One of the oldest settlements in Brazil, Cabo Frio was established in the early 1500s as a port from which wood was shipped to Portugal. Today it's best known for its beaches with clear blue waters, its party scene, and its water sports. However, it has recently been dogged by crime problems, and the town itself is less than beautiful. Of far greater appeal is the smaller and more tranquil Arraial do Cabo, with its crystal clear waters—making it a top spot for diving—and icing-sugar beaches.
Hotels in Cabo Frio are both less appealing and more expensive than those in nearby Búzios. If you are looking for chic lodgings, you're better off staying in Búzios and taking a day trip to Cabo Frio.