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The town was established in the latter half of the 19th century, when it served as the main shipping port for San Luis Obispo. Although Avila Beach still has a working commercial fishing pier and the inland areas have extensive apple orchards, tourism is now the main industry.

The beach itself is less than 0.5 miles (0.8 km) long and sheltered in San Luis Bay, which is formed by Point San Luis on the west and Fossil Point on the east. Avila Beach faces south and is protected from the prevailing northwesterly winds by Point San Luis. It is therefore usually warmer than the other beaches on the Central Coast. Most of Avila Beach is undeveloped, except for a few blocks adjacent to the beach with homes, hotels, and small businesses, and a few recently built upscale housing developments inland, near a golf course.

Avila Beach has three piers: Avila Beach Pier, 1,685 feet long, intended for tourist strolling and recreational fishing, Harford Pier, for commercial fishing boats to offload their wares, and the California Polytechnic State University (Cal Poly SLO) Pier, part of the university's marine research program and not publicly accessible.

Diablo Canyon Power Plant, one of the two nuclear power plants in California is located in a remote part of the Avila Beach unincorporated area, about 6 miles northwest of the beach itself. Avila is also known for its hot springs, which are used for resort spas.

 

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