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The Santa Cruz Wharf offers nearly a mile of ocean views, tourist-y shops, and the freshest seafood you'll find anywhere. Travelers from landlocked places especially will find the Wharf's ambiance novel and invigorating.
Santa Cruz does have two rough areas: Beach Flats and Lower Ocean St. You probably don't want to book a hotel in either of these two areas. Unfortunately, there are a number of hotels clustered here because of the city zoning for tourist accommodations and the proximity to the Boardwalk. The first area to avoid (Beach Flats) is a triangle directly across from the Boardwalk bounded by Beach, Third, and Cliff Streets. Look up your hotel on a Google map. If it's in this triangle, you might want to reconsider. The other rough patch is Lower Ocean. This is a rectangle bounded by Broadway, Ocean, Riverside and San Lorenzo. You probably want to avoid lodging in this area.
Downtown still can't decide whether it wants to be 1970's hip or 2000 Carmel glitz. Generally it lands in between. Many local shops and restaurants. Lot's of people out walking on weekend nights. 17 movie screens, many showing art house, foreign, and independent films. The best bookshop is Borders. Bookshop Santa Cruz used to be the best, but their shelves are bare of late and only their periodicals section is worth browsing.
The West Side has three excellent bakeries, two wineries, a gin distillery and a cluster of small businesses making everything from surfboards to guitars, and studio microphones to body jewelry. Try lunch at Kelly's Bakery and visit the design stores nearby.