with Olhao, I assume you mean Olhao in the Algarve?
I've been there a while ago. It's a small place. I'm not sure about accomodation. The only thing I remember is a camping place (didn't look very attractive though) near the beach. But we just drove through going to the beach.
There is a beach, but it's not directly located at the ocean.
I'm not sure how to explain it, but have a look at this: http://www.casasdobarlavento.com/images/mapa_tavira.jpg
you'll see what I mean.
If you're with kids, it's great. There are not a lot of waves, the beach is ok.
Another beach close by is in Santa Lucia (close by). You can walk (about 10 min) or take a small train to the beach. This is directly at the ocean. Has waves, nice beach as well.
There's some kind of vacation park there. I'm sure you will be able to rent something there.
Anyway, in that area it's a good idea to have a car. And if you have a car, you can choose a place to stay a bit further from the beach.
We stayed at this place: http://www.quintadasflores.eu/
Great place. nice pool, good apartments. and only 10 minutes away from the beach.