The Algarve is a popular destination among travelers in Portugal. It’s filled with stunning resorts, beautiful Atlantic beaches, and elite restaurants.

From the warm, Mediterranean climate to the historical shrines and even the food, everything in this area seems to be designed to make you feel safe and welcome.

Due to its popularity, the Algarve isn’t the cheapest place to stay in Portugal. Between the prices of some of the resorts in this area and its exclusive reputation, you might find it difficult to find the best places to stay in the Algarve on a budget.

That why we’ve created this neighborhood guide,  to help you figure out the best places to stay no matter what you have to spend. We’ve also listed the best things to do in each area, so you can find somewhere that suits your interests.

Best Places to Stay in the Algarve

Looking for a specific place to stay? These are our highest recommendations for where to stay in the Algarve.

Best Airbnb in the Algarve – Seaview Studio

Seaview Studio Algarve

This stunning apartment sits in Albufeira, the best place to stay in the Algarve. It’s set in a traditional Portuguese building and has its own private kitchen, so you can save money on eating in.It’s full of large, bright spaces where you can relax and enjoy your holiday.

Best Hostel in the Algarve – Casa d’Alagoa

Casa d'Alagoa Algarve

Located in Faro, this hostel is bright, cheerful, and has lots of local charm. Situated in a beautiful Portuguese villa, it has a friendly, welcoming atmosphere and is close to local attractions. It has private as well as dorm rooms, so you can pick whatever suits you.

Best Hotel in the Algarve – Belmar Spa & Beach Resort

Belmar Spa & Beach Resort Algarve

If you’re looking for a touch of luxury, this hotel in the Algarve is a great choice. It’s located right on the beach in Lagos and has a spa and pool to enjoy. The rooms are spacious and have a kitchen and seating area, and a continental breakfast is served each morning.

Algarve Neighborhood Guide

First Time in Algarve
Faro Algarve
First Time in Algarve

Faro

Full of history, great shopping, and a culture that’s both unique and mesmerizing, Faro is the capital of the Algarve and is both tourist friendly and a busy, local city.

ON A BUDGET
streets-of-tavira-algarve-portugal
ON A BUDGET

Tavira

Tavira is a seaside town that gets lots of tourists without losing its own character. It carries a lot of Moorish influence that can be seen in the architecture as well as the churches that are strewn throughout the city.

FOR FAMILIES
Albufeira Algarve
FOR FAMILIES

Albufeira

Albufeira is a lively, sunny town with lots of energy and attractions. This is what makes it one of the best choices when you’re trying to decide where to stay in Algarve for families and need lots to do.

FOR NIGHTLIFE
sea-cave-with-natural-skylight-algarve-portugal
FOR NIGHTLIFE

Portimao

Portimao is one of the largest cities in the Algarve and it’s also one of the best places in the Algarve to stay in if you want to have lots of fun nights out. This city is on the beach and it has countless bars, nightclubs, restaurants, and late-night shopping areas.

The Algarve is home to small villages, natural attractions, and some of the best beaches in Portugal. There are beautiful destinations dotted along its coastline, each offering something slightly different to travelers.

Faro is the best place to stay in the Algarve. This small town is loaded with some of the best reasons to visit Portugal, from a great shopping scene to fascinating history and nature experiences. Because of this, it’s the ideal place to base yourself if you want to get to know the area.

Tavira is the best place to stay if you’re traveling on a budget. where you’ll find some budget activities and even reasonably priced Algarve accommodation options. Be prepared for gorgeous surroundings, history, and lots of outdoor activities in this area.

If you’re trying to decide where to stay in the Algarve for families, Albufeira is the best choice. It’s easily accessible, and has lots of outdoor and indoor activities to keep you busy.

For the best nightlife in the Algarve, you can’t go wrong staying in Portimao. Located in the Faro region, Portimao is known for its high number of clubs, bars and restaurants.

Read on for more detailed guides on each place, and the best accommodation and activities in each.

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4 Best Neighborhoods to Stay in Algarve

The Algarve is one of the coolest places to stay in Portugal for nature-lovers. From beautiful beaches to stunning landscapes, Algarve has something for every traveller.

There are plenty of things to do in the Algarve, depending on which area you’re staying, so do your research before heading out! We’ve added our insider tips on what to do at the end of each area, so be sure to read on!

1. Faro – Where to Stay in the Algarve on your First Visit

Faro Algarve
Faro has both natural and archaeological attractions
  • COOLEST Thing to Do in Faro – Spend some time hanging out in the Old Town for great shopping, food, and an incredible atmosphere.
  • BEST Place to Visit in Faro – Visit Ria Formosa natural park for amazing wildlife experiences.

Full of history, great shopping, and a culture that’s both unique and mesmerizing, Faro is the capital of the Algarve and is both traveler-friendly and a bustling local city. If you’re looking to get to know the Algarve region, staying in Faro is your best bet.

