Otavalo is a small town in Ecuador.
If you come from Tulcan busses will probably drop you off at the Pan American highway, it's only a 10 minute walk to the center from there.
The Otavalo/Las Lagos bus company will drop you off at the bus terminal in Otavalo.
There is a small bus terminal northeast in town along calle Atahualpa & Jacinto Collahuazo and busses leave for Quito (2,5 hours) every 10 minutes.
Taxies will take you anywhere within town for $ 1,00.
You could have a better chance to do your shopping, if you arrive here early or leave late. But keep in mind that you may regret that you have bargained too hard with those indigenous people who work very hard to make their living.
Around Otavalo Most people just visit Otavalo for the day on Saturday when the market is at its biggest. For those wanting to stay longer, or have had their fix of market and are looking for something to take up a few hours, there are number of options.
To the North of Otavalo (15 to 30min walk) is a small but pretty Waterfall. Walk North along Bolivar, after the hospital turn East and walk until you cross the old railway line. Follow the next cross road North. Eventually you go over a small creek. Follow the road round to the right up the hill. You will then see a sign to the Las Cascadas. Follow this through the gum (eucalyptus) trees, and you are there.
You can hike to the top of the two surrounding Volcanos. Imbabura can be done in a day, with a car taking you to about 3,500m asl. Cotacahi is probably best done over night. Both are normally surrounded in cloud, with Cotacachi often getting snowfall as a result of its extra altitude. A number of the small tour agencies in the town operate tours, and are quite affordable.
There is a special (to the local indigenous population) tree on the ridge separating Otavalo and San Pablo, which has amazing views to San Pablo, the Lake and Volcan Imbabura. To get there, walk east along Garcia Moreno and follow over the hill. Once up the top, you will have to walk a little North before sighting the tree in order to aim for it. Best way, is just to aim for the highest point.
Near the lechero, you'll find the Condor Park, a rescue center for Raptor birds, including of course the Andean Condor. Flight shows with several birds twice a day. You also have a magnificent view on the surroundings of Otavalo. closed on Mondays.
A series of lakes (3700 m) 17km (uphill) south of Otavalo, in an extinct volcano, which are very beautiful. The best way to get there is to take a taxi (~US$14 return - with four hours there). The locals do not recommend going on a weekday as this may be dangerous (robbed of all possessions including clothes). Weekends are considered safe given the greater numbers of visitors (which aren't many).
West of Otavalo at the base of Volcan Cotacachi and near Cotacachi Village. It is an eco reserve, with a lake in the crater of the volcano. Very pretty, with a lovely, but reasonably long, day walk around. Great views to Volcan Imbabura and Otavalo can be seen from there. To get there take a taxi to Cotacachi village and hire a taxi from there.
Each of the small villages around Otavalo and Ibarra general specialise in a particular craft. Cotacachi specialises in leather goods.
A local speciality is Helados de Paila, or sorbet icecream. With beautiful fruit used to make the sorbet, it is a must for any visitor.
There are a large number of villages surrounding, Otavalo, Ibarra, Cotacachi. Each village tends to specialise in the manufacture of a one particular good, from the rugs, to Panama hats, to bronze busts.