Where do I start....
There is not a lack of things to do here. I went jet skiing which I've never done before and it was lots of fun. I went with Barefoot Billy's and it was a 2 hr tour around the island and we got some time to take the jet ski at max speed and play around.
Another highly recommended activity is a sunset cruise. There are several to choose from. I did the Party Cat cruise and the food was delicious and the sunset was even better!
If you want to see the sunset without the cruise, then Mallory Square is where you want to go. There is a nightly celebration where many gather to watch street performers, eat popcorn, and watch the sunset.
Duval Street is another popular place. Here is where you will find all the souvenir shops, places to eat and mini parades in the evenings. Key West is one of the few places where you can get drinks to go :)
There is not much beach in Key West but there are some places to go. There is Smathers Beach which most tourists go to and I think is still nice to lay out on.
Get the pamphlets that you see in the hotels and airport. Many restaurants have buy one get one free drinks which really comes in handy!
Don't rent a car. The hotels will have shuttles to downtown and you walk around everywhere. You can rent a bike if you want to tour the island since it is not very big.
If you want to see the sunset, make sure you get there in advance since it gets crowded. Check out this site to see when the sun sets throughout the year.
I think the holidays is a great time to go since there are lights everywhere and it is 70+ degrees in December.
Where to Stay at with Points & Certificates
to name a few
Marriott Beach Side Hotel - Even though its on the north east side of the island (which is not that far), it has its own private sand area where you can relax on beach chairs and watch the boats/jet skiers.
Redeem 35k/night or 140k for 5 nights.
Courtyard Waterfront - On the north side of the island near the water and a shopping center, can be redeemed for 30k/night or 120k for 5 nights
Sheraton Suites -Bright colored hotel across the street from Smathers Beach and you can redeem from 12k-16k per night
Hyatt Beach House - On the north east side of the island and you can redeem your Hyatt Certificates.
Hyatt Sunset Harbor - A short walk to Mallory Square and you can redeem your Hyatt Certificates.
Hyatt Resort and Spa - A short walk to Mallory Square and you can redeem your Hyatt Certificates.
Casa Marina A Waldorf Astoria Resort -A beachfront property listed in the National Register for Historic Places is on the South West side of the island and one night can be redeemed for 60k HHonors points or 6+ nights for 45k/night. There is a $25/night resort charge.
The Reach A Waldorf Astoria Resort - Boasts as having the only natural beach on the island and next door to the Casa Marina. I could not find very good point redemption rates but you can use your Hilton Hotel Certificates for a weekend stay. There is a $25/night resort charge.