I hope this isn't coming too late--I'm an American currently living in Lisbon. After living here, the bank transfer doesn't surprise me, although I don't blame you for not wanting to do it. Portugal was hit really hard by the financial crisis a few years ago, and the effects are still rippling through. Credit is virtually unheard of here, and the vast majority of places insist on cash or Portuguese bank cards (in other words, real money they can count on) to pay for things. Small hotels in rural places asking for a bank transfer don't surprise me in the least.
So, a word of advice: set out on your trip with ample cash. At the very least, have a debit card that will allow you to withdraw money from foreign ATMs without huge fees. In Lisbon, ATMs are everywhere, but I can't speak for smaller towns. You're going to need to do a lot of paying in cash in Portugal! I can think of less than a handful of places (in Lisbon, the capital city and a major metropolitan area) who will accept my foreign debit OR credit cards. Nine times out of ten, I need cash. This includes restaurants! It's the only place in Europe I've ever had this issue. Portugal is charming in more ways than I can count, but their practices with money and credit are probably a bit different than what you're used to. Hope this helps!