Planning a trip to the Algarve? Lucky you! Sunshine, sea views, and pastel de nata (the famous Portuguese custard tart) are waiting. But before you start packing your flip-flops, there’s one tricky question: where should you stay?
The Algarve isn’t just one beach town – it’s a whole stretch of amazing places, each with its own vibe. Some spots are perfect if you want peace and quiet, while others are made for late-night cocktails and dancing.
This guide will walk you through the best areas so you can find the spot that fits your holiday style perfectly.
1. Albufeira, best area to stay in Algarve for nightlife and beaches
Albufeira is one of the most popular towns in the Algarve, mixing sunny beach days with lively nights out.
During the day, you can relax on wide sandy beaches like Praia da Oura or Praia dos Pescadores or Praia dos Alemães, try out water sports, or take a boat trip to see secret caves and dolphins along the coast.
The old town, with its whitewashed houses and narrow streets, is perfect for wandering, shopping, and enjoying fresh seafood.
When the sun goes down, Albufeira shows a whole new side. The Old Town fills with music and outdoor bars, while the Strip – the best area for nightlife – comes alive with clubs, cocktails, and dancing until morning. It’s a place where you can choose between peaceful seaside moments or non-stop fun, depending on your mood.
Whether you’re traveling with friends, as a couple, or even solo, Albufeira promises energy, variety, and a holiday you won’t forget.
Best hotels in Albufeira
2. Lagos, where to stay in Algarve for first time
Lagos is a town that mixes history, beauty, and adventure all in one place. It’s famous for its stunning beaches like Praia Dona Ana, Praia do Camilo, and Meia Praia, Praia do Canavial, where golden cliffs meet turquoise water.
The dramatic Ponta da Piedade rock formations are a must-see, and you can join a boat or kayak trip to explore hidden caves and grottoes along the coast.
But Lagos isn’t only about nature – it’s also full of culture and charm. The old town has cobbled streets, lively squares, and historic landmarks like the ancient city walls and churches that tell stories from the past. Around town, you’ll find plenty of cafés, restaurants, and bars, giving it a buzzing yet relaxed atmosphere.
Lagos is also a great base for exploring nearby towns and attractions, making it perfect for first-time visitors. Whether you want sunshine, history, or adventure, Lagos has something for everyone.
Best hotels in Lagos
- (€€€) Bowen, Luxury Suites
- (€€) Agua Hotels Vila Branca
- (€) Hotel Mar Azul
3. Faro, stay in the capital of the Algarve
Most people think of Faro only as the city with the airport, but that’s like judging a book by its cover – you’d be missing out on a real gem. Faro is the capital of the Algarve, and it has a mix of history, culture, and nature that makes it more than just a quick stop.
The Old Town feels like a step back in time, with cobbled lanes, pretty squares, and landmarks like the Arco da Vila and the cathedral. For something a little unusual, you can even visit the Bone Chapel inside Carmo Church (yes, it’s made of real bones!).
Nature lovers will love the Ria Formosa Natural Park, where boat rides take you past wildlife and out to peaceful islands like Ilha Deserta and Ilha do Farol.
Add in cozy cafés, local restaurants, and a laid-back vibe, and Faro might just surprise you as one of the Algarve’s best hidden treasures.
Best hotels in Faro
- (€€€) Roots Hotel
- (€€) Palacete da Baixa by MY CHOICE
- (€) Hotel Made inn Faro
4. Carvoeiro, best area to stay in Algarve for families
Carvoeiro looks like it was made for postcards – whitewashed houses on the cliffs, a tiny golden beach in the middle, and the ocean sparkling below.
Unlike the busier towns of the Algarve, Carvoeiro has a calm and cozy vibe, making it a favorite for couples and families who want beauty without the big crowds.
The main beach, Praia de Carvoeiro, may be small, but it’s set right against dramatic cliffs, which makes it extra special.
Just outside town, you’ll find some of the Algarve’s most famous spots, like Praia da Marinha, Vale de Centeanes, and the impressive Algar Seco rock formations.
Hikers will love the Seven Hanging Valleys Trail, where every turn shows off another jaw-dropping view of turquoise water and hidden coves.
Add in tasty seafood restaurants, cliff-top sunsets, and a welcoming local feel, and Carvoeiro becomes one of the Algarve’s dreamiest little towns to stay.
Best hotels in Carvoeiro
- (€€€) Mirachoro Carvoeiro
- (€€) Algar Seco Parque
- (€) Colina Village
5. Tavira, a quiet place to stay in Algarve
Tavira is one of the Algarve’s prettiest hidden treasures, sitting on the eastern side of the region close to the Spanish border. Unlike the busy resort towns, Tavira has a calm, traditional feel that makes you slow down and enjoy the moment.
The Gilão River runs through the middle of town, crossed by the famous Roman bridge, with whitewashed houses, cobbled lanes, and leafy squares all around. It’s the kind of place where you can wander without a plan – popping into little churches, stopping for coffee by the river, or browsing shops selling handmade crafts.
History lovers will enjoy Tavira’s mix of Roman, Moorish, and Portuguese influences, seen in its old castles and elegant churches.
But Tavira isn’t only about history – it’s also close to some of the Algarve’s most beautiful beaches. A quick ferry takes you to Ilha de Tavira, an island with long stretches of soft white sand and clear water.
Peaceful, cultural, and very authentic, Tavira is perfect if you want to escape the crowds and experience the slower, more traditional side of the Algarve.
Best hotels in Tavira
Extra: Sagres, best area to stay in Algarve for surfing
Sagres feels like the edge of the world – and in ancient times, people actually thought it was! Sitting at the very southwestern tip of Portugal, this small town is wild, rugged, and full of natural beauty.
It’s a favorite for surfers thanks to its strong waves and beaches like Praia do Tonel, Praia do Beliche, and Praia da Mareta, but even if you’ve never touched a surfboard, you’ll be blown away by the dramatic cliffs and ocean views.
The sunsets here are legendary, with fiery skies lighting up the Atlantic, best enjoyed from the Sagres Fortress or Cape St. Vincent lighthouse.
The town itself has a relaxed, youthful vibe, with plenty of surf schools, budget stays, cozy cafés, and local seafood spots. It’s not the place for big resorts or nightlife, but if you want adventure, wide-open landscapes, and a laid-back atmosphere, Sagres is the Algarve at its most untamed.
Best hotels in Sagres
Featured image: Shutterstock
