Southern Portugal has been cited as the world’s best-value destination for British holidaymakers.
According to the 2025 Post Office Travel Money report, the Algarve has topped the list of the places where holiday money will stretch furthest, for the first time in nine years.
The study also shows that, in the past two years, the pound has strengthened against 29 out of 30 of the most popular foreign currencies.
The report includes a snapshot of a typical holiday shopping basket: a three-course meal for two with wine, a cup of coffee, a bottle of local beer, a can of cola, a glass of wine, a bottle of still water, sun cream and insect repellent.
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This year’s study included 47 destinations and showed that prices are down in half of the resorts and cities also surveyed a year ago.
Spain is British holidaymakers’ favourite destination, but Portugal has similar attractions without its neighbour’s mass tourism flashpoints.
The Algarve moved from fifth place in 2024 to first this year, coming in with a barometer cost of £58.95. This is partly due to the continued affordability of dining out: a three-course meal for two with wine was just £40.33 – the lowest recorded across all destinations surveyed.
That figure is a third of what you can expect in New York – the most expensive place surveyed – where a meal will set you back more than £128.
Nice in the south of France is famously expensive – and the report discovered it’s the priciest European spot out of all the destinations surveyed (Photo: Alexander Spatari/Getty Images)The French coastal city of Nice is by far the most expensive European destination on the list. Prices have risen by 27 per cent there since 2023, with costs adding up to more than £153.
The Algarve, where a filter coffee costs an average £1.27 and a bottle of local beer is £2.12, has also become more affordable thanks to sterling’s strength against the euro – up 1.8 per cent year on year and 6.3 per cent compared with March 2023.
The Dominican Republic is the only Caribbean island of seven surveyed to make the top 20 in this year’s costs barometer.
Coming in at 19th place, the holiday items were £93.09 in the resort of Punta Cana, where prices fell by more than 26 per cent in the past year.
Many long-haul destinations outperformed European ones this year, claiming five of the top six places.
Cape Town retained its number two spot, with a barometer cost of £59.84 – while that is 11 per cent higher than a year ago, the South African city makes for an affordable trip, before factoring in flights, with wine just £2.07 a glass.
Japan is in third place, up from fourth last year. Its capital, Tokyo, may have seen prices rise by 7.4 per cent, but its barometer cost is still just £63.34, with a bottle of local beer costing £2.94.
Strong pound
Twenty three of the Post Office’s top 30 currencies – including the euro – have weakened since last year, meaning sterling offers better-value exchange rates in many regions.
While the euro is still relatively strong – losing 1.8 per cent year on year against sterling – holidaymakers visiting the eurozone can receive almost £30 more on a £500 currency purchase than in 2024. Sterling also buys almost 5 per cent more Norwegian krone than 2024.
Mexico offers plenty of bang for your buck when it comes to currency exchange (Photo: Arkadij Schell/Getty Images)The Mexican peso has experienced the biggest year-on-year loss against the pound, weakening by more than 21 per cent, meaning visitors get £87 more on a £500 currency purchase.
Turkish lira’s fall has continued, with a 17.5 per cent drop in value in 2024, following a 114.7 per cent collapse in 2023 – though inflation means that the resort of Marmaris comes in at 14th place in Post Office’s Holiday Costs Barometer, with costs (£86) up 26.4 per cent this year.
Post Office Travel Money Barometer results
Algarve, Portugal – £58.95 Cape Town, South Africa – £59.84 Tokyo, Japan – £63.34 Kuta, Bali – £66.88 Delhi, India – £69.52 Sunny Beach, Bulgaria – £71.46 Hoi An, Vietnam – £73.23 Prague, Czech Republic – £75.92 Phuket, Thailand – £76.10 Costa del Sol, Spain – £76.51 Mombasa, Kenya – £77.20 Penang, Malaysia – £83.05 Puerto del Carmen, Lanzarote – £85.42 Marmaris, Turkey – £86.00 Sliema, Malta – £88.91 Paphos, Cyprus – £91.26 Sharm el-Sheik, Egypt – £91.48 Toronto, Canada – £92.78 Punta Cana, Dominican Republic – £93.09 Santiago, Chile – £94.13 Read More Details
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