It’s gotten really expensive to travel in most of Europe. Note: most of Europe. While 10 euros will barely buy you a sandwich in Paris, it’s enough for an entire lunch in Lisbon. In fact, Portugal’s hilly capital is filled with good deals, especially if you think like a local. Start by synchronizing yourself to the pace of Lisbon life. Rattle around in the cranky old streetcars (eléctricos) and funiculars (elevadores). Explore the labyrinthine, pedestrian-only lanes of the Alfama, the old sailors’ quarter. Take a Sunday stroll through a 16th-century monastery. Wherever you go, you’ll find yourself thinking of food—especially in summer, when the savory smell of grilled sardines tends to hover in the air. Luckily, this Old World city was built on seven steep hills, so you’ll have plenty of opportunities to walk off the calories.

SIGHTSEEING FOR LESS
The best way to spend the day in Lisbon is simply to wander the winding, cobblestoned streets of old neighborhoods like the Alfama, Bairro Alto and Bélem, soaking up the scene. If you prefer not to venture forth without a destination, the sprawling Feira da Ladra near the Alfama should be at the top of your list. Every Tuesday and Saturday, this raucous “Market of Thieves” provides one of the best people-watching experiences in Lisbon. And it’s totally free—unless, of course, you can’t resist a bargain. Keep an eye out for inexpensive azulejos, the brightly glazed tiles seen on buildings throughout the city. For a crash course in the craft and history of the tiles, head to the Museu Nacional do Azulejo, a converted 16th-century convent displaying more than 7,000 pieces. 4 Rua da Madre de Deus; $6

Lisbon’s prime sightseeing spot is an old Moorish stronghold called Castelo de São Jorge, situated on the city’s highest hilltop. You can tour the restored towers, stroll the tranquil grounds and walk along the fortress walls—the perfect place to catch a sunset. 7 Rua da Costa do Castelo; $7

Be sure to check out the nearby Resto do Chapito, a café that doubles as a school for clowns and jugglers. The views over the Tagus River are breathtaking, and a light meal from the tapas menu will cost less than $20 for two. 1/7 Rua da Costa do Castello 

In the historic Belém neighborhood, head to Mosteiro dos Jerónimos to see the apex of Manueline art and architecture—named for Manuel I, who ruled Portugal during its golden Age of Discovery. It’s said that Vasco da Gama and other great explorers prayed in this monastery before sailing off on their voyages. Praça do Império; $8, free Sundays 

Across the square, you’ll find the Berardo Collection, a contemporary art museum that opened in 2007. Its rotating exhibitions—of works by Picasso, Warhol, Magritte and Miro—are assembled from entrepreneur José Manual Rodrigues Berardo’s $410 million collection, and rival any contemporary art museum in Europe. Praça do Império; free

THE FOOD
To see the building blocks of Portuguese cuisine, take the creaky Elevador da Bica down from the Bairro Alto to the Mercado da Ribeira, Lisbon’s main food market. There vendors lay out the day’s catch, from fat cod to mesh bags bulging with snails. Women grind kale to make caldo verde, a traditional soup prepared with potatoes and chouriço, the dry, garlicky Portuguese sausage. Stock up on fresh breads and savory raw-sheep’s-milk cheese like Azeitão, which pairs perfectly with a red wine from the Douro Valley. Grocery stores sell excellent bottles for less than $8.

The Portuguese display their love of pastries in the colorful names they give them: toucinho do céu (bacon from heaven) and the coconut-topped papos de anjo (angel’s double chin). These inexpensive treats make a perfect snack while you stroll. If you’re visiting the high-end shops of the Chiado neighborhood, fuel up at the longtime Café a Brasileira, near Largo do Chiado. In Belém, follow the locals to Pasteis de Belém, home to Lisbon’s best pasteis de nata (egg-custard tarts). 84-92 Rua de Belém

DINING: OLD
While a new generation of Lisbon chefs is hard at work reshaping Portugal’s culinary legacy, you should also sample the traditional fare—which is more than just salt cod. (Still, the bacalhau in Lisbon is wonderful.)  Hands down, the best place to start is Stop do Bairro. You’ll dine elbow to elbow with neighborhood regulars on traditional dishes like grilled dourado or porco a Alentejana, a pungent mix of pork and clams. After dinner, owner João de Rego Sabino might pour you a glass of his quince brandy. 55 Rua Tenente Ferreira Durao; 011-351-21-388-8856; dinner for two, $40*