Faro is designed for all kinds of travelers. Whether you’re a foodie, nature-lover or night-owl, you’ll be met with plentiful opportunities to indulge in everything the area has to offer. Whatever you want while you’re on holiday, you’ll find it in Faro.

Best Airbnb in Faro – Best sea views at Faro Beach

Best sea views at Faro Beach Algarve

Want to be just steps from the beach during your stay? This fully equipped apartment offers staggering views at a fraction of the price you’d find elsewhere. It’s suitable for up to 4 guests and has 1 bedroom, a full kitchen and washing facilities, so you’ll live comfortably throughout your stay.

Best Hostel in Faro – Hostellicious

Hostellicious Algarve

This hostel in Faro is convenient, comforting, and welcoming. With private and dorm rooms, you can enjoy your privacy or spend all your time with new friends, and take advantage of all the common spaces in the hostel. It’s also close to the city’s transport hubs, so you won’t have any trouble getting around everything you want to see.

Best Hotel in Faro – Hotel 3K Faro Aeroporto

Hotel 3K Faro Aeroporto Algarve

This 3-star hotel is in one of the best neighborhoods to stay in the Algarve if you want easy access to the region. The rooms have a balcony and private bathroom and there’s a bar on-site, as well as plenty close by that you can explore.

Things To See and Do in Faro:

  • Sample some local food at Xic, Very Restaurante and Rooftop Bar, or La Forchetta
  • Have a drink at Os Aristas’ bar, Epicur Boutique Wine Bar, or Piper’s Irish Pub
  • Take the Land Train, which will take you past some of the best sites in the city
  • Explore the old center of town, Cidade Velha. Look out for landmarks like the Arco da Vila gateway and the cathedral at Largo da Sé
  • Explore Milreu and Estoi, two of the most important Roman sites just outside of Faro
  • Marvel at the beautiful Renaissance collection at the Museu Municipal
  • Wander inside the Igreja da Nossa Senhora do Carmo, an 18th century church in the center of town
  • Visit the science center Centro Ciência Viva do Algarve
  • Head over to Faro Island on hot days and relax on Praia de Faro, a white sand beach on the south of the island
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2. Tavira – Where to Stay in Algarve on a Budget

Tavira
Make the most of the area no matter what your budget!
  • COOLEST Thing to Do in Tavira – Relax on world-class beach ‘Praia do Barril’
  • BEST Place to Visit in Tavira – Take a trip to Tavira Castle for a return to the days of Moorish rule

Tavira is a seaside town that gets lots of travelers without losing its own character. It carries a lot of Moorish influence that can be seen in the architecture and churches throughout the city.

This city is also the best choice when you’re visiting Portugal on a budget because it offers cheaper accommodation, as well as lots of relatively free outdoor activities.

Tavira is also famous for its locally produced wine, so make sure to visit if you’re interested in trying some of the available options.

Best Airbnb in Tavira – Sunny Apartment

Sunny Apartment Algarve

This bright apartment is suitable for up to 6 guests. It has 2 bedrooms and 2 bathrooms, a veranda, sun terrace and BBQ. It has everything you’ll need for a comfortable stay throughout your time in the Algarve.

Best Hostel in Tavira – HI Tavira – Pousada de Juventude

HI Tavira - Pousada de Juventude Algarve

This hostel in the Algarve is perfectly positioned so you can enjoy the city. It’s clean and secure, close to local attractions, and offers a welcoming atmosphere where you can relax, make new friends, and really enjoy your stay!

Best Hotel in Tavira – Golden Club Cabanas

Golden Club Cabanas Algarve

Located inside of the famous Ria Formosa Nature Park, this hotel is indisputably located in the best area in the Algarve to stay in for nature experiences. The studio apartments come with a terrace or balcony, and the hotel has pools, a gym, and a spa and sporting facilities.

Things To See and Do in Tavira:

Tavira Algarve
  • Explore Tavira Castle, parts of which date back all the way to the 1000s
  • Check out the 16th century church Igreja da Misericórdia
  • Wander along the beautiful Gialo River and stop off at little eateries for a snack
  • Try some local and reasonably priced wine at The Old Barrel, Arcada Cocktail & Wine Bar, or the Brewery
  • Listen to some local music at Fado com História
  • Have a meal at Little India, Café Del Mar, or Acqua e Sale
  • Take in the views from Camera Obscura Tavira

3. Albufeira – Best Neighborhood in Algarve for Families

Albufeira Algarve
Albufeira is family and backpacker friendly!
  • COOLEST Thing to Do in Albufeira – Spot the wildlife on the coastline and visit Zoomarine for an educational day out
  • BEST Place to Visit in Albufeira – Head down to the promenade for diving tours or dolphin tours off the coast

Albufeira is a lively, sunny town with lots of energy and attractions. This makes it one of the best choices when you’re trying to decide where to stay in Algarve with family, as there’s so much to explore. This town has a real atmosphere of fun and relaxation and is ideal if you want to forget that the modern world exists for a while.

