Should you stay in the city of Loreto or Loreto Bay?
This questions comes up a lot. Both places have their plusses and minuses. For starters, you should know where each of them are located. The city of Loreto is located about 5 minutes north of the airport and Loreto Bay is about 10 minutes south of the airport.
City of Loreto: The city of Loreto has several hotels and Airbnb's throughout the town. The big hotels that are on the "ocean" are Hotel Oasis which has a sandy beach in front and Hotel La Mision which has the Malecon (boardwalk by the sea) in front. Hotel Oasis is a little further to "down town" but you can still walk or take a taxi. Hotel La Mision is a nice hotel and situated closer to the shops and restaurants. Another big Hotel is Hotel Sante Fe which is located further inland and on the main road.
If you choose to stay in the city of Loreto, there are tons and tons of restaurants and little shops. You are also closer to grocery stores, where you can save some money on food and drinks. The beach in the city of Loreto consists of Playa Darsena which is just to the north of the marina and Playa Oasis (south). There are not any beach bars in the city or elsewhere for that matter. The beach tends to have a little more waves than spots further south of the city.
The tour operators are mostly located in town, so you may be within walking distance or the tour operator can just pick you up. Being in the city makes you feel like you are in Mexico and you can meet some of the wonderful people here.
Loreto Bay: Loreto Bay is a "gringo community" located on a sandy beach. There are about ten restaurants/bars within a mile stretch. You do not have as money options for eating and the prices are not going to be the "street taco" prices, but they are still very good and convenient. Loreto Bay also has a golf course that meanders throughout its community, estuary and shoreline. Additionally, you can rent kayaks, paddle boards or go snorkeling.
The only hotel is the Hotel Loreto Bay which has a prime location on the beach. They have a large pool, outdoor bar and several palapas on the beach.
Other options are Airbnb, which there are probably over a hundred options. This is a good idea for longer stays or large families. You can still go out and eat at the restaurants here or you can cook up some food yourself. The accommodations available on Airbnb are very nice. Most are two to three bedrooms and have a courtyard or two to enjoy.
You are farther from town (which is worth going to) and so unless you rented a car, you will need to take a taxi which costs about $16.00 each way (expensive). But if you only go into town once or twice, it's no big deal.
Conclusion: As you can see each has their good and bad points. My suggestions is to do both your first visit and so the second time around you know what you like :) Stay in the City for a few nights and stay in Loreto Bay a few nights. Winner, Winner!