The Algarve in Portugal is the best-value holiday destination for British travellers, the latest Post Office Holiday Money Report has revealed.

Portugal’s southern region has topped the annual report for the first time in nine years.

The destination moves from fifth position in 2024 thanks to the continuing low price of meals and drinks. The cost of a three-course meal for two with wine came in at £40.33 – the lowest recorded across the 47 destinations surveyed.

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Laura Plunkett, head of travel money at Post Office, said this makes the Algarve a great choice for holidaymakers looking to keep spending low.

The annual survey by Post Office Travel Money compared the prices of eight items – a three-course meal for two with wine, a cup of coffee, bottle of local beer, can of cola, glass of wine, bottle of still water, sun cream and insect repellent – to create the Worldwide Holiday Costs Barometer.

According to the survey, long-haul destinations are better value for money than many European destinations.

Cape Town, South Africa, has retained second place position despite costs being 11 per cent higher than last year.

In third place is Japan’s capital Tokyo, with the Indonesian island of Bali just behind in fourth.

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However, prices however have risen in both destinations, with Tokyo’s rising by 7.4 per cent while prices are five per cent higher in Bali year-on-year.

Alongside the Algarve, prices have fallen in four other top 10 destinations.

Delhi is the highest placed of these, rising to fifth from 13th place a year ago on the back of a 10.7 per cent drop in costs.

New York is the most expensive destination of the 47 surveyed, with an increase of 15.6 per cent year-on-year.

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Prices for the same items in New York are almost double compared with elsewhere in the US.

In 18th place, Toronto is rated the best value of eight new destinations featured this year.

The top 10 best-value destinations 2025

According to the Post Office Holiday Money Report

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