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Algarve,Portugal at Christmas?

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Our US family of five( which now includes our new son- law ) are from the midwest and always like to spend our Christmas holiday in someplace warmer than where we live. This year we would like to go to the south of Portugal for a Christmas holiday. We specifically are interested in the Algarve area . We would be spending about 10-12 days including the actual Christmas holiday so would love any recommendations for towns,restaurants and things that might actually be open at that time of the year in that area.

We are planning on renting a villa/house in possibly two to three different cities to use as a base for our explorations. This is our first Christmas vacation with our son in law so would love to make it special.
We are not resort type folks-more like taking the rental car and seeing the area,enjoying the food and wine along with hiking and beach combing. Our family loves historical things and anything with natural history.

Which towns would be better for more things open or to enjoy the natural beauty during Christmas? What town would you suggest spending Christmas Eve and Day? We have already been to Lisbon,Sintra,etc. many years ago and enjoyed that part of Portugal but wanted something different this time.

Any help or suggestions for the Algarve would be greatly appreciated!

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