Day 2: Puerto Varas to Castro (121 miles)
Fuel up for the trip’s longest drive with an early breakfast at the hotel: strawberry crumb cake, local honey and Camembert, and salami from nearby German butcher Familia Schwerter. Before you hit cruise control, shop for provisions on Calle Walker Martinez in Puerto Varas, where bushels of wild black cherries are sold on sidewalk corners. The city center is also the place to pick up handcrafted souvenirs such as laurelwood duck-shaped serving spoons from boutique Vicki Johnson (318 Calle Santa Rosa; 56-65/232-240). Back in the driver’s seat, head 50 miles south to Pargua, the departure point for the 40-minute car ferry ($20) to Chacao, on Chiloé.
Upon arrival, swing by Ostras Caulín (Caulín Alto; 56-9/643-7005; oysters for two $11) for briny ostras especiales on the half shell. After your mid-morning snack, double back to the main road past farmsteads to Puñihuil, known for the otters, sea lions, cormorants, and the real showstoppers, Magellanic and Humboldt penguins, that congregate on small islands off the coast. The most knowledgeable guides on the beach are from EcoTurismo Puñihuil (Playa de Puñihuil; 56-9/9019-4273; tours $10 per person), but be forewarned—many don’t speak English. For those who have worked up an appetite, lunch is hearty: at Restaurant Quetelmahue (Quetelmahue; 56-9/8791-9410; lunch for two $30), Chiloé’s signature dish, curanto al hoyo—a mix of shellfish, sausage, chicken, and potatoes—is cooked for hours in an underground oven beneath nalca leaves. Traditional techniques are also used at Ancud’s Taller Kelgwo (359 Calle Eleuterio Ramirez; 56-65/628-021; kelgwo.cl), where a picture window into the workshop allows shoppers to see Huilliche artisans weaving all-natural woolen rugs and blankets, and more-packable finds (rust-colored sweaters; loosely woven shawls) are on sale in the airy boutique. From here, hop on the iconic Pan-American Highway south to the village of Castro, famous for its rows of colorful palafitos (houses built on stilts). Local architect Edward Rojas is behind the restoration of Palafito 1326 Hotel Boutique (1326 Calle Ernesto Riquelme; 56-65/530-053; palafito1326.cl; doubles from $91), with 12 rooms on Castro Bay that have been designed in muted tones with blond wood furnishings.
For dinner, walk to the hilltop Isla de Brac (1695 Calle Panamericana Sur; 56-65/636-060; dinner for two $22) and pick up sandwiches (shredded beef with fried eggs; smoked salmon and avocado) for a picnic on the hotel’s roof deck, accompanied by a bottle of Chile’s Rapel Valley Cabernet Sauvignon, sold at the front desk.