Passport in Room
Sandy Bay (St. Vincent), St. Vincent and the Grenadines
I follow a simple rule that goes against everything I've been told about passport management—when my backpack is stationary, my passport does the same.
I leave my passport in my room, casually concealed inside a locked compartment of my backpack. Unless I can put my own padlock on the door of a secure room, I also lock a wire mesh around my pack (which is then padlocked to something sturdy). When your life is reduced to a single bag, you can't be too cautious. Even a simple chain around a backpack can keep a thief with a set of duplicate room keys from snatching your stuff and running.
Fetching several thousand dollars on the black market, passports are a highly sought after prize for muggers and pickpockets the world over. The reality is that the likelihood of getting relieved of your belongings on the street is much more probable than encountering an official who would demand to see your papers. Even if you did happen to run into such a situation, don't you think it's much easier to retrieve your documents from a locked room than it is to deal with an embassy?
Personally, I find I'm concerned about being hospitalized unconscious or anonymously washing up on a beach someplace, so it's important for me to carry some type of identification. I've opted to simply carry my indestructible Arizona drivers license with a little emergency cash wrapped around it (in a pocket hidden inside my pants). Simple, waterproof, and effective.
Yes, it should be noted that most countries require you to by law to carry your passport on your person at all times. But hey, I figure if the rare encounter comes when I'm put in a hard situation because of my decision, perhaps that's what the cash wrapped around the license will best be used for.