to rent out a few rooms or run a full-time guesthouse, you’ll need to understand the licensing system, legal obligations, and what type of property can be used for short-term tourism.

This guide walks you through the essential steps and practical realities of starting a guesthouse or B&B in Portugal under the Alojamento Local (AL) regime.

What Is Alojamento Local (AL)?

Alojamento Local is Portugal’s legal framework for short-term tourist rentals. It covers everything from Airbnb-style apartments to boutique guesthouses and B&Bs.

You’ll need an AL license if you plan to:

• Rent rooms or entire properties to tourists
• Market stays shorter than 30 days
• Operate on platforms like Booking.com, Airbnb, or Expedia

The process is relatively straightforward — but local restrictions, property type, and use classification can affect whether you qualify.

Three Types of AL Registration

Type of Use	What It Covers	Best For
Moradia or Apartamento	Entire home, apartment, or villa	Airbnb-style rentals
Quartos (Rooms)	Renting private rooms in your main residence	Owner-occupied homes
Estabelecimento de Hospedagem	More than 5 rooms, operating like a guesthouse	Boutique B&Bs and guesthouses

📝 If you’re planning to host more than 10 guests or over 5 rooms, you’ll likely be classified as a guesthouse and subject to additional rules.

Key Steps to Start a Guesthouse in Portugal

✅ 1. Check Zoning and Property Classification

• The property must be located on urban land (AL is not permitted on rustic-only land)
• Some municipalities (like Lagos) have saturation zones where new licenses are restricted or suspended
• Verify with the local Câmara Municipal whether AL use is currently allowed in your area

⚠️ Never assume you can register AL just because the property looks suitable — always check zoning first.

✅ 2. Prepare the Property for AL Compliance

• Separate guest access (if applicable)
• Fire extinguishers, signage, smoke detectors
• Emergency contact list and complaints book
• Appropriate insurance (RC – responsabilidade civil)

🔥 Larger properties or guesthouses may also require a fire safety certificate from the local fire brigade.

✅ 3. Submit the AL License Application

This is done online via the Balcão do Empreendedor platform and includes:

• Proof of ownership or lease
• Floor plans
• Identification documents
• Liability insurance
• Declaration of suitability for tourism use

Once submitted, the municipality has 10 working days to approve or reject the request. After approval, your AL license number must be visible on all marketing channels.

Additional Requirements for Guesthouses (More Than 5 Rooms)

If your guesthouse qualifies as an “Estabelecimento de Hospedagem”, you may need:

• Accessibility adaptations (e.g., ramp or lift, depending on layout)
• Extra fire safety compliance
• Guest registration with SEF (border control)
• Local tax registration as a hospitality business

You may also be subject to a category classification (1–5 stars) depending on size, location, and services offered — especially if applying for financing or listing in tourism registries.

Where Can You Still Start a Guesthouse?

Some areas (like central Lagos and parts of Albufeira) have paused or limited new AL licenses due to saturation. But there are still many good locations, including:

• Tavira – Low saturation, historic town center
• Monchique – Rural tourism and retreat potential
• Carvoeiro & Ferragudo – Coastal villages with growing demand
• Countryside areas – Often under AL or TER rural tourism license

🧭 See also: Top Areas in the Algarve to Open a Boutique Hotel or B&B

Running a Guesthouse: Things to Know

• Bookings: Most owners use platforms like Booking.com, Airbnb, or direct websites
• Taxes: Income must be declared via IRS or corporate tax depending on ownership structure
• Management: Some owners outsource cleaning, check-ins, and bookings to local agencies
• Inspections: Municipal or tourism inspectors may check compliance after registration

💼 If you’re not living on-site full time, consider a local property manager to ensure quality and compliance.