The region surrounding Otavalo offers some great hiking and exploring. A short drive up the mountain from town will take you to the Cotacachi Cayapas Ecological Reserve and the Culcocha Crater lake.
Culcocha is at an altitude of approximately 3000m so you want to be accalamatized to the altitude. This beautiful caldera or volcanic crater is about 3 km wide and was formed over 3000 years ago by a massive volcanic eruption. From the gates there is a short walk up to the main centre where the crater rim hike begins or you can also buy a ticket for the boat ride around the lake.
The hike takes about 3 hours and offers up some impressive scenery. We had an indigenous Kichwa guide who took us along the path pointing out the flora and fauna unique to the altitude. He also picked off some plant material which was good to breathe in to open up the lungs and help with our breathing. The hiking path is well marked and groomed but hiking shoes or good trail runners are recommended. Bring plenty of water, some food and layers of clothing. This is the mountain region and the weather can change quickly. Sun block at this altitude is also important.
After the hike we drove back into Otavalo which is noted for its bustling Indian market. The locals wear traditional colourful clothes and you can get a fantastic introduction to Andean life. It is also a great place to pickup some souvenirs.
We found wonderful alpaca blankets and scarves which make for some great gifts to take back home. Leather goods, clothing and souvenirs and keep you shopping for the duration of the afternoon.
Where to stay: Try out the Hacienda SuMerced. This is a 400 year old colonial hacienda on the drive back through Quito which we used to set us up for the next days travel. The rooms are large and spacious while the food is amazingly good.