Another traditional option is Casa Eurico Ferreira, a hole-in-the-wall where workers hunker down for lunch at long tables. This is the spot for those grilled sardines in summer. Castelo de São Jorge lies just up the hill. 3 Largo do São Cristovao; 011-351-21-886-1815; lunch for two, $20

DINING: NEW
In the upscale Lapa neighborhood, Nariz de Vinho Tinto (Red Wine Nose) is hard to find and pricey, but it’s worth a visit thanks to the city’s best wine list, amazing housemade sausages and adventurous game dishes like rabbit risotto with (of course) red wine sauce. 75 Rua do Conde; 011-351-21-395- 3035; dinner for two, $90

Pap’ Açorda practically invented nouveau Portuguese cuisine. Despite its landmark status, this hip Bairro Alto spot is anything but stuffy. Order the açorda, bread stew with shrimp or cod. Reservations are recommended. 57 Rua da Atalaia; 011-351-21-346-4811; dinner for two, $100

To sample the new wave of contemporary Portuguese cuisine, try lunch at Cop’ 3 in the burgeoning Santos Design District. 3 Largo Vitorino Damasio; 011-351-21-397- 3094; lunch for two, $50

DRINKS AND FADO
Taste affordable flights of wines from emerging Portuguese vintners at Chafariz do Vinho. Between glasses you can stroll through the restaurant, fashioned from 18th-century subterranean aqueducts. Rua da Mãe d’Agua á Praça da Alegria

The clubby Port Wine Institute is, not surprisingly, the place to learn about Portugal’s signature tipple. You can sample hundreds of vintages here, some for as low as three euros a glass and other rare bottles for hundreds of euros. Snacks of cheese and presunto (cured ham) or chouriços for two are under $10. 45 Rua de Sao Pedro de Alcantara

Some describe fado as a cross between flamenco and Billie Holiday. The songs’ lyrics speak of unrequited love, the deaths of heroes, a sailor’s yearning to be home with his wife. Late at night, in dark bars, patrons follow along, mouthing the words, often with tears in their eyes. The problem is, there are too many cheesy fado places that exploit tradition, packing in tourists for overpriced dinner shows. In contrast, Tasca do Chico, a pub in the Bairro Alto, offers free late-night fado every Monday and Wednesday. The performers are generally singers and guitarists from the neighborhood, but there’s always the chance that a star might pop by—like Mariza, Portugal’s current fado queen. 39 Rua Diario de Noticias

* Prices cover a three-course meal without drinks, tax or tip, unless otherwise noted.

STAY

RCI-AFFILIATED RESORTS NEAR LISBON INCLUDE:

HOTEL AP. VILA GALE VILLAGE CASCAIS, Cascais
QUINTA DA MARINHA, Cascais
THE ESTORIL EDEN, Estoril

For more information, visit RCI.com or call:
Weeks: 800-338-7777
Points: 877-968-7476

NON-RCI-AFFILIATED HOTELS:

LISBOA REGENCY CHIADO
This 40-room hotel offers
luxury on the cheap and a
great location, in the middle
of the Chiado shopping
district and steps from
the central Rossio square
and Bairro Alto nightlife.
114 Rua Nova do Almada;
lisboaregencychiado.com;
doubles from $156

PENSÃO LONDRES
A 40-room hotel has been
carved out of an old mansion,
with grand ceilings and
wrought-iron balconies that
look onto narrow alleys.
Rua Dom Pedro V;
pensaolondres.com.pt;
doubles from $95

APARHOTEL VIP EDEN
The 134 apartment-style
rooms come with small
kitchens. 24 Praça do
Restauradores; viphotels.com;
studios for two from $145

HOTEL BORGES
Another good value, this
96-room hotel is in the Chiado
shopping district, right next
to Café a Brasileira. 108 Rua
Garret; lisbonhotelborges.com;
doubles from $100

RESIDENCIAL DUAS NAÇÕES
This bargain favorite is the
best spot for those who want
to stay downtown, near the
Rossio and the waterfront
Praça Commercio. 41 Rua
da Vitoria; duasnacoes.com;
doubles from $97

NOTE: Information may have changed since publication. Please confirm key details before planning your trip.