Funchal City Guide
Cheap Hotels Funchal: How to Cut the Cost of a Night
Cheap hotels funchal searches turn up plenty of listings and no official price index, so this page works from one useful fact instead: the city's tourist tax does not punish you for booking a cheaper room. It is the same $2.29 (€2.00) per person per night whether you book a 5-star hotel or a 1-star one, so the savings on a cheap Funchal hotel come entirely from the room rate and the area, not from the tax on top. This page names no property, since it holds no rate reading of its own, and instead sets out where lower rates cluster, what a 1-2 star listing and an Alojamento Local room actually are under Madeira's own classification law, one gap this research could not close, and the transport and food choices that do more to cut a trip's cost than the hotel itself. For the area comparison and full tax detail, see where to stay in Funchal, and for the wider trip, start at the Funchal guide, from the start.
Quick answer The tax does not change, the room rate and area do
Cheap hotels in Funchal are found by area and star category, not by chasing a lower tax band, since the city's $2.29 (€2.00) per person per night tax applies equally at every category. No Funchal-specific youth hostel could be confirmed on an official register in this research. The Se and city centre, and streets around Zona Velha away from the seafront, are where lower rates commonly cluster.
Key takeaways
- Compare every area on where to stay in Funchal before assuming the cheapest listing is also the best located.
- A self-catering room or apartment cuts food costs more than the room rate alone, see Funchal apartments.
- The GIRO transport card cuts bus fares from $2.35 (€2.05) to $1.66 (€1.45) a ride, covered in cutting the cost.
- For a fixed, published-price introduction to the city instead of a pricier private tour, the Funchal old town walking tour starts at $18.84.
- This page is one piece of the Funchal city guide, alongside attractions, food and day trips.
Budget Category Options in Funchal
Four types of lower-cost stay recognised under Portugal's own tourism law, compared by what governs them and what the city's tax adds. None of the four is exempt from that tax.
| Type | Governing rule | Tourist tax | What to check |
|---|---|---|---|
| 1-2 star hotel | National 1-5 scale, DLR 12/2009/M | $2.29 (€2.00) per person per night | Verify the star at rnt.turismodeportugal.pt |
| Estabelecimento de hospedagem (may call itself a hostel) | Alojamento Local, DL 128/2014 | $2.29 (€2.00) per person per night | Must show an AL registration number in the listing |
| Quartos, rooms in a host's own home | Alojamento Local, max 3 units | $2.29 (€2.00) per person per night | Same registration-number rule applies |
| Self-catering apartment | Alojamento Local, apartamento modality | $2.29 (€2.00) per person per night | See Funchal apartments for the full rules |
Every row carries the identical tax, so the saving on any of these comes from the nightly rate, not from a lower tax band. Sources: Funchal Taxa Municipal Turistica FAQ, Funchal's Alojamento Local info sheet. Figures current for in Q3 2026.
The Tax Does Not Get Cheaper by Booking Down
This is worth stating plainly because it runs against how tourist taxes work in some other cities.
Funchal's municipal tourist tax is $2.29 (€2.00) per person per night, capped at 7 consecutive nights for a maximum of $16.04 (€14.00) per uninterrupted stay, in force since 1 October 2024 and extended to cruise passengers since 1 January 2025. It applies at the same flat rate whether the room is a 5-star hotel or a 1-star one, and whether it is a classified hotel or an Alojamento Local unit. There is no lower tier for a budget booking.
What that means in practice: the entire saving on a cheap Funchal stay comes from the room rate itself, plus the area you choose and how many nights you stay before the 7-night cap kicks in. A week-long budget stay tops out its tax contribution at $16.04 (€14.00) per person no matter how cheap the room, which is worth knowing when you are adding up a full trip budget.
Sources: Funchal Taxa Municipal Turistica FAQ.
What This Research Could Not Confirm
An honest gap: this page will not name a hostel it cannot source.
A budget guesthouse street away from the seafront in Funchal. No hostel here is named because none could be sourced against an official register.
