We make a trip to Morro Bay at least once a year and we have stayed at the same motel the last three trips. This time we decided to try a different location just for a change of pace. The Embarcadero Inn will get our business next time. We recommend rooms on the third floor (except for 306) which is adjacent to the breakfast room--the third floor offers unobstructed views of the bay. We enjoyed a king room with fireplace and balcony (room 315) at a reasonable price. The room was comfortably furnished, pleasantly decorated and well equipped (DVD player and a good selection of DVDs available from the office at no additional charge). The bed was very comfortable. The staff was very friendly and helpful and the included continental breakfast was much more than adequate but fairly basic.
There were no major negatives unless these minor considerations are game changes for you:
1) There is only one sink and fairly limited area for toiletries.
2) The breakfast room has only three tables and I imagine quite difficult to access during peak seasons when the inn is full or nearly so (which was not the case during our visit). If you are traveling with a family we would advise an early or late breakfast--opens at 7.
3) If you are the type that only cares about the gas fireplace for atmosphere and a soft glimmer when you go to sleep you will probably find yourself being quite warm . . . our fireplace delivered a lot of heat in addition to a warm atmosphere.