The selection of indicators for the Observatory of Sustainability of the Algarve Region for Tourism (OBSERVE), poses challenges, namely which indicators are relevant to stakeholders and how to assure that information is available. To support the selection of the environmental, sociocultural, economic and institutional indicators, an engagement process was designed and applied, which included meetings with stakeholders, a workshop and an online survey. The results showed that both workshop and online surveys reflected, in general, similar opinions, thus allowing the selecting of the sustainable development indicators for the Algarve region. Additionally, the results showed that nearly 75% of the indicators can be obtained from national statistics and, therefore, can be used on the OBSERVE project, assuring a quick flow of information. As limitations, it is important to mention that the other 25% will need further development, in order to provide data for indicators, like carbon management and client satisfaction. With this approach, the observatory will survey and evaluate the sustainable development of the region (status and trends), based on indicators that answer to the strategic needs of system’s main users, with social and economic implications, i.e., public institutions, economic agents, tourists, local communities and residents.

The Algarve region, located in the south of Portugal, is a well-known tourism destination that seeks to be sustainable and competitive. The local administration looks to establish a collaborative network, where stakeholders take a crucial role. The research aims to appeal to the accommodations and food services stakeholders to have a shared vision of the issues and priorities related to sustainable tourism development. Their perception is a critical factor in making decisions regarding the region’s competitiveness. Algarve’s two major and leading associations of the tourism supply sector AIHSA and AHETA were invited to participate in the study. Based on the responses of an online questionnaire, an artificial intelligence algorithm was applied to the data to identify the common and divergent aspects. The conceptual model developed is based on a simplified model of psychological ownership. The results highlight a convergent perspective regarding sustainability challenges, namely, natural resources and biodiversity, safety, and supply chain. However, hotels and restaurants do not reflect the same perception regarding sustainability initiatives, e-tourism, or free internet access. These divergences are essential results since they indicated which issues require local authorities’ priority intervention.

This study analyses the most appropriate methodology to make similarity classifications among the cities of the Algarve (Portugal) according to 105 sustainability indicators monitored with the Observatory of Sustainability of the Algarve Region for Tourism (OBSERVE). The methodology used to establish the similarities was the cluster analysis with 4 different approaches which reduced the dimensions of the data set: total approach, pillar approach, subject area approach, and indicator approach. By combining the approaches, a total of 620 different cluster analyses were performed. The results reflected that the data analysis approaches with less dimensions were those that performed the best groups among cities. In this sense, the approaches with a high number of indicators (e.g., the total or the pillar approach) were characterised by misclassifying cities in more than 30% of the indicators. Thus, the most acceptable cluster analysis approach was that with a low number of indicators. Through this approach, it was possible to make correct groups of the sustainability level of the cities of the Algarve. These results provided an appropriate methodology for the decision-making regarding the sustainability of a region and could be extrapolated to other regions to assess sustainability or environmental indicators.