The one official youth hostel network operating in Madeira, run by Movijovem, was confirmed to have a hostel on Porto Santo, the smaller neighbouring island, not in Funchal itself. Movijovem's own hostel page for that Porto Santo property returned an error when checked directly, so even that one cannot be printed here with confidence. No search of official Portuguese tourism registers in this research turned up a dedicated Movijovem youth hostel inside Funchal city.
That does not mean cheap beds do not exist in Funchal, only that this page will not invent a hostel name it cannot verify. What it can tell you is how to check any listing that markets itself as a hostel, which is an estabelecimento de hospedagem under Portuguese Alojamento Local law once dormitory guests outnumber private-room guests, and every such listing must carry a registration number, checkable for free at rnt.turismodeportugal.pt using the Pesquisa_AL.aspx search.
Sources: Movijovem, Pousadas de Juventude, Turismo de Portugal, Pesquisa RNAL.
Cutting the Cost of the Rest of the Day
Once the room is booked, two everyday choices do more for a tight budget than chasing a slightly cheaper bed.
The GIRO Card for Transport
Loading a GIRO card cuts the city bus fare from $2.35 (€2.05) paid on board to $1.66 (€1.45), and the same card also gets a cheaper Aerobus fare from the airport, $6.36 (€5.55) against $7.68 (€6.70) on board. A day pass on the GIRO card runs $5.67 (€4.95), which pays for itself after roughly three or four rides in a day. None of that depends on where you are staying.
A supermarket breakfast in a self-catering room. This alone cuts a Funchal trip's daily spend more than chasing a slightly lower room rate.
Self-Catering Instead of Every Meal Out
An Alojamento Local apartment with even a basic kitchenette lets you cover breakfast and some lunches from a supermarket run rather than a restaurant bill three times a day, which for most travellers cuts more from a trip's total cost than the difference between a 2-star and a 3-star room. Funchal apartments covers the registration rules and what to check on a self-catering listing before you book one.
A Fixed Low Price for Your First Morning
The walking tour and hop-on hop-off bus both list a published price under $30, a predictable add-on to a budget stay.
from $18.84
Funchal Old Town Walking Tour
A 2 hour small-group walk through Funchal's Old Town, the Jesuits' College, the Farmers' Market, a wine lodge and a historic sweet factory.
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from $21.82
Hop-On Hop-Off Bus Tour
A 24 hour to 5 day hop-on hop-off pass covering Funchal, Câmara de Lobos and Cabo Girão, with a Blandy's wine tasting included.
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Next Steps on a Budget
Pages that carry the budget decision forward.
Where to Stay in Funchal
Compare every area, including which ones tend to run cheaper, on where to stay in Funchal.
Funchal Apartments
Self-catering rules and registration checks, on Funchal apartments.
Funchal Costs
The wider daily budget picture for a trip to Funchal, on Funchal costs.
Cheap Hotels in Funchal: Questions
Is the tourist tax lower for a cheap hotel in Funchal?
No. The tax is a flat $2.29 (€2.00) per person per night at every star category and at Alojamento Local units, capped at $16.04 (€14.00) over 7 nights. See the tax section.
Is there a youth hostel in Funchal?
No official Movijovem youth hostel could be confirmed inside Funchal city in this research. The one confirmed Movijovem hostel in the region sits on Porto Santo. See what this research could not confirm.
How can I check a cheap Funchal listing is legal?
Search it for free at rnt.turismodeportugal.pt, using Pesquisa_ET.aspx for classified hotels or Pesquisa_AL.aspx for Alojamento Local rooms and apartments. Every legal listing must display a registration number. See what this research could not confirm.
What is the cheapest way to get around Funchal on a budget?
Load a GIRO card, which cuts the city bus fare to $1.66 (€1.45) from $2.35 (€2.05) on board, and the Aerobus to $6.36 (€5.55) from $7.68 (€6.70). See cutting the cost.
Are apartments cheaper than hotels in Funchal?
The tax is identical either way. The saving from an apartment usually comes from self-catering some meals rather than a lower room rate on its own. See Funchal apartments. Full detail on Funchal hotels.
Funchal on a Budget, on Film
Three videos on budget travel and area choices in Funchal and Madeira.
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