If you’re planning a holiday in Europe and watching your travel budget, you’re not alone. With rising living costs across the globe, finding a destination that’s both scenic and wallet-friendly has never been more important. And if you’re wondering where your euros will stretch the furthest, there’s one sunny region that consistently delivers both charm and savings.
The Algarve: a budget-friendly gem in southern Europe
You may already know the Algarve as one of Europe’s favorite beach destinations, but it turns out it’s also the most affordable place to vacation in Europe right now. According to the latest analysis of holiday costs, this stunning region in southern Portugal offers some of the lowest prices on typical travel expenses — from meals to sunscreen.
The comparison looked at eight common holiday purchases: a three-course dinner for two with wine, a cup of coffee, local beer, a soft drink, a glass of wine, bottled water, sunscreen, and insect repellent. And the Algarve came out on top, offering the best overall value among all European destinations.
On my own trip to the Algarve a couple of summers ago, I was shocked (in the best way) to pay just over €1 for an espresso overlooking the ocean. It felt like stepping back in time — in the most relaxing way possible.
Food and drink prices influence travel decisions
For many travelers, the cost of dining out plays a major role in choosing where to go. In fact, according to data from the Post Office Worldwide Holiday Costs Barometer, 84% of holidaymakers — and nearly 9 in 10 families — consider meal and drink prices a key factor in their decision.
“With the current cost of living crisis, this kind of report is a valuable tool for helping people choose their destination,” said Hugo Nascimento, executive director of Algarve Tourism. And with everything from affordable seafood restaurants to cozy local cafés, the Algarve continues to attract visitors who don’t want to sacrifice quality for price.
Globally speaking, Vietnam tops the chart
While the Algarve holds the European crown, the most affordable travel destination in the world is Hoi An, a charming town in central Vietnam. There, the same bundle of eight typical holiday items costs just €59.49, thanks in part to lower local prices and a weaker currency.
Hoi An has climbed the rankings in recent years and is now ahead of cities like Cape Town (South Africa), Mombasa (Kenya), and Tokyo (Japan). In fact, Tokyo took fourth place, just ahead of the Algarve — which means Europe’s best value still holds its own globally.
Where prices are rising — and fast
At the other end of the scale, some destinations that were once considered budget-friendly are seeing steep price increases. Tamarindo, in Costa Rica, now ranks as the most expensive of the 40 destinations surveyed, with an average cost of €183 for the same set of items.
Prices there have jumped over 13% in just one year, fueled by the country’s strong economic growth. A similar trend is happening in Cancún, Mexico, which dropped to 33rd place this year after once being in the top 10. The cost of a basic holiday basket there now exceeds €140.
So if you’re looking for sunshine, seaside charm, and serious value, Portugal’s Algarve may be the perfect pick. And if your wanderlust takes you further afield, Vietnam is a standout for stretching your travel budget. Wherever you go, a little planning — and maybe a few cost comparisons — can go a long way in making your 2025 getaway both unforgettable and affordable.
