Texas State University has approved a plan for Houston-based developer Midway to build a $40 million boutique hotel on its San Marcos campus. The university’s Board of Regents agreed to the development on November 20, giving Midway control of a 3-acre site at 429 North Guadalupe Street under a 75-year ground lease, with options for two additional 10-year extensions. The site was previously home to the Richard A. Castro Undergraduate Admissions Center and is located just north of downtown San Marcos.
The project will include a full-service hotel spanning 120,000 square feet, offering at least 130 rooms and amenities such as an event lawn, amphitheater, restaurant and bar, pool and courtyard, and modern meeting spaces. Regents stated that this will be the only full-service hotel near downtown San Marcos, providing Texas State University with greater capacity to host conferences while also supporting local tourism as the city continues to grow.
San Marcos has nearly 75,000 residents and Texas State University enrolls about 40,000 students. University officials said the new hotel addresses long-standing demand in the area’s downtown district.
“San Marcos is long overdue for a true, full-service, top-of-the-line hotel and restaurant in the heart of downtown,” said Eric Algoe, vice president for operations and CFO at Texas State University.
Midway secured city and county incentives earlier this year for the project. The City of San Marcos approved an incentive package worth $9.1 million paid over ten installments. The agreement does not include property tax rebates but offers significant benefits: there will be a phased rebate on sales taxes (up to 95 percent) and hotel occupancy taxes as well as construction sales tax rebates. In exchange, Midway must invest at least $40 million in the project, begin construction by late 2026, and complete it within two-and-a-half years.
City officials estimate that over its first decade in operation the hotel could generate $2.4 million in property taxes for San Marcos along with $456,000 in retained sales taxes. Hotel occupancy tax rebates could total up to $7.3 million while allowing the city to keep another $1.8 million from those taxes. The incentive agreement remains active for fifteen years after completion; after that period ends Midway may sell its interest in the property to a public entity without repayment obligations tied to incentives received.
Austin-based New Waterloo will manage operations of the new hotel; its portfolio already includes South Congress Hotel and Hotel Ella.
