Beyond the sacred Citadel: Shabby town spruces up in pursuit of its own identity. (Travel Intelligence).

Nearly every traveler who ventures to Machu Picchu, the Incas' mountaintop city; passes through Aguas Calientes. But how they describe the burg at the base of the mountain depends on how long ago they visited Peru.

Until a decade ago, Aguas Calientes was little more than the last train stop before travelers boarded a bus for a 20-minute trip up the steep, windy mountain road to Machu Picchu. The town consisted of a small cluster of ramshackle buildings and bars serving icy Cuzqueria beer and snack bowls of fried corn kernels, or cancha. Local Indian families practiced subsistence farming on rocky hillside terraces or plied tourists with T-shirts, textiles and alpaca sweaters.

The town's lone attraction was its eponyrnous hot springs, feeding a series of rustic concrete pools where locals and budget travelers gathered daily for a soak. The hot springs are still there, but they're the only recognizable thing about Aguas Calientes these days.

"Everything opened up when they built a roadway into town," says Cesar Garcia, lieutenant mayor in the community now officially called the District of Machu Picchu, even though everyone still refers to it by its old moniker. "At first, it was chaotic."

A decade later, the once-rundown town has transformed into a quaint community trying to carve an identity beyond Machu Picchu. Paved streets are lined with Internet cafes, pizzerias, craft shops and restaurants. A helicopter pad complements train and road access. The population, once numbering in the hundreds, edges toward 2,000.

"Practically 100% of the people here live from tourism," says Fredy Medina Guzman, who has worked as a tour guide with Condor Travel for six years. "There's no farmland. There's no other way to make a living."

The new road sparked the town's rebirth, but a hotel boom fueled it. Today the single biggest employer is the Machu Picchu Pueblo Hotel, a rambling complex of cottages along a verdant stretch beside the raging Aguas Calientes River. The hotel, under expansion to bring its guest room total to 100, employs more than 120 local residents, many of them working in cottage industries set up by the hotel.

"It was hard for biologists to find work. But now we can work in tourism, including as eco-guides" says Carmen Soto, who oversees a butterfly and hummingbird species count at the hotel, as well as its butterfly breeding program. Peru has banned collectors from taking wild butterflies; the hotel plans to raise butterflies for collectors and for export.

The second biggest of the town's 40 small inns is the Hatuchay, a six-story hotel that debuted in 2000. It opened to get Machu Picchu visitors to spend the night in Aguas Calientes rather than take a four-hour train back to Cuzco. Visitors are buying the idea because it lets them see the ruins at both sunset and dawn.

But Jose Koechlin, owner of the Machu Picchu Pueblo Hotel, had a different idea when he opened his hotel with 15 rooms in 1991. He wanted to make Aguas Calientes a tourism destination in its own right. "Our dream is to have people come not just because of the ruins, but because of environmental reasons," he says. Those eco-incentives include an abundance of hummingbirds and orchids as well as the presence of Peru's national bird, the scarlet cock of the rock.

Cuzco's Orient-Express. Koechlin is negotiating for rights to water from the hot springs so he can create a spa and is clearing what he claims is an overgrown Inca road on his property. Although tourists make up the bulk of his guests, he has begun marketing the hotel--which has a business center and Internet access--as a corporate meeting and retreat location.

"We've had some board meetings here. There'll be a time when corporate decisions will be taken in solitude, isolated from the usual pressures of the corporate world. And those will be places like this," says the hotelier, who grew up in Lima.

The tourism boom has not been easy. "We're having a problem with garbage. We generate three to four tons of garbage a day now," Lieutenant Mayor Garcia says. Electricity in the town is undependable and road repair is constant thanks to rains and mudslides. The fee to enter Machu Picchu last year doubled to US$20, with part of the money earmarked for infrastructure projects in Aguas Calientes.

Improved, air service already makes it possible for visitors to fly into Cuzco in time to catch the morning train to Machu Picchu, making Aguas Calientes more accessible to business travelers with tight schedules, Last year's purchase of the train by the swanky Orient-Express hotel chain is expected to result in upgraded rail service from Cuzco.

That's a long way from the late 1980s when Sendero Luminoso guerrillas wreaked havoc in Peru and as few as 60 tourists a day visited Machu Picchu. Garcia estimates that as many as 2,000 tourists a day now jam Aguas Calientes. While many hoteliers say that estimate is high, they also quickly add that the possibilities are immense.

"Tourism here? It hasn't even started," Koechlin says.