Rent a villa
Staying in a villa or rental house is much cheaper than a hotel stay, especially if you're traveling with a group and don't mind cooking meals at home. Finding a villa has gotten easier as the number of vacation rentals has expanded online.
HomeAway.com says it has more than 27,000 villas and homes for rent in Europe alone. The most popular destinations for vacation rentals: Tuscany, Italy; Mallorca, Spain; Cote-d' Azur on the French-Riviera; and Provence.
For example, a five bedroom, two bathroom villa with an in-ground pool and air conditioning on the Costa del Sol in Spain is $2,975 a week. (See more at homeaway.com.)