The Algarve named best value holiday destination
According to the 19th annual Post Office Travel Money Holiday Money Report, the Algarve is officially the best-value holiday destination for 2025. After nine years, Portugal’s southern coast has reclaimed first place in the Worldwide Holiday Costs Barometer.While long-haul destinations still dominate much of the top 10, the Algarve stands out as the cheapest option overall this year, thanks largely to consistently low prices for meals and drinks, combined with the sterling’s relative strength against the euro.The cheapest holiday destinations in the world in 2025The 2025 report by the Post Office surveyed 47 destinations and found that prices for common tourist purchases had fallen in nearly half of the locations also assessed in 2024. Long-haul destinations such as Cape Town, Tokyo and Bali feature strongly again, taking five of the top six positions. However, the Algarve climbed from fifth place to claim the top spot. The Algarve’s total barometer cost stands at £58.95, which is 1.6% lower than in 2024.Cheap Algarve holidaysThe Algarve’s return to the top position comes down largely to food and drink prices.A three-course meal for two with wine at £40.33 is exceptional value by European standards, and everyday café prices remain accessible for British travellers. A coffee at £1.27 and a beer at £2.12 keep daily spending predictable, even in popular resorts such as Albufeira.Beyond the barometer items, the Algarve remains relatively affordable for activities. Public beaches are free, highly-ranked coastal walking trails such as those around Praia da Falésia or the Seven Hanging Valleys require no entrance fee, and many towns host free summer events. Accommodation spans everything from simple guesthouses to self-catering apartments and resort hotels, with noticeably better rates outside July and August.What is the cheapest part of the Algarve?The eastern Algarve is generally the most affordable stretch of the region. Towns such as Tavira, Olhão and Vila Real de Santo António tend to have lower accommodation prices and more local restaurants charging everyday Portuguese rates.These areas are less dominated by large-scale tourism than central Algarve hubs like Albufeira or Vilamoura. Beaches remain wide and sandy, particularly along the Ria Formosa barrier islands, and the atmosphere feels more residential outside peak summer. What is the best month to visit the Algarve?Late spring and early autumn continue to strike the best balance between weather and prices. May and June bring warm temperatures and lively town centres without peak-season rates. September and October often feel similar, with sea temperatures still pleasant after summer and fewer crowds.July and August remain the busiest and most expensive months, with higher accommodation costs and busier beaches. Winter is quieter and significantly cheaper, though some seasonal restaurants and tour operators close. The right month depends on how important heat, nightlife and swimming conditions are compared to budget and crowd levels.Stay inspired for your travels in Portugal —get our weekly newsletter for the latest travel, legal, and lifestyle news.
