Where to Stay in Funchal Madeira: 3 Main Areas

Trying to decide where to stay in Funchal for your trip to Madeira? Choosing the right area can make a big difference to your experience, especially if you want the perfect base for exploring the island while still enjoying the atmosphere of the city.

Introduction

This guide on where to stay in Funchal is based on our own trip to Madeira in December, including spending Christmas on the island and exploring the hills, coastline and streets of Funchal itself.

While planning our trip, we knew we would likely rent a car to explore Madeira since there were five of us travelling. At the same time, we also wanted to stay somewhere walkable so we could easily reach restaurants, markets, the harbour and the Christmas lights around the city.

If you are deciding where to stay in Funchal, this guide will help you choose the best area for your trip. Whether you prefer ocean views, a central location close to restaurants or a quieter boutique stay in the hills, we break down the best places to stay in Funchal and where we personally stayed during our visit.

Where We Stayed in Funchal (Our Honest Pick)

We chose to stay close to Funchal’s city centre, and honestly we’d pick the same area again.

We wanted to be able to:

• walk to dinner and sunset viewpoints
• easily join day tours
• explore markets and old town streets
• experience Christmas lights and night vibes without needing transport

Being central made everything so easy. Most mornings started with coffee in a nearby café, and most evenings ended wandering colourful streets on the way back from dinner.

If it’s your first time in Madeira, or you’re building a trip around exploring the island during the day and enjoying the city at night, I really believe the centre is one of the best places to stay in Funchal.

👉 If you’re looking for something similar to what we’d personally book again, I’d shortlist:

• Castanheiro Boutique Hotel for charm and location
• The Views Baía – Adults Only for value and views
• Maria’s Central View for a modern apartment near Sé Cathedral or the Old Town for space and flexibility

These areas consistently have the best balance of price, location, and atmosphere.

Where to Stay in Funchal Madeira: Best Areas to Stay in

Before jumping into specific hotels, it really helps to understand the different areas of Funchal. Each neighbourhood has a slightly different vibe, and choosing the right one can completely change your experience.

There are three areas:

1. Lido & São Martinho – Best for Ocean Views & Resort-Style Stays
2. Funchal City Centre & Old Town – Best for First-Timers & Foodies (this is where we stayed)
3. Monte – Best for Nature, Views & a Peaceful Stay

1. Lido & São Martinho – Best for Ocean Views & Resort-Style Stays

The Lido area is the most popular place to stay in Funchal, especially if it’s your first time visiting Madeira.

This stretch of coast is known for its seaside promenade, access to swimming complexes and natural pools, loads of restaurants, and big ocean-view hotels. It’s flat, walkable, and really well connected by bus or Bolt into the old town.

Best for: couples, beach lovers, resort-style trips, sunset chasers
Vibe: relaxed, coastal, polished
Why stay here: sea views, easy swims, lots of dining options, beautiful coastal walks

Where to Stay in Lido & São Martinho

• Luxury: Savoy Palace – stunning rooftop pool, spa, and uninterrupted ocean views
• Mid-range: Hotel Alto Lido – modern, great value, walkable to the promenade
• Budget: TUI Blue Madeira Gardens – affordable with views and a pool

👉 This is one of the best areas to stay in Funchal if you want your accommodation to feel like part of the holiday, not just a place to sleep.

2. Funchal City Centre & Old Town – Best for First-Timers & Foodies

If you want to be able to walk everywhere, this is hands down the most convenient place to stay.

The city centre and old town (Sé, Santa Maria, and around Mercado dos Lavradores) put you close to:

• cafés and brunch spots
• the best restaurants and wine bars
• historic streets and cable car stations
• Christmas markets and festivals (if you’re visiting in December)

We spent a lot of our time wandering these streets, especially in the evenings, and it’s easily the most atmospheric part of Funchal.

Best for: first-time visitors, short stays, food lovers, solo travellers
Vibe: lively, colourful, historic
Why stay here: walkability, nightlife, culture, easy tour pickups

Where to Stay in City Centre & Old Town

• Boutique: Castanheiro Boutique Hotel – rooftop pool, spa, central location
• Mid-range: The Views Baía – Adults Only – incredible harbour views
• Budget: Se Boutique Hotel – simple, central, great value

👉 If you’re only in Madeira for a few days, this is often the most practical place to stay in Funchal.

3. Monte – Best for Nature, Views & a Peaceful Stay

Monte sits above Funchal in the hills and feels completely different from the coastal areas. It’s greener, quieter, and known for its gardens, viewpoints, and famous cable car.

