Aguas Calientes (now officially Machu Picchu Pueblo) is a small town at the bottom of the valley next to Machu Picchu, and the principal access point to the site. Despite its magnificent setting, it's not the most scenic town, owing to fast and ruthless development to support the huge influx of tourists. Unless you're on a daytrip from Cusco or plan to spend a fortune and stay at the sole lodge in Macchu Picchu itself, you will need to spend at least one night here.
The only ways to get to Aguas Calientes are by train or by foot.
Until July 2010, the train will not run all the way between Aguas Calientes and Cusco, due to severe flooding from the 2010 rainy season. Instead, train services stop at Piscacucho, which is 82km from Cusco. Travelers must take either a bus or a taxi from Cusco to Piscacucho; preplanning is strongly advised, as a taxi will cost 100-200 soles and take around two hours from Cusco. Buses are much cheaper but also much much slower.
Peru Rail has a monopoly on the tracks, and is at the moment the only option. Trains depart from Poroy, just outside of Cuzco, twice daily. The scenic journey through the Sacred Valley takes about 4 hours. Tickets should be bought in advance either online or at the Wanchaq train station on Av Garcilaso in Cuzco. Try to book several days in advance if possible, especially in the high season. It´s not possible to select your own seats online, so if you have a preference, buy them at the station. The fares start at US$48 each way in the 'Backpackers' cars, with decently comfortable seats and snacks for sale. The 'Vistadome' cars are the mid-range cars at US$71 each way, with more comfy chairs and meals served. If you prefer to ride in style, opt for the 'Hiram Bingham' at US$294 each way, complete with gourmet meals and an observation carriage.
The cheapest option (short of walking) is to bus it to Ollantaytambo and catch the train from there. A minivan bus from Cusco to Ollanta costs S/10. Ollantaytambo is worth staying a night in, it's a pretty little town with beautiful ruins of its own.
If you're on a budget, or just adventurous, it's possible to hike downstream along the railway tracks from Ollantaytambo or from the town at km 82, where the Inca trail starts, this is about a seven hour hike (Note - hiking on the train tracks is prohibited).
It's also possible to hike upstream along the train tracks from Santa Teresa (4 hours) or Hydroelectrica (2 hours). You can take a minibus directly to Hydroelectrica from Cusco for S/50 or make the journey by public transport: To reach Santa Teresa, take a bus towards Quillabamba from Cusco and get off at Santa Maria. The bus leaves Cusco at 8am (from the Santiago bus depot - S/20) and passes through Ollantaytambo, Urubumba and Santa Maria. It´s an 7 hour journey from Cusco to Santa Maria. You can also take a Minivan (Colectivo) which leaves next to the buses (S/25-30 - 4 hours). At Santa Maria, take a connecting bus to Santa Teresa (S/6, 1.5 hours) or a taxi (S/10, 1 hour). Walk 2 hours or catch a bus (S/5) to the hydro electric plant (planta hidroeléctrica). From there it's two hours of walking to Aguas Calientes from here, but it's also possible to catch a train for $18.00 US to Machu Picchu Pueblo, possibly much cheaper if you are Peruvian (leaves hidroeléctrica at 4 PM). As the tracks are still in use, be careful, especially when crossing bridges and in the tunnels.
There are also hiking paths coming from Mollepata, Cachora and Huanicapa for the extremely adventurous. You will want to get your hands on some topographical maps beforehand, Hiking and Treking around Cusco is available for around S/.25.00 to S/.30.00 and has details on the routes you can take.
The town is compact and walkable, and there are no vehicles apart from the buses to Machu Picchu and a few work vehicles.
Machu Picchu is what most people come to see.
Hiking on the train tracks is prohibited, although it seems to be the only way to reach certain destinations.
Going downstream towards Santa Teresa;
Following the train tracks upstream from Machu Picchu Pueblo towards Ollantaytambo you will see some other ruins and a waterfall.
Costs for visiting Aguas Calientes from Cuzco: Current train ticket prices are at Peru Rail's website. The bus from the town Aguas Calientes up to Machu Picchu costs $14.00 per person for a return trip, or $7 one-way. You can walk to the ruins for free, but it's steep uphill and takes about an hour and a half. You have to buy your ticket for entering the ruins at the Cultural Centre in Aguas Calientes (if you're not doing the whole tour from Cusco with a guide). This ticket costs S/126 per person and is valid for 1 entry over a period of 3 days (so if you've only got one night in Aguas Calientes, are on a budget and arrive with the backpacker train at roughly 11:30am decide if you want to go up to Machu Picchu in the afternoon or early morning). Remember to take water and snacks with you as the snacks available at the ruins are insanely expensive.
Prices on most things are relatively high, if you´re on a very tight budget, bring some snacks and water from Cuzco. If you´re wanting to use a credit card for hotel or purchases, note that most places only accept Visa. However, prices on basics such as snacks and water are not much higher than Cusco and the Sacred Valley.
There is a big market along the road to Machu Picchu, and a big handicraft market in front of the railway station.
Some shops sell hand-painted t-shirts, which are far more expensive than other t-shirts in Peru but are a little more creative.
The town is full of pizza restaurants, which are a safe option. Menu Hoy or Todays Menu is usually S/.10.00 - S/.15.00 and depending on where you go will be something along the lines of -
Palta Rellena (Stuffed Avocado) Soup Main Course (generally trout, beef or chicken) Tea, Coffee, Fruit Juice, Wine or Pisco Sour
Alpaca is definitely worth trying if you get the chance, in my opinion it tastes better than beef or lamb.
The smaller restaurants up the hill will often offer twice the food at half the price than the larger establishments, and the quality is usually the same.
Indio Feliz (Happy Indian) is a nice French restaurant for those willing to spend a bit more than at the other places. Meals will cost about 30 soles here plus drinks but the food is outstanding. There is a also a 50-soles prix fixe menu that provides three courses is good value. The restaurant is owned by a Frenchman and his Peruvian wife, who are both very friendly.
Every restaurant has an advertising guy whom will give you a business card and their name - it can get quite annoying as there are many restaurants whom will try to lure you into their establishment. The ad man will take you to the bar/restaurant and seat you and for this they'll get a 10% tax added to your final bill and then if the service was good you'll want to tip the normal 10% of the bill. You'll end up tipping 20%. One could see it as creating jobs... yet annoying.
There are Chifas, the Peruvian version of Chinese restaurants, everywhere and make good options after a day of hiking.
Many bars try to lure in customers with 4 for 1 happy hours lasting the whole evening. Beware that the price is fourfold of the normal prices in Cuzco.
Signs warn that it is not allowed to sell and/or consume alcoholic beverages after 11pm. However, it's not too hard to find a place to drink some beers after this time.
There are many sleeping options in Aguas Calientes. There is one very expensive hotel right next to the Machu Picchu entrance.
Internet cafes are spread around the town, and cost around S/3 per hour with slow connections. They offer local and long-distance calls as well.