If you’re planning a European getaway without blowing your budget, there’s one region that stands out from the rest this year. Based on travelers’ experiences and new data, the Algarve in Portugal has officially been crowned the most affordable destination in Europe for 2025.
Algarve: Sun, Sea, and Seriously Good Prices
Known for its golden beaches and charming coastal towns, the Algarve isn’t just a favorite for sunseekers — it’s a haven for budget-conscious travelers too. According to the Post Office Worldwide Holiday Costs Barometer, this picturesque region in southern Portugal offers the best bang for your buck across Europe.
Researchers evaluated the average price of eight typical holiday expenses: a three-course meal for two with wine, a coffee, a local beer, a soda, a glass of wine, a bottle of water, sunscreen, and insect repellent. The Algarve stood out not only for its affordability but for offering a three-course meal and a coffee at prices most Europeans would struggle to find back home. A cup of coffee here costs just a little over one euro!
And in a year where 84% of holidaymakers — and a whopping 89% of families — say that food and drink costs heavily influence their travel plans, affordability is a serious advantage.
Beyond Europe: Vietnam Tops the Global List
On a global scale, Hoi An in Vietnam steals the spotlight. Although the Algarve wins in Europe, travelers heading farther afield will find even more incredible savings in Southeast Asia. In Hoi An, picking up the same eight holiday essentials would only set you back around €59.49. That’s thanks to a combination of falling local prices and a dip in the value of the Vietnamese dong.
Other destinations rounding out the global affordability rankings include Cape Town (South Africa) and Mombasa (Kenya), which offer exceptional value despite modest price increases.
Where Prices Are Rising: Costa Rica and Mexico
At the other end of the spectrum, Tamarindo in Costa Rica has become the priciest destination among those surveyed. With an average basket price of €183, it’s clear that Costa Rica’s booming economy is pushing travel costs higher — up over 13% in just a year. Similarly, Cancun in Mexico, once a favorite budget-friendly hotspot, has climbed to 33rd place with an average of €148 needed for the same spending basket.
Europe’s Pricey Picks
Not all European cities fared well in the affordability rankings. Nice in France, for example, only reached the 28th spot. While still beautiful and culturally rich, it’s definitely not the best choice for travelers trying to stretch their euros as far as possible this summer.
