Far northwest Yunnan province has a small 3 county Tibetan Autonomous Prefecture called Dechen བདེ་ཆེན་བོད་རིགས་རང་སྐྱོང་ཁུལ་. This region is the furthest southern extremity of the Kham region of Tibet. The 3 counties of Dechen prefecture have a total population of around 360,000 with Tibetans making up around 1/3 of the total. Other minority groups such as the Lisu, Naxi and Bai also have significant amounts of people in the prefecture. Over the past 10 years the area in and around Shangri La, known as Gyelthang རྒྱལ་ཐང་ in Tibetan, has become a major tourist destination on the Tibetan Plateau. Not long ago this region was just a small village. Now, there are many 4 and 5 star hotels with plenty of excellent restaurants serving food from across the globe.
Though I am well traveled to nearly all regions of the Tibetan world, the summer of 2010 was the first time I traveled to the Shangri La region. Shangri La is a good sized city for the Tibetan Plateau, though still considered extremely small for the rest of China. By far the best place in Shangri La is the Old Town. The Old Town is a maze of cobblestone streets with plenty of guesthouses, shops and restaurants around. Most travelers to Shangri la prefer to stay in this region. There is Tibetan dancing each night in the main square of the Old Town which you can participate in for free.
On the north end of town is the large Ganden Sumtseling Monastery, home to over 700 monks. This is the largest Tibetan Buddhist monastery in Yunnan province. The Gelukpa sect monastery was founded in the year 1679. You can easily spend a full day exploring the monastery and the area surrounding it. There is another smaller monastery above the old town that offers a great view.
Though it is possible to fly into Shangri La, most people prefer to travel there overland either from Kunming or Chengdu. The week long overland route from Chengdu to Shangri La is becoming one of the most popular overland routes in western China. There are public buses connecting all of the towns along the way to Shangri La from both Chengdu and Kunming, though if you have the extra money I recommend taking a private vehicle so that you can really enjoy the beauty of the region. The mountains between Xiangcheng in southwest Sichuan and Shangri La are amazing. Seeing them through a smoke filled bus window of a public bus would be a tremendous waste.
Though Shangri La can have a lot of tourists during the summer high season, it is still a great place to go. It is well worth the long overland journey from Chengdu or Kunming. When you are there, be sure to have a meal at Bhaskar's Kitchen and at The Compass. Bhaskar's Kitchen is an authentic Nepali/Indian restaurant co-owned by Bhaskar, a Nepali who has lived in the Tibetan regions for most of the past 10 years. The Compass is a well run foreign owned restaurant serving up excellent western food. You know a place is good when people are lined up waiting for it to open each morning.