Cheapest holiday destination for 2025 sells beer for £2.12 and has stunning beaches
The Post Office has released its 2025 Holiday Money Report which analyses trends, currencies and where the pound will stretch the furthest.
Researching 47 popular destinations including long and short haul, the Post Office found New York to be the most expensive, closely followed by Hawaii, also in the US.
While many Asian destinations appeared in the top 10 cheapest spots, it was the Algarve in Portugal that came out as the best value, returning to the top spot for the first time since 2016.
Analysts looked at the average prices for eight items tourists would usually buy on holiday: a three course meal for two with wine, cup of coffee, bottle of local beer, can of cola, glass of wine, bottle of still water, suncream and insect repellent.
Getting the most bang for their buck, Algarve holidaymakers can buy a beer for £2.12, a coffee for £1.27 and a three course meal for two with win for £40.33.
The Post Office said: "The Algarve is one of 19 resorts or cities to record a fall in prices. Others to do so include Delhi, India; Phuket, Thailand; Spain’s Costa del Sol and Prague in the Czech Republic, all of which have returned to the Worldwide Holiday Costs Barometer top 10 as a result.
"The Algarve has moved up to the top spot from fifth place a year ago with a barometer cost of £58.95, 1.6 per cent less than in 2024. This is thanks to the continuing low price of meals and drinks.
"Sterling’s strength against the euro has also helped to reduce prices for British visitors."
While Tokyo in Japan is widely considered an expensive place to live, it actually came in third cheapest, with the eight items costing £63.34 - less than £5 more than the Algarve.
Also in the top 10 cheapest was Cape Town in South Africa (third), Kuta in Bali and Delhi in India.
The short haul destinations to reach the top 10 were Sunny Beach in Bulgaria, Prague in the Czech Republic and Spain's Costa del Sol.
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At the other end of the charts the eight items cost travellers £167.85 in New York, £155.80 in Hawaii and £153.03 in Nice, France.
The Caribbean was also expensive, with Rodney Bay in St Lucia, Bridgetown in Barbados and St John's in Antigua also featuring in the top 10 most expensive destinations.
| Top 10 Cheapest Destinations | Destination | Total Price | |
|---|---|---|---|
| Top 10 Cheapest Destinations | |||
| 1 | Algarve, Portugal | £58.95 | |
| 2 | Cape Town, South Africa | £59.84 | |
| 3 | Tokyo, Japan | £63.34 | |
| 4 | Kuta, Bali | £66.88 | |
| 5 | Delhi, India | £69.52 | |
| 6 | Sunny Beach, Bulgaria | £71.46 | |
| 7 | Hoi An, Vietnam | £73.23 | |
| 8 | Prague, Czech Republic | £75.92 | |
| 9 | Phuket, Thailand | £76.10 | |
| 10 | Costa del Sol, Spain | £76.51 | |
| Top 10 Most Expensive Destinations | |||
| 1 | New York, USA | £167.85 | |
| 2 | Hawaii, USA | £155.80 | |
| 3 | Nice, France | £153.03 | |
| 4 | Mahé, Seychelles | £152.21 | |
| 5 | Darwin, Australia | £146.45 | |
| 6 | Cairns, Australia | £138.14 | |
| 7 | Melbourne, Australia | £132.20 | |
| 8 | Rodney Bay, St Lucia | £132.08 | |
| 9 | Bridgetown, Barbados | £131.30 | |
| 10 | St John's, Antigua | £131.22 | |
Some popular destinations have seen considerable changes in prices in the last year.
Egypt's Sharm el-Sheikh, a favourite with families seeking budget-friendly beach holidays, has an almost 50% rise in prices year-on-year, due in part to rising local charges by restaurants and bars to accommodate the collapse of the Egyptian pound. It only ranks 17th in the Post Office's barometer.
And it's a similar story for Türkiye's Marmaris, which has dropped down to 14th place, again due to higher prices after the collapse of the Turkish lira.
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| Biggest Y-o-Y Price Changes | Destination | % Change | |
|---|---|---|---|
| Biggest Rises | |||
| 1 | Sharm el-Sheikh, Egypt | +49.1% | |
| 2 | Mombasa, Kenya | +44.2% | |
| 3 | Hoi An, Vietnam | +41.3% | |
| 4 | Funchal, Madeira | +35.3% | |
| 5 | Nice, France | +27.0% | |
| Biggest Falls | |||
| 1 | Punta Cana, Dominican Republic | -26.5% | |
| 2 | Scarborough, Tobago | -22.6% | |
| 3 | Prague, Czech Republic | -20.5% | |
| 4 | Cancun, Mexico | -18.8% | |
| 5 | Delhi, India | -10.7% | |
When it comes to saving for and spending on holidays, travelling away from busy periods is regarded as the best way to make travelling abroad more affordable.
Two-in-five (40%) holidaymakers are prepared to swap peak season for cheaper times of the year. Of of those questioned 27% say they will book cheaper accommodation and 26% said they would go to a cheaper destination.
Over a fifth (21%) plan to reduce the length of their holiday and almost as many will cut back on alcohol while abroad (19%). Avoiding restaurants is the tactic by 16% of those questioned who said they would opt for self-catering accommodation.
Cheapest and Most Expensive Destinations by Item
| Item | Cheapest | Most Expensive |
|---|---|---|
| Coffee (Café/bar) | Algarve, Portugal (£1.27) | Mahé, Seychelles (£4.48) |
| Beer (Café/bar) | Hoi An, Vietnam (£1.53) | Downtown Dubai, UAE (£7.92) |
| Cola (Café/bar) | Toronto, Canada (£1.12) | Nice, France (£5.09) |
| Wine (Café/bar) | Cape Town, South Africa (£2.07) | New York, USA (£11.08) |
| Water (Supermarket) | Sharm el-Sheikh, Egypt (£0.17) | Bridgetown, Barbados (£2.34) |
| Suncream (Supermarket) | Delhi, India (£4.44) | Grand Baie, Mauritius (£23.94) |
| Insect repellent (Supermarket) | Delhi, India (£0.66) | Funchal, Madeira (£10.19) |
| Three-course meal for two with wine | Algarve, Portugal (£40.33) | New York, USA (£128.27) |
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