The oceanfront Ritz-Carlton in Half Moon Bay is being sold to a new owner, just days after the hotel cut the city a check for $2.16 million to settle a years-long dispute over unpaid taxes. The sale comes on the heels of a Half Moon Bay City Council vote that largely rejected the hotel's attempt to fight the bill.
Council Upholds Most of the City's Tax Findings
According to the San Francisco Chronicle, Strategic Hotels & Resorts plans to sell the Half Moon Bay property to Regency Half Moon Bay LLC, and the City Council has already approved a document tied to the pending sale. The sale price has not been disclosed, and the closing date is not immediately clear, the paper reports. The same report states that the hotel paid the city $2.16 million in delinquent taxes and interest, a figure also confirmed by Coastside News.
The payment followed a Sept. 22 council meeting where members unanimously denied most of the hotel's appeal and largely upheld the city's findings, per the same Coastside News account. A city audit covering September 2021 through August 2024 found that the hotel had failed to collect and pay taxes on resort fees and on charges billed to groups that canceled events or room blocks. A city tax consultant identified roughly $1.6 million in unpaid taxes, with interest adding about $363,000 more to the total bill.
Marriott Pushed Back on Cancellation Fees
Marriott International, which owns the Ritz-Carlton brand, argued that the cancellation fees in question were damages for broken contracts rather than payments for hotel stays and should not be taxed. Citizen Portal reports that Marriott's tax team drew a distinction between taxable guaranteed no-show charges and group cancellation fees assessed when a group backs out months or even years in advance, framing the latter as contract liquidated damages, not consideration for the right to occupy a room.
City officials disagreed, saying the cancellation fees were connected to customers' original rights to occupy rooms and therefore fell under Half Moon Bay's tax ordinance. The council did grant the hotel one concession, removing about $191,000 in additional interest tied to a communication breakdown between the two sides. The city's auditor, HDL, told the council it had reviewed the Ritz-Carlton's records for 2021 through 2024 and flagged group-cancellation charges, resort fees and some food-and-beverage-included charges as potentially taxable, according to the same Citizen Portal report on the audit findings.
Worker Group Says It Wasn't Told of Possible Cuts
Hotel representatives unsuccessfully disputed much of the bill and warned that absorbing the tax expense could lead to staff reductions, temporary layoffs, reduced benefits and service cuts, Coastside News reported. Marriott Business Services went further in writing, suggesting the hotel may lower its standards in order to recover the cost of the tax assessment, interest and penalties.
Unite Here Local 2, which represents hotel workers, told Coastside News it had not been notified of any potential staffing impacts. The union's lack of notice stands in contrast to the hotel's own warnings about possible cuts, a gap the newspaper's reporting leaves unresolved.
A Coastside Landmark With a Complicated History
The Ritz-Carlton, Half Moon Bay sits overlooking the Pacific Ocean and includes guest rooms, restaurants, a spa and two golf courses. It opened in 2001, and Strategic Hotels & Resorts purchased the property in 2004 for about $124.4 million, according to public records cited by the Chronicle.
The resort has had other legal entanglements in the past: owners of the Ritz-Carlton, Half Moon Bay and the Four Seasons in East Palo Alto previously filed a complaint alleging they were victims of a criminal real estate scheme after a man allegedly falsified a series of grant deeds, according to the Half Moon Bay Review. The back-tax saga also lands at a tight moment for city finances: Half Moon Bay closed a roughly $1.5 million gap in its 2026-27 budget this past June, underscoring how much the disputed hotel-tax revenue matters to local coffers.
