Allepey is the centre of houseboat holidays where you can take a trip through the backwaters. For India it's a really laid back area, not a lot of activities. The Kumarakom end of the backwaters faces the Western Ghats where there may be activities such as hiking on offer. I would be tempted to catch the train south to the Trivandrum area where the beach resorts probably have more on offer.
A trip on a houseboat though is really worth doing, a totally relaxed way to spend a day or more.
There will be lots of festivals throughout the State in July though remember that you will be visiting India in the middle of the monsoon season.

Hi John. I visited Alleppey in October of 2017 and spent a few nights on a house boat on the Vembanad Lake​. If your accommodation isn't finalized yet, I would highly recommend that you take a look and see if you can find a place that offers something like this. Me and my SO used a company called Asian Tours And Holidays​. They provide Alappuzha houseboat​ tours and I actually think we might do it again next time we visit. They where super friendly and even allowed us to change our check-in dates free of charge after we got caught up in Madurai. I'm not sure if it's in your budget but you can take a look on their website.