We have family in Capitola and always stay at the Capitola By-the-Sea Best Western when we visit. It's a nice, clean hotel and the prices are more reasonable than those in the village. The rooms are larger than many and are equipped with refrigerators and microwaves. They offer a complimentary continental breakfast in the mornings. Staff is always friendly and helpful. It's a short drive to the village and is located with many amenities within walking distance. (grocery, shopping, etc.). If you're planning to stay in the Capitola area, definitely check out this hotel.
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