Originally a small fishing town, tourism to Playa del Carmen began with the passenger ferry service to Cozumel, an island across the Cozumel Channel and world famous scuba diving destination. While passing through, many people realized that it was a nice place to relax away from the crowds of Cancún but with the same quality beaches and turquoise waters. While its salt water scuba diving cannot compete with Cozumel, for the adventurous, Playa del Carmen's fresh water cenote diving more than makes up for it.

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Today Playa del Carmen, or just "Playa" as it is colloquially referred to, is the center of the Riviera Maya concept, which runs from south of Cancún to Tulum and the Sian Ka'an biosphere reserve. Playa is a stop for several cruise ships which dock at the nearby Calica quarry docks, about six miles south of the city.

The Xcaret Eco Park, a Mexican-themed "eco-archaeological park", is a popular tourist destination located just south of the town in Xcaret (pronounced "esh-caret"). Tourist activity in Playa del Carmen centers on Quinta Avenida, or Fifth Avenue, stretching from Calle 1 norte until Calle 34, a pedestrian walkway located just one or two blocks inland from the beach, which is lined with boutique hotels, shops, bars, and restaurants.

The Playa del Carmen local community and government have attempted to retain Playa del Carmen's reputation and charm as a small fishing village and artists' colony, without it becoming as large and metropolitan as Cancún. To this end, the city passed an ordinance limiting buildings to three stories. A few four story buildings were built before the ordinance, however.