Where to Stay in Funchal: 5 Best Areas (Pros and Cons)

Knowing where to stay in Funchal isn’t easy, especially if it’s your first time in Madeira’s capital city. Home to the vast majority of the island’s population, the city is made up of many neighbourhoods, each vastly different from the next, and with its own advantages, drawbacks and terrain to contend with.

Funchal is by far the most popular place to base yourself in Madeira. It’s well connected by buses and tours, and there’s always something happening: regular fiestas throughout the year, endless restaurants and cafés, and a busy marina used for whale-watching tours.

If it’s convenience you’re after, Funchal is the place to be. It does get crowded, particularly when the cruise ships are in port, so it’s best suited to people who like being right in the thick of the action. If you value peace, open views or quicker access to trails and beaches, you may want to explore alternatives in my complete guide to where to stay in Madeira.

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Is Funchal the Best Place to Stay in Madeira?

It would be way too easy to say yes, and end the discussion there, but that wouldn’t be honest. Whether Funchal is the best place to stay boils down to what you want from your trip and how you plan to get around.

For first-time visitors, I do think that Funchal is the most practical choice. It’s easier to navigate than Madeira’s smaller towns, and it has the most reliable public transport. To add to that, you can go whale watching directly from the marina and pick from a wide range of hiking tours and transfers.

Everyday essentials are also straightforward. There are supermarkets, restaurants, bars, and car rental shops within walking distance of most central Funchal neighbourhoods. The Old Town is compact and walkable, and if you want to go swimming, you can head to natural pool and pebble beach in Lido and São Martinho.

Advantages of staying in Funchal:

• Excellent public transport (buses, ferry to Porto Santo and the cable car to Monte).
• Wide range of organised tours and hiking transfers.
• Everyday essentials are everywhere: supermarkets, cafés, pharmacies and car rental shops.
• Direct access to whale-watching tours from the marina.
• South-coast location with longer, sunnier days.
• The widest range of hotels, apartments and hostels on the island.

Disadvantages of staying in Funchal:

• Crowded and noisy at times, especially when cruise ships are in port.
• Heavier traffic than other parts of the island if you’re renting a car.
• Parking can be difficult and expensive in central areas.
• No sandy beach in the city centre; swimming spots are mostly in Lido/São Martinho.
• Fewer dramatic mountain views compared to rural areas.

What Are The Best Areas to Stay in Funchal?

Most people stay in the Old Town (Zona Velha), but it can be more cost-effective to stay in the neighbourhoods bordering Zona Velha, such as Santa Luzia and São Pedro if you don’t mind walking.

Lido and São Martinho are other good options, especially if you want to spend time by the beach or the Funchal natural pools. You’ll just need to take a short bus to reach the Old Town.

I’ll start off this Funchal accommodation guide by explaining the pros and cons of each place, and who it’ll suit best.

A quick note on elevation: Funchal is steep, so I recommend always checking elevation and terrain before booking your accommodation, especially if you want to get around on foot. Google Street View is a handy tool for this.

1. Old Town (Zona Velha)

Best for: Convenience, walkability, tour/bus connections and sightseeing.

Cons: Crowded, tourist-focused, and no beach.

The Old Town (Zona Velha) is the best area to stay in Funchal if you value convenience. It’s a walkable area with cobbled streets lined with shops, restaurants, coffee shops and bars, as well as a fair few historic buildings.

As one of the flattest parts of Funchal, it’s also much easier to navigate on foot than neighbouring hillside neighbourhoods.

To go whale watching in Madeira, you can reach the promenade and marina within a few minutes’ walk. From the promenade, there are buses over to Lido, with its pebble beach, beach bars and the Funchal natural pool.

Renting a car is also easy from the Old Town, but if you’re exploring car-less, you can rely on the fantastic bus connections spread across the promenade, old town and bus station to reach the north coast, Valley of the Nuns and locations along the south coast.

Most of the tours/hiking transfers in Madeira include pick-up in Old Town, too.

The Old Town has long, narrow streets, so the hotels are smaller and not many of them feature a pool. Any holiday apartments will be expensive compared to neighbourhoods on the outskirts of Funchal. There are also a couple of small hostels in the Old Town for budget or solo travellers.

My main problem with the Old Town is that it can get very busy, especially during peak season and when cruise ships are in port. It can also feel loud and lively at night, particularly around restaurant-heavy streets.

Good places to stay in the Old Town (Zona Velha):

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2. Santa Luzia

Best for: City views, lower prices, and good holiday apartments.

Cons: More walking required, sometimes with a hill.

Santa Luzia is my favourite alternative to the Old Town. Located to its southeast, this sloping Funchal neighbourhood has more holiday rentals and tends to be cheaper than the very centre of the city.

The thing to watch out for in Santa Luzia is the hills. If you stay within a kilometre or two of Funchal, you’ll be okay – it’s usually a 10 or 15-minute walk to the Old Town, with a slight slope – but if you stay further up the hill, you may need to rely on buses.

