Five kilometers east of Panajachel  is the quaint lakeside village of Santa Catarina Palopó, a collection of adobe houses with tin and thatched roofs built into the surrounding hillsides. The streets near the church and the road leading to the lakeside are excellent places to pick up some of the colorful textiles and handicrafts produced here. Many of the villagers still sport the traditional attire.
As elsewhere on Lake Atitlán, many well-to-do Guatemalans (and increasingly, foreigners) have bought property and built houses on the slopes just outside of town.
Santa Catarina is the site of a few moderate to high-end hotels offering some of the lake’s best accommodations. On the road between Panajachel and Santa Catarina, and under the same ownership as Antigua’s Mesón Panza Verde, Casa B’alam Ya (tel. 7832-2925, www.panzaverde.com , $150–400 d) encompasses two villas. The first of these has two bedrooms, a hot tub, a spacious kitchen, and a deck fronting the lake. The smaller junior villa has one bedroom, a deck, and a kitchen. There are kayaks for guests’ use. You can arrange for a local chef to cook your meals or have the kitchen stocked with everything you need to cook your own.
Just off the street leading from toen to the lakeshore, the 36-room Villa Santa Catarina (tel. 7762-1291 or 7762-2827, www.villasdeguatemala.com , $68–104 d) has attractive rooms and junior suites with gorgeous lake views, tile floors, TV, hot-water private bathroom, telephone, and some rooms with ceiling fans. There are lovely antique furnishings throughout the property, a swimming pool and the excellent Restaurante Las Playas (7 a.m.–10 p.m. daily), serving Guatemalan and international dishes in an attractive dining room overlooking the swimming pool. Meal prices are in the $5–10 range.
Along the road leading out of town toward neighboring San Antonio Palopó, Tzam Poc Resort (tel. 7762-2680, www.atitlan.com/tzampoc.htm , $85–170 d) has accommodations varying from standard and deluxe rooms in Mediterranean-style, thatched-roof villas to an entire, fully furnished villa for $400–1,000 per night. The beautiful rooms are nicely decorated. The resort’s centerpiece is an exquisite infinity-edge swimming pool overlooking the lake below. There are tropical gardens throughout. Other amenities include a tropical lounge, sauna, and solarium. Credit cards are accepted but incur a 7 percent service charge.
For budget accommodations, Posada Don Vitalino (at the entrance to town coming from Panajachel, tel. 7762-2660, $20 d) makes a fine choice with basic, clean rooms and hot-water showers.
The most splendid of the lake’s accommodations is Casa Palopó (Km. 6.8 Carretera a San Antonio Palopó, tel. 7762-2270, www.casapalopo.com , $125–276 d), with rooms housed in a beautiful colonial-style villa featuring floor-to-ceiling windows with magnificent lake views. The rooms and common areas are loaded with antiques, brightly painted walls, exquisite furnishings, and wonderful extras such as Italian cotton sheets and Aveda bathroom products. There’s also a charming swimming pool with peaceful angel carvings looking on from an adjacent wall.
Farther up the hill is the even more alluring Villa Palopó, decorated with a tasteful mix of African tribal relics and Indonesian hardwood furnishings. There are hardwood floors and ceilings and phenomenal lake views from each of the two suites ($199.50–235 d). You can rent the whole villa for $683–998, depending on the season. The villa has its own lap pool, also overlooking the lake, and butler service.
Casa Palopó’s restaurant, 6.8 Palopó, is a bit on the expensive side ($15–30 for a typical meal), but the food is certainly some of the best you’ll find on the shores of Lake Atitlán, with spectacular lake views from an airy terrace. If you’re not staying there, it makes a great place to stop for a drink and watch the sunset or enjoy a romantic candlelit dinner.