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Very excited for first trip to Portugal: 7 nights

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We are excited to see Portugal for the first time, in late August. We have booked airfare into Lisbon, then we will travel to London from there. We are in our early 60s, like to walk as much as possible, want to stay in one place for at least 3 or 4 nights (no less).

So, first question is: stay in Lisbon the entire 7 nights, and take day-trips from there? Or would we miss seeing an outstanding town or site, by doing that?

If so, we could stay in Lisbon 3-4 nights, and another place 3-4 nights. What do you think? We are not hectic travelers. We prefer to take our time to explore.

I already booked the Hotel Avenida Palace in Lisbon for 7 nights, taking advantage of a special deal, but we can cancel or change without penalty. This hotel seems to be in a good location for exploring Lisbon? It has very good reviews.

The Sheraton Lisboa has their special 40 euro offer available for two nights. But reviewers say it is in a business district and not very lively with restaurants, etc?

Also, we would prefer to use public transit, and are wondering if that will serve us well. or do we need a car?

We have not yet booked transportation from Lisbon to London, but we plan on flying.

Thank you for recommending your favorite sites in Portugal!

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