I always check the exact elevation on Google Street View before booking here. It makes a big difference, because you can get a real sense for how steep your route is down to the Old Town.

Santa Luzia has lovely views over the Old Town and ocean, and back towards the mountains above Funchal. There are fewer hotels, but the ones it does have are generally more spacious than the hotels in Old Town.

Good places to stay in Santa Luzia:

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3. Lido and São Martinho

Best for: Access to the beach, natural pool and beach bars.

Cons: Requires a bus or taxi to the Old Town; urbanised area with less character.

Lido and São Martinho are some of the most popular places to stay in Funchal, mainly because, between them, they have a large, pebble beach (Praia Formosa) lined with casual beach bars and Doca do Cavacas, the Funchal natural pools.

Lido is the closest to Funchal, with São Martinho set behind it. Both areas are flatter than most of Funchal, as long as you stay near to the ocean, making them easy to walk around.

There’s no beach in central Funchal, so it really shouldn’t be much of a surprise that lots of chain hotels have popped up in this neighbourhood, taking advantage of Praia Formosa.

In central Funchal, you tend to see compact, older-style hotels, but in São Martinho and Lido, the standard is a large, spacious resort-style building (often aparthotels).

I’m not a huge fan of Lido and São Martinho as a base for Funchal. I like that they have multiple swimming spots and views over the largest cape in Europe. However, I find that the area lacks character compared to the Old Town.

Many of the hotels look very similar, and if it weren’t for the views, I feel like I could be anywhere in Europe.

On top of that, from Lido and São Martinho, it’s a 10 – 15-minute bus ride into central Funchal. The buses are very regular, but at busy times, they’re often full. You sometimes need to wait 10+ minutes for a bus with free seats.

The alternative is walking (20 – 40 minutes) to the Old Town or calling a Bolt car, but I’ve struggled to get a Bolt several times from Lido to Funchal.

Good places to stay in Lido and São Martinho:

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4. São Pedro

Best for: Views over Funchal bay; easy access to Lido and the Old Town

Cons: Can be hilly

São Pedro is a nicely located neighbourhood in Funchal, between Lido and the Old Town. Like Santa Luzia, it’s pretty hilly, so you need to watch the terrain (checking Street View on Google Maps should help).

Like Lido, São Pedro is well-connected to the Old Town by buses. There are also regular connections in the other direction, to Praia Formosa and the Funchal natural pools.

Several luxury hotels are placed in São Pedro, because the area has spectacular views over the bay of Funchal. There are also holiday rentals, again sporting great views over the bay.

Overall, it’s a nice option because it’s closer to the centre of Funchal than Lido. Just watch the terrain; you don’t want to wind up doing a 30-minute steep uphill walk to your hotel twice per day.

Good places to stay in São Pedro:

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5. Monte

Best for: Quinta hotels and views of Funchal

Cons: Crowded area; less accessible

Monte is one of Funchal’s best-known areas. Tons of tourists flock there every day by cable car to tour Monte Palace and take the traditional toboggan ride (Carreiros do Monte) for two kilometres from Monte to Livramento.

Staying in Monte is worthwhile if you’re interested in the quintas of Madeira, historical homes with large, spacious gardens. There are a couple of quinta hotels in Monte, and the views are exceptional, as the neighbourhood is around 550 metres above sea level.

The downside? If you don’t rent a car in Monte, you’ll have to fork out a fair bit on cable cars or buses to and from the city. It’s also a busy area with a lot of tourist traffic, so buses and roads can be crowded.

Also, take note that the temperature is slightly cooler in Monte due to the elevation, and clouds/mist can cling to the hills, causing the weather and visibility to change quickly.

Good places to stay in Monte:

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Where to Stay in Funchal Without a Car

Funchal is the easiest place to stay without a car. Public transport is the most reliable here, and most tours and hiking transfers include pick-up from central Funchal.

If you’re going car-free, the safest choice the Old Town (Zona Velha). It’s the most walkable part of the city and has immediate access to buses and the marina.

Santa Luzia and São Pedro can also work well, provided you check the terrain carefully and don’t mind a 15- to 25-minute walk to bus stops and tour pick-up zones.

Lido and São Martinho are also possible without a car, but you’ll need to depend more heavily on buses to reach the Old Town.

If you’re wondering how to plan your trip without driving, I’ve broken down the best bases, places to visit and example itineraries. in my complete guide to Madeira without a car.

How Long to Stay in Funchal

How long you stay in Funchal depends on what your plans are. If it’s your first time in Madeira, I recommend spending at least 3 – 4 nights in Funchal. This gives you time to explore the Old Town, take a whale-watching tour, ride the cable car to Monte and do one or two day trips.

On the other hand, if you’re coming to Madeira for a week or more, I really like the idea of splitting your time. You can stay in Funchal for sightseeing and tours, then move to a quieter location on the south or east coast for a change of pace.

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