The Sacred Valley is where I would base a family for most of a Peru trip. It is lower than Cusco, warmer, greener, and stuffed with Inca ruins that kids can climb on. Most people race through it on the way to Machu Picchu. Give it three nights and it becomes the best part.
Ollantaytambo
This is a town the Inca laid out and people still live in it. Stone streets, water channels running down the middle, and a fortress of terraces climbing the hill above the square. Kids can run the terraces and there is a viewpoint at the top that takes about twenty minutes. Stay here. It is also the train station for Machu Picchu so it removes a transfer.
Pisac
Pisac has the best market in the valley, biggest on Sundays, with textiles, alpaca toys and street food. Above the town the ruins stretch along a ridge with terraces and a fortress and the walk between them is spectacular. Drive to the top entrance and walk down to save little legs.
Maras and Moray
Moray is a set of circular terraces that look like an amphitheater sunk into the ground. It was an Inca agricultural lab. The salt pans at Maras are thousands of small pools stepping down a hillside, harvested by local families for centuries. Together they make a good half day and kids find both of them strange enough to be interesting.
Chinchero
A weaving village on the road back toward Cusco. The cooperatives show how wool is spun, dyed with plants and woven. Kids get to try the dyeing. Buy something here if you buy anything.
Active options
Horseback riding, mountain biking on quiet dirt roads, easy river rafting on the Urubamba, and short walks to Inca sites like Huchuy Qosqo for older kids. Guides and outfitters in Urubamba and Ollantaytambo set all of it up.
Where to stay
There are lovely family friendly lodges around Urubamba with gardens, pools and space to run. Ollantaytambo has smaller guesthouses closer to the action. Either works. The valley has decent restaurants and the kids will find something on every menu.
Planning Peru with kids? Start with the full Peru family travel guide, or send me the ages and the dates and I will come back with what is really available.
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