Where to Stay in the Algarve: 12 Truly Special Hotels

Where can you stay in the Algarve?

In our opinion, you have three options for where to stay in the Algarve: larger cities, smaller villages, or towns in the Algarve’s interior. Here’s a quick overview of all three.

#1 Staying in a city in the Algarve

• good tourist infrastructure
• wide range of activities along the Algarve (including for families)
• nightlife for younger travelers
• rental car not necessarily needed
• tourist crowds and large hotel complexes
• not particularly authentic

There aren’t any true metropolises in the Algarve, but there are a few larger cities. Some of the best-known include Lagos, Sagres, Faro, and Albufeira. Especially if it’s your first time visiting the Algarve, these cities make an excellent base.

Our hotel pick in Lagos: Villas D. Dinis – Charming Residence (adults only)

Our hotel pick in Sagres: Casa Azul Sagres – Rooms & Apartments

Our hotel pick in Faro: Roots Hotel

Our hotel pick in Albufeira: Casa Amarela Guesthouse

#2 Smaller villages in the Algarve

• the real Portugal
• less touristy
• beautiful nature, especially the clifftops
• peace and quiet and emptier beaches
• rental car needed for day trips
• fewer choices of restaurants and hotels

There are countless villages in the Algarve worth exploring. We personally love Monte Clerigo, Arrifana, Burgau, and Tavira, among others. These places are far more authentic and haven’t yet been overrun by tourists.

If you love peace and quiet, they’re perfect. Some, however, are so small that they don’t even have their own supermarket — so you’ll generally need a rental car to get around.

Our hotel pick in Salema: NAU Salema Beach Village

Our hotel pick in Arrifana: Herdade Monte Do Sol

Our hotel pick in Tavira: Authentic Tavira Hotel

#3 Staying in the Algarve’s interior

• affordable accommodation
• plenty of activities for outdoor enthusiasts
• no tourist crowds
• authentic Portuguese life
• rental car required
• limited infrastructure

The towns in the Algarve’s interior are mostly overlooked entirely — which means hotels and restaurants are far cheaper than on the coast. They make a great base for day trips to the sea, though you’ll definitely need a rental car.

These towns are still very traditional, and many sit up in the mountains — perfect for hiking and cycling. Particularly lovely examples include Monchique, Loulé, and Alte.

Our hotel pick in Monchique: Casa Spa d’Alma

Our hotel pick in Loulé: Downtown Loulé

Our hotel pick in Alte: Alte Tradition Guest House

Algarve hotels right on the water

Want to roll straight out of bed and onto your beach towel in the morning? No problem! Here are two truly beautiful beachfront hotels in the Algarve.

Mareta Beach House

Sagres

The Mareta Beach House is a small boutique hotel in Sagres. It owes its name to its location: Mareta Beach is right on the doorstep.

We especially love the rooms — they’re bright and welcoming, with floor-to-ceiling windows. During the day, you can kick back on your own terrace or by the infinity pool with those gorgeous ocean views.

The center of Sagres is just a ten-minute walk away. For day trips into the surrounding area, you can rent bikes or a car directly from the hotel.

To the Mareta Beach House

Villa Esmeralda

Lagos

Villa Esmeralda is located in Lagos — one of the most popular towns in the Algarve, with plenty of restaurants, shops, and a great nightlife scene. It’s especially perfect for younger travelers and families with kids.

You’re not staying right in the town center, but you are right next to Praia Porto de Mos beach. The hotel sits on a small hill above it, and from the palm garden you get a fantastic panorama over the water.

The hotel has a distinct oriental style — you’ll feel like you’ve left Europe entirely. And if you’re visiting in winter, you won’t have to skip the swimming: there’s a heated outdoor pool in the garden.

To Villa Esmeralda

Boutique hotels in the Algarve

Location isn’t your top priority? What matters more to you is staying somewhere with real character rather than a massive resort complex? Then our picks for boutique hotels in the Algarve are sure to hit the spot.

Casa Codebò

Aljezur

At Casa Codebò, hosts Carlotta and Gianni welcome you personally. Everything in this small B&B is put together with a lot of love: breakfast features plenty of homemade items, including always some vegetarian options.

The house is decorated in typical Portuguese style, with blue and white colors and lots of natural wood. For relaxing, there’s a terrace and a lounge.

Casa Codebò is located in Aljezur, between our two absolute favorite beaches in the Algarve: Praia de Arrifana and Praia de Monte Clerigo. The town is very quiet with small shops and local eateries — and it’s great for hikes and cycling through the countryside.

To Casa Codebò

Casa Creativa

Lagos

Casa Creativa has just eight rooms. The vibe is homey and relaxed — the perfect retreat right in the heart of Lagos. Your hosts, Tim and Sarah, are happy to share personal tips on what to do around town.

What makes Casa Creativa really special is its concept of bringing guests from around the world together through workshops. The topics are wonderfully varied — there are classes on traditional Portuguese cooking, for example.

The rooms have a minimalist style with lots of plants — we love it! There’s also a communal lounge with a ping-pong table.

To Casa Creativa

Adults-only hotels in the Algarve

Planning a romantic getaway for two or a trip with friends without the kids? Then these two adults-only hotels in the Algarve might be exactly what you need.