Staying in Albufeira also means you’ll have access to hundreds of bars and places to eat out – ideal if you want a break from cooking! It’s full of things to do for all ages, and is well-worth a visit even if you don’t stay here.

Best Airbnb in Albufeira – Superior Apartment

Superior Apartment Algarve

This apartment is located in one of the best areas to stay in Albufeira if you want spectacular ocean views. It’s fully renovated, private, and offers access to the facility pool, as well as parking. The apartment is open, bright and suitable for up to 4 guests.

Best Hostel in Albufeira – Peneco Albufeira Guesthouse

Peneco Albufeira Guesthouse Algarve

With lots of outdoor areas where you can enjoy the warm weather, this is one of the coolest hostels in Albufeira. It’s right in the historical heart of the city and surrounded by shops and restaurants, as well as just a minute’s walk from the beach. There are private and family rooms available so you can have all the privacy you want during your stay.

Best Hotel in Albufeira – Alfagar Aparthotel

Alfagar Aparthotel Algarve

Overlooking the ocean, this hotel in the Algarve has enviable views and a relaxed, luxurious vibe. There’s a restaurant on-site that serves delicious meals and a bar where you can relax with a drink after a long day at the beach. If you don’t like to swim in the ocean, there are three pools on-site you can use instead!

Things To See and Do in Albufeira:

Albufeira Algarve
You’ll never get bored of the views!
  • Head down to The Strip for a collection of great bars, like Devlin’s Irish Bar, Wild & Co, or Cooper’s Bar and Kitchen
  • Try some of the local beers like Sagres and Algarve Rock
  • Relax on some of the popular local beaches like Beach Falésia Açoteias or try some water sports while you’re there!
  • Wander through the cobblestone streets and atmosphere of the Old Town
  • Eat some local delicacies at The Market Restaurant, The Sizzling Stone, or O’Farnel
  • Take a fishing tour out from the marina
  • Go bird watching from Salgados Lagoon
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4. Portimao – Best Area to Stay in Algarve for Nightlife

Portimao
  • COOLEST Thing to Do in Portimao – Bathe in the warm waters overlooked by limestone cliffs at Praia da Rocha
  • BEST Place to Visit in Portimao – Head to the Expo-Trade Center for sporting events and exhibitions

Portimao is one of the largest cities in the Algarve, and it’s also one of the best place to stay in if you want to have lots of fun nights out. This city on the beach has countless bars, nightclubs, restaurants, and late-night shopping areas. If you’re looking to be entertained at night, you’ll have your pick of things to do and see.

Portimao has an interesting history, and its architecture is a mix of the 19th and 20th centuries. It’s cheerful, colorful, and arty, and there’s always something going on in this city!

Best Airbnb in Portimao – 5 Minutes Walk to the Beach

5 Minutes Walk to the Beach Algarve

This apartment offers quick beach access for a good price. It’s five minutes away from Praia da Rocha on foot, and is surrounded by cafes and shops. What else could you want?

Best Hostel in Portimao – Aloha Hostel

Aloha Hostel Algarve

This bright and charming hotel is a great choice no matter how long you stay in Portimao. It’s in the historical center of the city close to the riverfront, and offers private and dorm rooms. There’s a fully equipped kitchen, shared living spaces, and a terrace where you can enjoy the warm summer nights.

Best Hotel in Portimao – Jupiter Algarve Hotel

Jupiter Algarve Hotel Algarve

Bright, light, and spacious – this hotel has everything, from an indoor pool to entertainment facilities at night. There’s a spa on-site for some extra pampering and the rooms are large and modern. Some of them even have a balcony, so you can enjoy the sea views.

Things To See and Do in Portimao:

Portimao Algarve
This area is bustling by day and by night
  • Have a meal at Casa da Tocha, Masala House, or Loki Restaurant
  • Have a drink at Mourisco Cocktail Bar, The Manhattan Café or the Church Bar
  • Take in the mystery of the burial site at the Megalithic Monuments of Alcalar
  • Explore the history of the fishing town that Portimao once was, at The Museu de Portimao
  • Wander along the beach promenade and enjoy the ocean views
  • Pick up some fresh food and get to know the locals at the Mercado Municipal
  • Take in the fortress at Fortaleza de Santa Catarina

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Final Thoughts on the Where to Stay in the Algarve

With its interesting history, vibrant markets and buzzing nightlife, the Algarve a great destination that will make any trip special no matter where you stay.

If you’re still unsure, you can’t go wrong with Faro. From stylish Airbnbs and luxury hotels to some of Portugal’s coolest eco-resorts, it’s suitable for any traveler looking to discover the area.

We hope this guide has helped you narrow down your options for where to stay in the Algarve!

Do you own an awesome hostel, hotel or apartment? Want to be featured in our list? Email [email protected] to find out how.


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