If you’re looking for your holiday pounds to stretch further in 2025, book a trip to the Algarve.
The Portuguese favourite, famous for its whitewashed fishing villages and sandy coves, has topped the Post Office’s world holiday costs barometer for the first time in nine years.
A three-course meal for two with wine in Albufeira costs around £40 – a third of the price of dinner in New York (£128). And a bottle of local beer will set you back just £2.12.
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Portugal has previously struggled to compete with the cheapest long-haul destinations. But food and drink remains consistently cheap in the Algarve – dropping 1.6% since last year. Meanwhile, prices elsewhere have risen.
The strength of the pound against the euro also spells good news for British visitors, who will get almost £30 more on a £500 currency purchase compared with two years ago.
Where else will the pound go further?
Last year’s cheapest destination, Cape Town, was the 2025 runner-up. A three-course meal plus wine there costs around £42.
South Africa’s Mother City is consistently rated among the best long-haul city breaks by visitors. Tokyo – which is now more affordable due to the Japanese yen weakening against the pound – came in third place.
The Algarve is one of 19 destinations to record a fall in prices. Others include Delhi, India; Phuket, Thailand; Spain’s Costa del Sol; and Prague in the Czech Republic.
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Listen to our journey through Cape Town in the Which? Shorts podcast.
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Where to go in the Algarve
Tavira – a sleepy working harbour in the east – is a visitor favourite: it made the top five in our survey of the best seaside and beach towns in the Mediterranean. The town sits on the Gilão River and is the region’s most historic, its cobbled lanes lined with seafood restaurants and boutiques.
Lagos is another gem, where well-preserved plazas and mosaic-tiled pavements wind within medieval city walls.
You’ll also find picturesque beaches – from wide expanses of golden sand, to the secluded Praia do Camilo tucked between two towering cliffs.
Enjoy emperor fish and snapper brought in fresh on fishing boats each morning, and filleted at your table, all for a bargain price.
Flights start from just £31, according to Skyscanner data. May is the cheapest month to fly, when daily highs are a pleasant 22°C.
A three or four-star hotel in Tavira costs £127 a night on average, according to data from Kayak, or £147 in Lagos.
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