Peniche is a jewel in the landscape of Portugal. I had originally planned to stay in Navarra, but the sight of the beach covered in identical white umbrellas changed my mind. I arrived the first weekend in August, which, as luck would have it, was a holiday weekend for Peniche. It was the festival of the Virgins. The festivities continued all weekend long. There were bands and food stalls and bars on the main pier in town. After dark, the Virgin was brought to the harbour and placed on a boat and then taken out to the water to be paraded around the harbour. All the boats were decorated with lights and anyone was welcome to hop on them. I would recommend Peniche at anytime of the year. The people were friendly, the town was easy to get around, and the beaches were fabulous -- everything you need!
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Peniche is a bustling little surf town about an hour north of Lisbon. It's the perfect town to visit to escape from the hustle and bustle of Portugal's larger cities and the perfect place to just relax on the long stretch of beaches in between Peniche and the neighbouring town of Baleal. But be warned the water can get a little chilly. The town is also fairly compact, so you can easily explore Peniche on foot and enjoy the many great food establishments and the many year-round events that Peniche has to offer. Peniche is also a great base to explore some of the nearby fishing towns and islands, like Nazare and Berlangas Island (only accessible in Summer). The town is easily reached by bus from most major cities in Portugal and has direct links to Lisbon and Porto.
There is a range of great hostels in Peniche -- some are right in the heart of the town with all the benefits of being in a beach town but still being close to transportation; others are little further afield in the town of Baleal. Some are even right on the beach, so there's no excuse to miss the gorgeous Portugese sunshine. Peniche is a great place to try out surfing if you have never given it a go, as most Peniche hostels offer lessons at a rate affordable for backpackers, or at least are associated with a company that can help you out.
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