Staying here means trading walkability for serenity and some pretty good views.

Best for: couples, honeymooners, slow travel, garden lovers
Vibe: peaceful, elevated, romantic
Why stay here: cooler temperatures, fewer crowds, lush scenery

Where to Stay in Monte:

• Unique: Quinta do Monte – old school, garden style
• For the views: OurMadeira – Babosas Village – close to gardens and public transport

How to Choose Where to Stay in Funchal Madeira

If you’re still deciding, here’s a simple way to narrow it down:

• Short trip / first time: City centre / Old Town
• Relaxation + ocean views: Lido / São Martinho
• Romantic or quiet escape: Monte
• Christmas trip: DEFINITELY central Funchal / Old Town
• No car: City centre / Old Town or Lido
• Resort-style stay: Lido

Best Hotels in Funchal at a Glance

Hotel	Area	Best For	Why Stay Here	Price Range	Check Availability
⭐ Savoy Palace	Lido	Luxury, couples, special trips	Rooftop infinity pool, spa, ocean views, walkable to promenade	€€€€	👉 Check Availability here
🌊 The Views Baía (Adults Only)	City Centre	Views, value, first-timers	Hilltop views over Funchal, great breakfast, close to old town	€€	👉 Check Availability here
🏛 Castanheiro Boutique Hotel	City Centre	Location, charm, walkability	Right in the historic centre, rooftop pool, spa, character	€€€	👉 Check Availability here
🌿 Quinta do Monte	Monte	Unique, peaceful stay	Lush gardens, quiet area, boutique old school feel	€	👉 Check Availability here
💸Maria’s Central View Apartment	City Centre	Groups, families, apartment style	Simple, central, excellent value	€€	👉 Check Availability here

Frequently Asked Questions

Where to stay in Funchal for first-time visitors?

If you are deciding where to stay in Funchal for the first time, the city centre or Old Town is usually the best option. These areas are close to restaurants, markets, the harbour and many of Funchal’s main attractions, making them ideal if you want a walkable base while exploring Madeira.

Which area is best to stay in Funchal?

The best area to stay in Funchal depends on your travel style. The city centre and Old Town offer the most atmosphere and walkable attractions, the Lido area is known for ocean views and resort-style hotels, while Monte provides a quieter and more scenic stay in the hills above the city.

Is Funchal a good base for exploring Madeira?

Yes, Funchal is one of the best places to stay in Madeira because it works perfectly as a base for exploring the island. Many travellers stay in Funchal and take day trips to places like Porto Moniz, Santana and Pico do Arieiro before returning to the city for restaurants, sunset views and nightlife.

How many days should you stay in Funchal?

Most travellers spend 2 to 3 days in Funchal as part of a wider Madeira trip. This gives you enough time to explore the Old Town, visit viewpoints and gardens, experience the Monte toboggan ride and enjoy the food scene before heading out on island day trips.

How many days do you need in Madeira?

For a first visit, 4 to 7 days in Madeira is ideal. Four days allows you to explore Funchal and see several highlights, while five to seven days gives you more time to experience levada hikes, scenic drives and different parts of the island without rushing.

Is Funchal worth visiting?

Yes, Funchal is absolutely worth visiting. The city combines colourful Old Town streets, oceanfront promenades, great restaurants and easy access to nature, making it one of the most enjoyable bases for exploring Madeira.

When is the best time to visit Funchal?

Funchal is a year-round destination thanks to Madeira’s mild climate. April to October is ideal for warm weather and swimming, while December is popular for Christmas lights, markets and New Year fireworks, making the city especially festive during the holiday season.

Is it better to stay in Funchal or elsewhere in Madeira?

For most visitors, staying in Funchal is the easiest and most convenient choice. The city has the widest range of accommodation, restaurants and transport options, while still being close enough for day trips across the island.

Final Thoughts: Best Places to Stay in Funchal

Choosing where to stay in Funchal can really shape your Madeira experience. The city centre offers energy, colour and walkable access to restaurants, markets and attractions, while the Lido area provides ocean views and resort-style stays. Monte is quieter and more scenic if you prefer a peaceful escape.

For first-time visitors, we think the best answer to where to stay in Funchal is somewhere close to the city centre. It’s convenient, vibrant and the perfect base for exploring Madeira.

No matter which area you choose, Funchal makes an incredible base for discovering the island. Hopefully this guide helps you decide where to stay in Funchal for your trip. Let us know in the comments where you ended up staying.

Thanks for reading until the end and drop a comment if you have an opinion of where to stay!
Mon & Ryan