Barra de Navidad is situated on a sandbar in a large bay. A long curving beach extends the full length of the town and continues across neighboring Melaque. On the other side of the sandbar is the Laguna de Navidad and canals have been built to service the Hotel Cabo Blanco as well as a number of homes. The streets are paved with cobblestones and bricks and many are sectioned off for pedestrian only or reduced traffic use. There are numerous hotels, restaurants and small shops.