Granada
One of the highlights of the south-western peninsula, and certainly an excellent base for exploring this area, is the colonial city of Granada. Granada is actually the oldest colonial city in all of the Americas, and has a very vibrant and turbulent history.
Like Antigua Guatemala, Granada's greatest asset is it's colonial charm. Granada, however, has not suffered from the decades of tourism that has reshaped Antigua as the tourist mecca of central America. For many people this is the charm of the city, a city that has not lost it's soul even after a grueling civil war, and a recent influx of tourism. This tourism, no doubt, will affect the city. Nicaragua has more visitors each year, which is seen by some as the solution to Nicaragua's problems, and others as a possible threat to it's culture.
In addition to its cultural charm, Granada boasts an array of natural areas at its doorstep. Along the shores of Lake Nicaragua, Granada contains 365 isletas, which can be viewed by boat. Many of these islands are being bought up by foreign investors, so if you want one, get them while you can!
Granada is also the gateway to numerous day trips, including two volcanoes, Mombacho and Masaya. Both are easily reached by bus. Mombacho provides a decent day hike, with excellent views of Granada and the isletas. Masaya is a unique volcano, which does not involve much climbing, and can be included in a day trip to the artistic town of Masaya. Granada is also the gateway to other popular destinations, such as Ometepe and San Juan del Sur. With plenty of accommodations in every price range, many restaurants, Spanish schools, and cultural activities, it is an excellent place to stay for a few days, weeks, or longer.