Although many tourists come to Otavalo just for the market, there’s plenty more to do around town. Otavalo is surrounded by extinct volcanoes, rugged Andean peaks and fertile highlands, as well as an abundance of lakes and waterfalls. Getting around is fairly easy; the combination of ancient Inca trails, cobbled roads and tracks make the possibilities for walking and cycling almost unlimited.
There are a couple of tour agencies in the town that can arrange trips from Otavalo – the most popular ones are visits to local villages where you can visit indigenous residents in their homes, watch carpets being woven the traditional way and learn about the weaving process. Hiking, cycling and horse-riding trips are also available.
If you're going hiking, the area around Lagunas de Mojanda is an excellent spot – beautiful, yet not at all crowded. The high páramo land, just 17 km south of Otavalo, has numerous trails, and you can walk just for a couple of hours, or up to a whole day. There are two hotels along the road that provide easy access to this area and both can recommend good routes.
The huge Laguna de San Pablo, a few miles southeast of the town, is another good choice, with several places to stay on the water’s edge. There’s a paved road encircling the lake, and you can walk around it in a day – the views are beautiful.
Another good excursion is to Laguna de Cuicocha, a volcanic crater lake which is a haven for wildlife. There is nowhere to stay around Cuicocha, but there is a restaurant, and you can take a boat trip onto the lake for an hour or so. There’s a trail around the lake, but the path very eroded in places and can be difficult to follow. On a clear day the views are stunning.
A popular walking or cycling trip from Otavalo is to the Cascada (waterfall) de Peguche. Follow the railway tracks north to the town of Peguche (about 3 km) – where you may be lucky enough to see weavers at work. Keep going another 2 km along a trail southwest to reach the waterfall. The area can be fairly busy with locals during the weekend, but is quieter during the week.