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To the early Mexicans, Santiago Peninsula, the seaside jungle at the foot of the Sierra Madres, was known as ”Las Hadas,” or ”the fairies,” for the phosphorescent quality of the water there.

To Bolivian tin magnate Antenor Patino, the swath of rocky coastline, turquoise water and ample beach between Acapulco and Puerto Vallarta also possessed a magical quality. So special was the parcel of land that when he stumbled upon it he ended a global search for a place to build a world-class playground.

It is unknown whether Patino was fueled by Mexican tequila when he conspired in 1964 with architect Jose Luis Ezquerra on the project that became Las Hadas resort. But the result was a surreal mix of curving arches, domes, turrets and spires, some capped with fairy tale-inspired sculptures, others resembling Dairy Queen ice cream cones and all painted starkest white.

`Fantasy` throughout

The ”fantasy” theme ordered by Patino was translated throughout, down to the curving minaret-like domes that were covers to the industrial-size trash bins.

He opened his $33-million resort in 1974 with a party for 300 of his closest friends. Two years later he sold Las Hadas to a Monterrey company, allegedly because his friends weren`t paying him for his lavish hospitality.

Until recently, the resort was owned by the private Mexican consortium Casolar and managed by Westin Hotels, who have maintained its fantasy theme. Westin still manages Las Hadas, but Casolar`s holdings were bought by a Mexican company, Real Tourism (the holding company for Hoteles Turismo Camino Real).

Guests, many honeymooners, are accommodated in 203 rooms (all with balconies), disguised behind the mosque-like domes and scrolled, white stucco walls. Four of the rooms have private swimming pools. All rooms are spacious and cozy despite white marble floors and stark white furnishings (currently being replaced with muted fabrics).

Cobblestone walkways link guest rooms with the resort`s restaurants-some identifiable from the Bo Derek movie, ”10,” which was filmed here. Rounding out the complex are golf, marina and tennis facilities and a myriad of public rooms, beach and free-form swimming pool, the latter featuring languid waterfalls, islands, palms, and bright yellow- and ruby-colored bougainvillea. There is a headiness throughout Las Hadas that is nine parts whimsy and one part Coco Loco, the house drink as well as the name of the swim-up bar.

Flag signals drink

Guests keep cool by staking an early claim under Arabian Nights-inspired white cabanas, which stand at attention in rows along the water`s edge. Smiling waiters in Arabian headgear circle the individual cabanas, on watch for a raised blue flag-the signal a guest would like to order a cool drink.

When the sun is high and blazing hot, swimmers stand ankle-deep in the lapping surf for undetermined periods of time, contemplating the hike across the mica-flecked beach back to the comfort of their thickly padded lounges.

Keeping guests comfortable on the beach is as important to hotel management as grooming the Pete and Roy Dye-designed 18-hole championship golf course, called La Mantarraya (the manta ray).

The course is typically ranked among the world`s best-and more challenging. The 160-yard 18th hole is particularly dramatic, a par-three that requires a white-knuckle shot over jagged cliffs and across Manzanillo Bay. When the ball goes awry and hits the water, it resembles a manta surfacing, thus the course`s name.

Given the sounds of clinking ice on the beach and the whack of a well-placed club face on a new golf ball, it`s obvious most of the time guests are happy to head for the links or lie lazily with a cold drink by the water. In the evenings, a large tent on the beach becomes a breezy movie theater, where carefully selected romantic movies compete for guests`

attention with the reflection of the moon and the lights of Las Hadas on the water.

Aside from the sheer romance of evening here, Las Hadas` night life or dinner in one of the hotel restaurants, there is little in the way of sizzling, after-dark entertainment in the town of Manzanillo.

Shopping may disappoint

In the daytime, guests also may be disappointed with Manzanillo`s limited shopping and recreational offerings.

Not that Las Hadas guests should ever be bored. There are day trips to Guadalajara for shopping (half-hour by air, four hours by car), tennis on one of 10 hotel courts and sportfishing in the waters that have earned Manzanillo- admittedly one of several destinations-the title of ”Sailfish Capital of the World.”

Well-equipped boats that offer half- and full-day fishing excursions for a price sit moored in Las Hadas marina along with 120-foot-long racing yachts. The best months for anglers are November and February, but the waters are teeming with fish the year around.

Sunset cruises and sailboat charters are available at guests` whim, but the marina (and hotel) also hosts racers in the annual San Diego Yacht Club race, a 1,130-mile jaunt between the California coast and Manzanillo.

Manzanillo, in the 1500s an important shipbuilding center, is now a busy shipping port for bananas, coconut and hardwoods. Souvenir stores are lacking in town, and the modern airport is a 25-minute, pothole-marred drive away.

A handful of restaurants, including a local outpost of the popular Carlos `n` Charlie`s chain, offers diversion to Las Hadas guests who want a change from the hotel restaurants.

For now, the best places to stay are swank Las Hadas and, down a notch, the Maeva (time-share condominiums). This all may change soon as new properties are on the collective drawing board, and a high-rise Inter-Continental is going up on a beach down the winding road from Las Hadas.

The 351-room Inter-Continental-scheduled to open this summer-will offer luxury accommodations, two restaurants, pool with swim-up bar, fitness center and tennis courts.

Of growing interest, too, is the $1-billion package of Casolar-developed

(now Real Turismo) private communities hugging the green hillsides adjacent to Las Hadas.

These include Club Las Hadas` 400 suites and villas (developed by the same company as the hotel, but not managed by Westin) and Club Las Hadas`

townhouses, called Villas del Palmar.

All sport the stark white, quasi-Moorish-Mediterranean-Mexican architecture, so it becomes hard to tell where Las Hadas hotel ends and various villa properties begin.

The company also owns a private residential community of expensive single-family dwellings, known as La Punta, a new development being hailed as the most exclusive such community in all of Mexico.

The lots for the private homes going up at La Punta (on the other side of the peninsula from Las Hadas) run between $250,000 and $400,000. The homes-being built by wealthy North Americans (primarily) and Mexicans, and most of which look like candidates for the cover of Architectural Digest-run up to 10 times as much. Some owners rent their vacation villas for a fraction of their worth.

Strict zoning and architectural restrictions applied to La Punta homes are ensuring the area of Las Hadas remains true to a variation of its original translation-”the fairyland.”