Ritz-Carlton Half Moon Bay Sells for $193M After a $2.16M Hotel-Tax Fight

The University of California’s investment office has bought the 261-room Ritz-Carlton Half Moon Bay for $193 million, or about $739,000 a room by our math. The San Francisco Chronicle reported the sale after CoStar first reported it, and Coastside News said the San Mateo County Assessor’s Office confirmed the sale had gone through.

The sale closed weeks after the resort lost most of a fight with the city over unpaid hotel taxes on resort fees and group cancellation charges. If you own or run a hotel, or are buying one, that tax fight is the part of this deal to study.

The sale

• Buyer: UC Investments, the university system’s investment office. County records list the buyer as an entity named Regency Half Moon Bay, whose listed address is UC’s Oakland headquarters, the Chronicle reported. UC Investments manages about $236 billion in retirement, endowment and cash assets, according to the university system as cited by the Chronicle.
• Plans: UC has not said what it plans to do with the resort or how it will be managed, the Chronicle reported, and UC Investments declined to comment, according to the Daily Bruin. The Chronicle said the resort, which opened in 2001 and includes restaurants, a spa and two golf courses, is expected to keep operating as a luxury resort for now.
• Previous owner: Strategic Hotels & Resorts, according to the Chronicle, citing public records. Coastside News described the previously listed owner as “Strategic Hotels and Resorts or a related entity.”
• 2004 price: Strategic Hotel Capital agreed in July 2004 to buy the 261-room resort for $124.4 million, or about $477,000 a room, according to its announcement filed with the SEC. Today’s $193 million is about 55% higher, or roughly 2% a year over 22 years, by our math. That ignores income earned and capital spent along the way.

Not UC’s first Bay Area hotel

Last year UC Investments paid $175.8 million for the 331-room Residence Inn Berkeley, next to the UC Berkeley campus, the Chronicle reported. That works out to about $531,000 a room by our math. University officials said at the time that the hotel would not be converted to student housing, according to the Chronicle.

Our analysis: two purchases do not make a strategy, and UC has not described one. But one of California’s largest pools of institutional money has now made two nine-figure Bay Area hotel purchases in about a year.

The tax bill

The city’s tax consultant, HdL Companies, audited the resort for September 2021 through August 2024. On Aug. 28, 2026, the city’s tax administrator assessed $1,659,756 in additional transient occupancy tax (TOT), or $2,354,984 with penalties and interest, according to the city staff report for the Sept. 22 appeal hearing. The tax broke down this way:

• Resort fees: $807,519
• Group cancellation charges: $737,909
• Miscellaneous fees (such as pet, housekeeping and golf package charges): $69,449
• Food and beverage packages sold with rooms: $44,878

Resort fees and cancellation charges made up 93% of the assessed tax. Penalties and interest added another $695,228, or about 42% on top of the tax. Half Moon Bay’s code charges a 10% penalty on late tax, another 10% after 30 days, and interest of 0.5% a month.

On Sept. 22, the City Council unanimously denied most of the appeal, Coastside News reported. It waived about $191,000 of interest that built up during a communication breakdown amid staff turnover at the city, bringing the bill to about $2.16 million. The resort paid it, the paper reported on Oct. 8.

What each side argued

Marriott International, the operator, appealed. According to the staff report, it argued that once a group cancels, nobody occupies or has the right to occupy the rooms, so the cancellation charge is not taxable rent. It also argued that when those rooms are resold, the city would collect tax twice. On resort fees, Marriott said the city had not clearly identified them as taxable before January 2024, and that it began collecting tax on them that month as a precaution.

The city pointed to its code, which defines rent as the consideration charged “whether or not received” for occupancy, and defines occupancy to include “the right to the use or possession” of a room. Coastside News reported that city officials also cited an earlier audit covering 2015 through 2017 and said the resort was told in 2018 that resort fees were taxable.

In its appeal letter, Marriott Business Services’ tax audit department warned that the hotel “will be asked to recover these expenses to the best of their ability,” which it said could mean lower standards, reduced staffing, temporary layoffs, reduced overtime and reduced benefits. That was the operator’s warning. We found no report that any of those steps has been taken.

Why buyers should care: the tax follows the hotel

Half Moon Bay’s code makes a hotel’s buyer responsible for unpaid TOT tied to the property. A buyer must notify the city at least 30 days before the transfer. If it does not satisfy the tax owed, it becomes personally liable for the full amount, including penalties and interest. The code’s safe harbor is to withhold enough of the purchase price, under California Revenue and Taxation Code Section 7283.5, until the city issues a “transient occupancy tax clearance certificate.”

The staff report also notes that the audit covered only activity through August 2024, and that the city can still review later periods. It is not public whether this buyer obtained a clearance certificate or a holdback.

What this means for your hotel

This section is our analysis.

• If you are selling, widen your buyer list. Institutional money does not always come from names you expect in a hotel deal, and the buyer may appear in records only as a partnership you have never heard of.
• Clean up the file before you go to market. We do not know whether the tax dispute affected this sale. But open occupancy-tax audits and city disputes are exactly what a buyer’s diligence team will find, and they are cheaper to settle before a buyer prices them in.
• Check what your city counts as rent. Resort fees and group cancellation charges drove almost all of this bill. Pet, housekeeping and package charges can also count. Read your local ordinance and ask your tax adviser before an auditor does.
• Penalties and interest add up fast. Here they added about 42% to a three-year tax bill before the council’s small waiver.
• Look at your group contracts. If your city taxes cancellation and attrition charges, decide with your advisers whether your contracts should pass that tax through to the group.
• Buyers and brokers: ask for a clearance certificate. In California, a TOT clearance certificate or a holdback from the purchase price protects the buyer. Ask which periods have been audited and which are still open.

For more on local hotel taxes, see our coverage of Tulsa’s 2027 hotel tax increase and the Plano and Odessa hotel-tax votes. For Bay Area context, see our San Francisco hotel market page, and for other recent prices, our October hotel deals report.

Sources: City of Half Moon Bay, Sept. 22, 2026 special meeting agenda packet (staff report, draft resolution, Municipal Code Chapter 3.12, final determination and appeal). Strategic Hotel Capital release, July 26, 2004 (SEC filing). Additional reporting: San Francisco Chronicle (Nov. 6, via Yahoo Finance); Coastside News, Nov. 6 and Oct. 8; Daily Bruin, Nov. 7; CoStar, as cited by those outlets.