Vila Origens

Albufeira

We love the décor at this boutique hotel: boho style meets natural stone walls and lots of wood. Some rooms even have a balcony with ocean views.

During the day, you can relax on the terrace by the pool or in the garden. And if you want to wind down in the evenings at the hotel, there’s a lovely bar for a drink or two.

Seriously, the location of Vila Origens is simply ideal. You have several beaches just a few minutes’ walk away, while also being right in the historic center of Albufeira with plenty of restaurants and shops.

To Vila Origens Boutique Hotel

Charming Residence & Guest House Dom Manuel I

Lagos

Guest House Dom Manuel I is our pick for a truly relaxing stay. The hotel has a spa area with a sauna and a steam room. The outdoor area feels like a little jungle and is perfect for switching off — there’s also a pool out there.

In just a few minutes you can stroll into the old quarter of Lagos — perfect if you want to do plenty of sightseeing or head out for a nightcap.

The breakfast is wonderfully varied, and there are even gluten-free products on offer. That’s not a given in Portugal — big thumbs up for that!

To Charming Residence & Guest House Dom Manuel I

The best luxury hotels in the Algarve

Luxury hotels in the Algarve are considerably more affordable than, say, hotels on the Côte d’Azur. So if you really want to treat yourself, we can wholeheartedly recommend these two top-end places to stay in the Algarve.

Bela Vista Chateaux - Adults Only

Portimão

Have you always dreamed of staying in a castle? At Bela Vista you get your chance — and it’s a picture-perfect castle at that: white, with turrets, and right on the beach. Not just any beach, either: Praia da Rocha is one of the most beautiful stretches of sand in the Algarve.

Of course, the full pampering package is on offer here. There’s a wonderful spa where, for an additional fee, a sauna, a Turkish bath, and various massages await you.

The hotel also has a gourmet restaurant where you can enjoy truly delicious Portuguese cuisine, with a focus on fish dishes and oysters.

To Bela Vista Hotel and Spa

Vilalara Thalassa Resort

Armação de Pêra

At Vilalara you get everything you could want from a luxury hotel. We especially recommend it if wellness and health are high on your agenda.

One standout is definitely the spa area: there are saunas, a steam room, thalassotherapy treatments, and hot stone massages. Outside, you can try out six different pools. And if you feel like a workout, there are three tennis courts.

For dining, the hotel has two restaurants: one is a gourmet restaurant serving healthy, low-calorie dishes. The second focuses primarily on fish, seafood, and grilled specialties. Afterwards, you can head to the bar with ocean views for a drink.

To Vilalara Thalasso Resort

Great family hotels in the Algarve

Traveling to the Algarve with your kids? Finding the right place to stay with children can sometimes be a real challenge. Here are two recommendations for family-friendly accommodation in the Algarve.

Casa Cabrita - Surf and Family House

Sagres

Casa Cabrita is a vacation home designed specifically for families. If you’re traveling with multiple kids, the two bedrooms and three bathrooms will be especially welcome.

You get a large kitchen with everything you need for a family vacation. If you’re staying longer, there’s also a washing machine available. A particularly great touch: there’s loads of toys for the kids to play with. In winter, you can even fire up the stove and have a cozy game night.

The outdoor area also features a pool. The nearest beach is just a ten-minute walk away.

To Casa Cabrita Surf and Family House

Lemon Tree Stay

Faro

If you’d rather stay in a hotel with your kids, we recommend Lemon Tree Stay in Faro. It’s a small guesthouse where children are warmly welcomed.

There are lovely large family rooms. A crib costs just €10 extra, and a regular rollaway bed for children up to 15 years old is only €15 per night. If you ever want to eat in, there’s also a shared kitchen available.

You’re staying right in the historic center of Faro, where there are plenty of things to see in the Algarve that are interesting for kids too. Close by is also the Ria Formosa Nature Park, where you can spot flamingos.

To Lemon Tree Stay

Budget hotels in the Algarve’s interior

Staying away from the coast is a smart move if you’re traveling on a tighter budget. Accommodation is significantly cheaper, but the short distances still make day trips to the sea totally doable. Here are our picks for budget-friendly places to stay inland in the Algarve.

Casa Spa d'Alma

Monchique

Casa Spa d’Alma is a hotel in country house style, very peaceful and with beautifully spacious rooms. The outdoor area has several highlights: a garden bursting with bougainvillea, a terrace with sun loungers, a pool, and even a hot tub.

You’re staying right inside Monchique Nature Park, making it easy to hike and cycle in the mountains. If you want a day trip to the coast, both the west and south coasts are about 35 minutes away by car.

There’s also an outdoor kitchen — warm evenings with a BBQ are basically guaranteed. In the mornings, breakfast is served at the hotel, complete with fresh fruit from the garden.

To Casa Spa d’Alma

B&B Casa Escondida

Alte

We recommend Casa Escondida if you want to stay somewhere genuinely beautiful with certain creature comforts, but similar properties on the coast are out of your budget.

The décor is incredibly stylish, modern, and typically Portuguese. Outside there’s a gorgeous pool overlooking the surrounding pine forests — it’s the perfect peaceful retreat to properly unwind.

From the hotel you can easily take trips to nearby villages like Loulé, Tavira, or Silves, experiencing the Algarve’s traditional side well away from mass tourism.

To B&B Casa Escondida