Why go: Although Lisbon embraces the past, its glorious old buildings house new restaurants, clothing boutiques and museums that have made the city one of Europe's hippest—and most affordable—cultural destinations.
Where to stay: Bairro Alto is considered Lisbon's first contemporary boutique hotel. Its 55 rooms blend traditional Portuguese design with luxe touches like flat-screen TVs and plush bed linens. Rooms from around $240; bairroaltohotel.com.
Where to eat: Restaurante 560 pays homage to simple Portuguese staples like octopus and farinheira (black pork sausage) by reinterpreting them in inspired ways: Octopus is deep-fried and served with rice and sautéed sprouts, while farinheira comes wrapped in phyllo pastry.