The National Statistics Institute said on Tuesday the Iberian country's hotel sector received 272,500 foreign visitors and 380,500 Portuguese travellers in January, the number of locals being 3 percent higher than a year ago.

The overall number of tourists staying in Portuguese hotels fell 4 percent to 653,000.

British tourists, the leading market by far in Portugal, contributed the biggest fall in hotel occupancy, but visitors from Spain and the Netherlands were more frequent guests in Portuguese hotels than a year ago, the INE said.

The number of nights tourists spent in Portuguese hotels fell 7 percent from a year earlier, with foreigners staying 11 percent less time on average. An average tourist's stay, including domestic tourism, was 2.6 nights.

Hotels' total revenues slumped nearly 12 percent to 81.5 million euros (75.4 million pounds). The INE also said that more people were choosing cheaper motels and youth hostels.

Tourist numbers increased in the Alentejo region, which offers a variety of destinations from beaches to rural and wine tours, and in the Azores, but fell in all other regions including the southern Algarve, popular with British sunseekers.

Last year, the sector eked out 1 percent growth in arrivals to 7.1 million foreign tourists, but the second half of the year was marked by steep declines in tourist numbers. Total tourism income hit a record high of 7.5 billion euros in 2008.

Tourism is an important source of income for the Portuguese economy, with all tourism-linked revenues accounting for over 10 percent of the gross domestic product in 2007, and it is slightly cheaper than the much bigger tourism market Spain, where tourist numbers fell 3 percent last year.

(Reporting by Andrei Khalip; Editing by Andy Bruce)