Portugal: Beautiful, soulful, affordable

— -- LISBON, Portugal -- On a cobbled back street in the ancient Alfama neighborhood, candlelight dances across the crumbling, 19th-century blue-and-white tiled walls of the Mesa de Frades tavern. Amid a hush of anticipation, fado singer Pedro Moutinho steps in front of two acoustic guitarists, closes his eyes and pours out a tune of loss so haunting, it can make strong men weep. Those packed into the hole-in-the-wall erupt with approval.

What jazz is to New Orleans and blues to Memphis, this melancholy folk music — born in the bars and bordellos of Lisbon over a century ago — is to this capital of three million on the banks of the Tagus River. And with the country's economic woes, experiencing it now is more affordable than ever.

"Fado is a storytelling medium that came from the troubadours," says filmmaker Diogo Varela, who leads private fado tours and is the great-nephew of Portugal's greatest fado singer, the late Amália Rodrigues. "It's not so much about your voice as how you express emotion and your life experience."

Fado, which means "fate," also is the musical expression of the Portuguese concept of saudade, a soulful yearning for the unattainable, as bittersweet as Port wine. This quintessential national trait is as unfathomable to outsiders as the city's labyrinth of secret passageways and back alleys crisscrossing its seven hills.

"Lisbon has a decadence and melancholy that comes from lost grandeur," says Danish director Bille August, who's here shooting Night Train to Lisbon, starring Jeremy Irons. "It's a mysterious place, but there's an innocence to the city."

Irons agrees. "There is a magic and this will be our biggest challenge: to reproduce this mystery in our film," he told the Portuguese newspaper Sol.

Indeed, that magic and mystery — along with the country's reputation as a European bargain — may have propelled Portugal to a tourism record in 2011. A study by Hotels.com ranks the hotels among the most affordable in a major European destination. In the past year, average prices have dropped from just over $117 to about $104 per night, with some five-star Lisbon lodgings charging less than $200. Doubles in the hip LX Boutique Hotel, for example, go for $154, including breakfast.

Three-course meals in informal restaurants — featuring the country's famed seafood, especially cod, the national obsession — start at about $25.

Leave your heart in 'Sao Francisco'

With its weathered cable cars, iconic bridges (such as the Vasco da Gama, Europe's longest) and steep winding roads tumbling to the waterfront, Lisbon is an Old World San Francisco look-alike. But rather than showy Victorian townhouses, it's a faded tableau of red-tiled roofs and wrought-iron balconies, Baroque churches and whitewashed plazas, baked by centuries of sunlight. Sherbet-colored buildings — in lemon, lime, peach, apricot — are slathered with enough mosaic tiles to fill the ships of this once-great trading empire.

"I hope you realize what you have here in the extraordinary buildings," Irons said at a Lisbon press conference for Night Train. "You have an absolute jewel."

The Alfama, a Moorish enclave that survived the city-flattening 1755 earthquake, is the city's star. But she's an enigmatic charmer, luring the unwary into a maze of narrow alleys, unexpected alcoves and hidden haunts that crawl the hill to the city's crowning glory, the Castle of São Jorge, dating from the sixth century.

Tourists in this area mingle with old women in black, who shuffle along. Freshly hung laundry flutters in the breeze. And fado spills out of windows and doorways like a plaintive refrain.

"You can still be a romantic here," says British journalist Max Wooldridge, on his fourth visit.

A world away, modern Lisbon hops to life after dark in Bairro Alto's boho bars and discos. Young trendies pub-crawl their way through the district, splashing out of watering holes with drinks in one hand, cigarettes in the other. After all, someone's got to keep up Lisbon's rep as a party spot — despite hard times.

During the day, buskers and living statues clot pedestrian-only Augusta Street, catnip for fashionistas. Even tonier stores beckon along leafy Liberdade Avenue, a Champs Elysées-wannabe.

Like most European capitals, Lisbon has its share of grand plazas (Comércio and Dom Pedro), monasteries (Jerónimos and Carmo), and churches (Sé Cathedral). But unlike them, it boasts funky funiculars and elevators that help Lisboans navigate the steep hills, such as the lacy ironwork-covered Santa Justa lift, built by a student of Gustave Eiffel.

Visit scintillating Sintra, too

If Lisbon is the stately matron, Sintra is her flamboyant little sister. Just 20 miles away, the rub-your-eyes town of 33,000 might have more castles, estates and royal retreats per square foot than anywhere else on earth — making it a UNESCO World Heritage Site.

One of those palaces now is offering euro-stressed prices: the five-star Hotel Tivoli Palácio de Seteais, an 18th-century landmark with frescoed walls and antique tapestries and furnishings. Rooms this spring start at $240 per night, including full breakfast — vs. $860 two years ago. The 30 updated bedrooms are a throwback, with hand-embroidered linens and trays set with crystal decanters of Port and local delicacies of pasteis de nata (custard tarts) and travesseiros (pillow-shaped puff pastries filled with a sweet eggy mixture).

"Sintra is a place you can imagine yourself in a 19th-century novel," says filmmaker/fado guide Varela. Or in Sleeping Beauty.

Set in cool forested hills, it was the summer retreat for the Portuguese royal family and its courtiers as early as the 14th century. One ornate villa after another seems to sprout from the dense vegetation along its quiet country lanes, such as the phantasmagorical Regaleira Estate. It's a spooky extravaganza of turrets, gargoyles and spires right out of Edgar Allan Poe.

But none can trump the Pena Palace for Disneyesque fantasy. Built on a hilltop by King Ferdinand II — with crenelated ramparts here, parapets and towers there — it's festooned with enough decorative flourishes for a wedding cake.

Day-trippers engorge the jewel-box town, filling the ceramics shops, wine-tasting emporiums and cafes that straddle its serpentine alleys. Church bells mark the hours, while diners linger over grilled sardines with boiled potatoes, fish stew or cod cakes, topped off with bica, the rocket-fuel espresso.

And as they watch the setting sun burnish the red-tiled roofs, there may be no better place to experience the life of a nobleman — but at a commoner's price.