My wife and I are thinking of doing something a little different next year. We typical stay in one place for two to three nights and then move on to another location. This time we would like to stay in one location for a minimum of one week and do day trips by car or train, go the market and interact with the locals, leisurely. Any suggestion as to where a good hub would be in Portugal and is this practical. We do want to see the country and its sites just not racing around. We also want to do this in northern Italy on the same trip.
Obvious as it may sound, Lisbon is a great hub. The city itself warrants 3-4 days of sightseeing. Add in day trips to Sintra, Evora, Cascais... (options abound), and here's your week sorted out! You would miss the north - Porto is too far for a good day trip - but you have to make choices sometimes.
If you want to stay somewhere smaller than Lisbon, Caldas da Rainha is a good base for seeing Obidos, Tomar, Fatima, Alcobaca, Batalha etc. Caldas has a good food market and is traditionally the centre for Portuguese tile making and many of the older buildings are still covered in painted tiles.
Another vote for Lisbon. Fantastic city with many many attractions. We rented an apartment in the Chiado district (Rua do Duque) for about $85/night (kitchen/washing machine/nice).
A Lisboa Card might interest you - check the website - good for admission to nearly everything - also a transit pass for buses, trolleys, and metro - keep in mind - most Lisbon attractions are closed on Monday - a good day to go to Sintra (easy access from the Rossio train station).
There are numerous day trip companies should you wish to visit Evora (highly recommended) - we used Cooltour - and our guide (Elizabeth) was a delight. About $75/person (including transport, olive oil tasting, entrance to numerous sites in Evora, and a stop at Cromeleque dos Almendres).
The airport is quite close to city center - I recommend uber rather than Lisbon airport taxis - their reputation for gouging tourists is deserved. The RS Lisbon guidebook (or the RS Portugal guidebook) - both excellent references. I can recommend a couple of private guides in Lisbon should that be of interest.
As you develop your plan, take a hard look at how many day trips you are planning, and if it makes sense. For a week, you really do not want more than 2 day trips, and while time with the locals seems nice, not much time for coffee and markets if you are always travelling someplace else. It may make more sense to trim your week to 5 days and overnight two for example.
The other thing about daytrips is you are hitting a place at it's worst, when everyone else is day-tripping there. Some places are "blah" to "annoying" with the crowds, but a delight after everyone leaves.
Still a good plan to use a Home Base and take a daytrip or two, just plan it well.
Lisbon was my first thought as well, however we have had a couple of friends recently who found Lisbon just too busy to enjoy. If you do choose Lisbon, I would spend some time choosing your location carefully. Areas like the Baixa are very busy, and you will not be interacting with locals much. You don't mention what time of year you are planning this.
With a week you cannot comfortably stay in one place and see the whole country, so I would suggest deciding which sites or regions interest you the most. I really like the Evora area for example, but you will not be able to see the entire country from there.
Blue439, very interested in your private guide recommendations!
Another vote for Lisbon.
Regarding where to stay; we stayed in area just below Principe Real and it was quite yet near everything. The Jardim Fialho de Almeida is almost a little village. A butcher, fishmonger, restaurants, coffee and a beer bar.
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I wonder how many posters have stayed in places other than Lisbon?
I have, and rereading this, I see that the OP is willing to drive. That would give a stronger case for a smaller town. If the plan is to go in or around summer, I would suggest Ericeira : it is a beautiful coastal town with great beaches (but waves and cold water, like elsewhere along that coast), within striking distance (less than 90 min frive) from Lisbon, Sintra, Tomar, Batalha and Alcobaça, Óbidos...